Daisy,
I have been thinking about this and looking at the guidance on the various websites (EOC, etc) and will try and explain what I think has happened. It might be a bit long, so bear with me.
The problem is that the guidance often does not spell out that the rules on maternity leave redundancies give those women preference over other people at risk of redundancy. This is because, if you read the legislation as someone with no knowledge of the rules on redundancy and using common sense, it is quite clear. The law says:
"2. Where there is a suitable available vacancy, the employee [on maternity leave] is entitled to be offered (before the end of her employment under her existing contract) alternative employment with her employer or his successor, or an associated employer, under a new contract of employment which complies with paragraph (3) (and takes effect immediately on the ending of her employment under the previous contract)."
If you read that as a normal person, it makes sense: if there is a suitable position, you are entitled to be offered it.
The problem comes that HR people (actually, that's unfair, what I mean is HR people who don't know about maternity redundancies) don't just read that section in a common sense way. They try to apply what they already know about redundancies to it. They know that, in a redundancy situation, an employer has to look for suitable alternative employment for EVERYONE at risk of redundancy. Therefore, like your daft employer, they read this section and think "oh, that's the same rule as normal, I have to look for suitable alternative employment". They then merrily continue down their usual, comfortable route of setting up a selection process to choose amongst all the people who could take the same vacancy.
The problem is not that the law is unclear but that the HR person has filtered that straightforward language through their own understanding of what a redundancy process means and not taken it at face value (if you see what I mean). If you take it at face value, it says that you have to be OFFERED the vacancy, and this obviously takes preference over the fact that you would CONSIDER all potentially suitable people for the vacancy.
If your HR sat back and thought logically about the wording of the legislation then they would realise (as we have discussed on previous posts) that it only makes sense in a situation where there is a women on maternity leave and another person at risk of redundancy going for the same vacancy.
Does that make sense at all?
Just to echo what Flowerybeanbag has said, do be reassured that this is a very simple case once your employer gets the right advice. The facts as I see them are this:
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They have admitted that the job is suitable for you by putting you in the ring-fenced pool.
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Sooner or later, someone will explain the law to them and they will realise that you have to be offered the job (unless there is another women on maternity leave in the pool, where the two of you will need to compete).
The important thing for you to do is get them something from CAB or whoever (something on offical, scary looking paper) pointing out that you are right and they are wrong. From your employer's point of view, it will be hard for them to accept from you that they have got it so wrong. They need to hear it from someone 'in authority' (IYSWIM). Assuming you what to stay with the company, you need to get them to see this quickly, before they possibly appoint someone else to the role. If they do, it will be very hard for them to take the job off him/her and probably the best you can hope for is a settlement package. That's all well and good, but it's not a job...