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Working from home – the risk of redundancy claims

Working from home – the risk of redundancy claims

Working from home – the risk of redundancy claims

Posted: 08/06/2021

Working from home has been on the increase in recent years. However, the pandemic has led to a large increase with 49.2 percent of UK employees working from home in April 2020 according to the Office for National Statistics.   Since then, although lockdown has eased, working from home has largely continued with many larger employers unveiling their plans for hybrid working.

In many cases, working from home brings benefits.  However, what are the risks to employers in moving staff from being based in the workplace to home working?

One such risk is redundancy claims. Take the following scenario.  A tech business has decided that working from home has been so successful that it decides to close its office and require all staff to work from home permanently.   Many agree and there are no issues. However, a group of staff are unhappy about working from home permanently and say they are entitled to a redundancy payment as the employer has closed their normal place of work. Are they?

The starting point here is the legal definition of redundancy. This is widely defined and includes a workplace closure. However, the employer would argue that there is still work to be done, it is just the place where the work is to be carried out that has changed. The employment contract might come to the rescue here since it may contain a job mobility clause allowing the employer to reasonably require a change of workplace. The difficulty is that these clauses are usually focussed around an employer's place of business and are rarely drafted on the basis of home working.

If the employment contract is not coming to the rescue does this therefore mean that the employee is entitled to a redundancy payment? The easy answer is no, since this entitlement applies only employees who have been dismissed by reason of redundancy. In this situation the employer would not be dismissing an employee but merely requiring home working as a result of the office closure. Ultimately however something has to give and unless matters are agreed, the employer would have to consider the best way forward. To enforce the changed working arrangements, one option would be to “fire and re-hire” which means that employment contract is terminated and new employment is offered on the new terms, which would be the homeworking arrangement. There are however at least two legal issues here.

The first issue is unfair dismissal – for employees who are eligible to bring this claim, the employer would need to be confident it could put forward a fair reason for dismissal and to show it had acted reasonably in terminating employment, in all the circumstances. 

The second issue is the redundancy payment – in essence, what was the reason for dismissal?  The employer’s case is that it was for a refusal to accept home working. However, the counter argument is that the real underlying reason was the closure of the normal place of work and this is redundancy.  The employment tribunal would have to decide that issue.

Even if there is a redundancy dismissal, what is the effect of the fact that there is clearly still a job to be done? An employee forfeits their right to a redundancy payment if they unreasonably refuse an offer of suitable alternative employment. Here, the employer would be strongly arguing that the offer of the same work, albeit to be carried out from home, falls squarely into this provision and that in refusing the offer of home working the employee forfeits any right to a redundancy payment. Is this a done deal then? Not necessarily – the fact that the actual work may be the same, or nearly the same, is relevant but so is the employee’s view of the job, and it may be that the employee feels that they did not sign up for permanent home working which would in fact be much less enjoyable for them. The employment tribunal would ultimately have to weigh up the various factors and decide.

There are potentially some difficult legal issues therefore lurking under the surface of a situation that may seem straightforward.  For many, there will be no issue since many value the benefits of home working. For others the situation is less clear cut.

Are you considering a workplace closure or a home working scenario? Does your business need legal advice? Contact Lee Jefcott to arrange a discussion, or speak to our Employment Law team.