Redundancy - Getting it Right

by Kate Russell

Bumping

Transferred redundancies, colloquially known as ‘bumping’, occur when an employee loses his position in the company and is moved to another worker’s job, thus displacing the second employee and causing his dismissal. In these circumstances, the dismissal is by way of redundancy, even though the role of the bumped employee still exists. There is still a duty on you to behave fairly and reasonably. Whether it is unfair or not to dismiss for redundancy without considering alternative and subordinate employment is a matter of fact for the tribunal.

Always assess whether it is appropriate to consider bumping in a particular case. The Leventhal case suggests that the duty placed on an employer to act reasonably does not impose an absolute obligation to consider bumping as an option but that, in particular circumstances, the failure to do so may fall outside the band of reasonable responses.

Example

Mr North was employed by Lionel Leventhal Ltd as a senior editor. In 2003, the company encountered serious financial difficulties. At that time, it employed 12 full-time staff and two part-time secretaries.

The company decided that the best way to save money was to make a staff member redundant, and the prime candidate was Mr North, because he was the most expensive employee, in a role the company could easily manage without.

At a meeting, Mr North was advised that the company did not consider it needed a senior editor. They asked Mr North for his views and reconvened another meeting. Mr North brought a list of 11 suggestions for cost cutting to that meeting. These were discussed, but subsequently the company concluded that they were not capable of producing the required savings quickly enough. They did not consider making any other member of staff redundant.

Mr North attended a second meeting the following day and was told that his employment would be terminated, and he would be given his two months’ contractual notice, together with statutory redundancy pay.

At no time did Mr North suggest, or the company consider, making a subordinate editor redundant, and offering the claimant that job, with less pay. He subsequently complained that his employer had failed to consider bumping and, that as a result, he had been unfairly dismissed

The court agreed that the redundancy dismissal was unfair, because the employer had failed to consider ‘bumping’ (even though the other job was a subordinate role with less pay, and the redundant employee had not suggested he would have considered this option). In this case, the tribunal concluded that North was not given the opportunity to say whether he would have accepted the subordinate position, and the subordinate employee was not approached to see whether he was interested in voluntary redundancy.

If the employee does expressly raise the suggestion of bouncing out someone else in order to keep him, the employer should be seen to consider that suggestion.

Example

Dr Mirab held a stand-alone Sales Director role which Mentor decided that it no longer needed. This followed earlier discussions about his responsibilities and departmental structure in which Dr Mirab had refused to consider any implied demotion to Account Manager, claiming that it would entitle him to claim constructive dismissal.

When it came to the proposed redundancy, Dr Mirab made brief reference in his consultation meeting to dismissing the Account Manager instead. It was not clear whether that was with a view to his taking up that role, or simply on the grounds that the savings from losing the Account Manager would enable Mentor to retain him as Sales Director. Mentor read his reference as the latter. On that basis, plus Dr Mirab’s strong earlier resistance to becoming Account Manager and the absence of any Account Manager vacancy, Mentor did not consider whether the Account Manager should be bumped out.

The Employment Tribunal found Dr Mirab’s dismissal fair, but the EAT reversed its finding, noting:

  •  consideration of bumping is just one ingredient to go into the pot to determine overall fairness, but is not determinative of that question by its presence or absence;
  • there is no general rule that an employer is obliged to consider bumping on a pro-active basis, i.e. without the employee even raising it;
  • Dr Mirab’s earlier resistance to a move to Account Manager was relevant to whether Mentor was reasonable not to look at bumping, but not determinative of it – much as when considering alternative vacancies in a redundancy situation, a more junior replacement role may not be something the employee would consider in the ordinary course, but he may become more flexible once confronted with the option of losing his employment altogether.

Relevant factors include the existence of other vacancies, the extent to which the two jobs are different, the difference in pay, the relative length of service of the two employees and the qualifications of the original employee at risk. Another factor could be the willingness of the other employee to accept voluntary redundancy or another vacancy.

In most circumstances, it would be appropriate to ask employees at risk of redundancy whether they wished to be considered for bumping. If the answer was yes, you could consider offering voluntary redundancy to those not at risk of redundancy in roles suitable for bumping, in case an appropriate volunteer comes forward.

You do not have to accept the offer of a voluntary redundancy if you decided not to pursue it. Ensure you properly document the process so that there is a paper trail.