As employers prepare to shed staff this year, many are likely to consider “bumping”, or transferred redundancy. This is where an employee whose job is not redundant is dismissed to make way for an employee whose role has become redundant. Although bumping can be a legitimate way of retaining valued staff while still reducing headcounts, it can also present traps for the unwary.
How can employers ensure that bumping dismissals are fair?
In Murray v Foyle Meats Ltd (1999 IRLR 562) the House of Lords confirmed the potential fairness of bumping dismissals. What counts is that there is a redundancy situation and that the dismissal of the employee is caused by that redundancy. Even then, employers need to consider alternative employment for the employee to avoid a claim for unfair dismissal.
What should employers do when deciding whether or not to bump?
According to the Employment Appeal Tribunal in Lionel Leventhal Ltd v North, factors to be taken into account include:
- whether there is a vacancy;
- how different the two jobs are;
- the difference in remuneration between the two jobs;
- the two employees’ relative length of service;
- the qualifications of the employee in danger of redundancy.
Is bumping simply an option available to employers, or must they consider saving the jobs of redundant senior employees at the cost of more junior colleagues?
Case law establishes that there is no absolute obligation to consider bumping in all cases, but that a failure to do so may make a dismissal unfair. In North, the EAT indicated that the question of whether it’s unfair to dismiss an employee by reason of redundancy without considering bumping is a matter of fact for the tribunal to determine by reference to the particular circumstances. This means that an employer can avoid bumping if there is good reason to do so. On the other hand, bumping can be used if the employer is able to show that the true reason for the dismissal of the bumped employee is redundancy and not some other reason, such as performance, which would take the dismissal outside the scope of redundancy and therefore make it potentially unfair.
Bumping aside, what principles should employers follow when identifying the selection pool for redundancy?
Even though employers have considerable flexibility in determining the pool from which employees will be selected for redundancy, they must still act reasonably or run the risk that any dismissals will be deemed unfair. When assessing if an employer has been reasonable in deciding on a selection pool, a tribunal will consider factors such as whether other groups of employees are doing similar work, whether employees’ jobs are interchangeable and whether the selection pool was agreed with an employee representative.
Can highly skilled employees automatically be excluded from a redundancy selection pool?
If a group of employees does similar work to those in the selection pool, an employer will need a good reason to exclude that group. This was confirmed in British Steel plc v Robertson (EAT 601/94), in which a group of craftsmen had been trained in all the skills required by the company. Redundancies were made from a pool of longer-serving engineers. The tribunal concluded that the multi-skilled craftsmen should have been in the selection pool, since they could do the same work. So employers should not exclude employees whose jobs are interchangeable with those of individuals in the pool unless they have a good business reason for doing so.
Case law
In Lionel Leventhal Ltd v North (EAT 0265/04) a senior editor was selected for redundancy because he was the most expensive employee. In deciding that his dismissal was unfair, the EAT concluded that the employer should have considered making a junior employee redundant and offering that job to the senior editor. The employer should not have assumed that the editor would reject a drop in salary. By contrast, in Byrne v Arvin Meritor LVS (UK) Ltd (EAT 239/02) the EAT rejected a claim that the employer should have considered dismissing a long-serving, well-qualified employee to retain a more senior employee.