Posted: Wednesday 15 February 2012
This article considers the case law relating to “bumping” and provides practical suggestions for employers.
As part of any redundancy process, it is generally accepted that employers should consider the option of “bumping”. What is more uncertain is what this involves from a practical perspective and how it impacts on defining the selection pool for redundancy.
Bumping in context
Bumping occurs where employee A is redeployed into another role as a consequence of his position being made redundant, and employee B (who performs that role) is dismissed in the place of employee A.
The case of Thomas & Betts Manufacturing Ltd v Harding is an early example of where a failure to consider bumping led to a finding of unfair dismissal. The Court of Appeal held in this case that the Tribunal had not erred in finding that the employee’s dismissal on the grounds of redundancy was unfair as she should have been offered alternative employment carrying out another role, even if there was no vacancy and it resulted in another employee being dismissed.
The House of Lords also held in the later case of Murray and Another v Foyle Meats Ltd that there may be a basis for having substantially wider selection pools in a redundancy exercise. It was held that there was no reason in law why the dismissal of an employee should not be attributable to a diminution in the employer’s need for employees, irrespective of the terms of the employees’ contracts or the functions that they perform. This decision essentially clarified that bumping dismissals could still be dismissals by reason of redundancy, although there had not been a diminution in the workload of employee B.
The question of whether the employer or employee should be responsible for raising the issue of bumping has also been dealt with in case law. In Barratt Construction Ltd v Dalrymple the EAT held that if a senior employee was being made redundant and was willing to take up a subordinate position, it was for the employee to make this clear to the employer at an early stage. However, the EAT specifically stated that it was not laying down a hard and fast rule in this respect.
The EAT also gave guidance in Byrne v Arvin Meritor LVS (UK) Ltd as to the extent of the obligation placed on employers in relation to bumping. In this case the EAT rejected a claim that the employer should have considered dismissing a long-serving and well-qualified employee in order to retain a more senior employee. The EAT held that the obligation on an employer to act reasonably was not one which imposed absolute obligations. It also confirmed that there was no absolute obligation to “bump”, or even consider “bumping”. It is clear from this case that the issue to be considered is what a reasonable employer would do in the particular circumstances, with the actions of the employer only being unfair where the actions fall outside the band of reasonableness.
The cases of Lionel Leventhal Ltd v North and Fulcrum Pharma (Europe) Ltd v Bonassera and Another shed further light on how to negotiate the potential minefield of bumping.
Lionel Leventhal Ltd v North
The Tribunal held that Mr North, a senior editor, was unfairly dismissed, with this being due in part to the employer failing to consider bumping a junior employee and redeploying Mr North to the junior position. The employer encountered serious financial difficulties in 2003 and, as a consequence, the decision to dismiss Mr North on the grounds of redundancy was taken on the basis that he earned the highest salary and carried out a role which the employer considered it could manage without. No consideration was given to making any other employees redundant. It was also assumed by the employer that Mr North would not be interested in taking up a junior post on a reduced salary, rather than this option being explored with him.
The Tribunal held that the dismissal was unfair regardless of the fact that Mr North did not indicate at any point prior to giving evidence before the Tribunal that he would be interested in taking up a subordinate position. The Tribunal concluded that an employer could not rely on this failure as a defence to a claim for unfair dismissal.
On appeal, the EAT stated that, in circumstance where there had not been consideration of alternative and subordinate employment, the determination of whether a redundancy dismissal was fair or unfair would a matter of fact for the Tribunal. The EAT listed a number of relevant factors to be taken into consideration by a Tribunal when determining this matter. These factors were:-
This list of factors is intended to be non-exhaustive as the EAT stated that there are other factors that may apply in any particular case.
Fulcrum Pharma (Europe) Ltd v Bonassera and Another
The Tribunal held that Mrs Bonassera had been unfairly dismissed as her employer failed to give any real consideration to the selection pool for redundancy and limited the pool to include only Mrs Bonassera. The employer’s HR team consisted of two employees: an HR Manager (Mrs Bonassera) and an HR Executive. The employer decided to make Mrs Bonassera’s post (which was the more senior post) redundant due to a diminished requirement for such a role within the business. The HR Executive was excluded from the pool for selection.
On appeal, the EAT agreed with the finding of the Tribunal but disagreed in part with the reasoning behind the Tribunal’s judgment. The EAT relied upon the Lionel Leventhal case with regards to the guidance that should be followed when deciding whether or not bumping was appropriate in the circumstances. The EAT held that these factors had not been fully considered by the Tribunal and remitted the matter for further consideration.
However, the EAT upheld the unfair dismissal finding on the basis that the employer failed to properly consult on the possibility of including both HR employees in the selection pool. Whilst the employer had considered the possibility of bumping and had documented this, it did not raise it with Mrs Bonassera during the consultation process. The EAT made clear that the employer should have done so.
It is clear from the Lionel Leventhal case that there is no absolute duty on an employer to consider bumping in order to avoid a finding of unfair dismissal, but rather the fairness of a failure to consider bumping will turn on the facts of the particular case. Given this, it is advisable that employers as a matter of course consider the option of bumping in order to minimise the risk of a finding of unfair dismissal.
Following the Fulcrum case, employers should also bear in mind that merely considering the option of bumping may not be a sufficient defence to an unfair dismissal claim as a Tribunal may find that the employer has failed to consult with the employee regarding bumping.
Prior to finalising the selection pool in any redundancy situation, employers should give consideration to the possibility of extending the pool not only horizontally due to an overlap in duties but also vertically due to the possibility of bumping. However, it is likely that framing the pool widely may introduce uncertainty across many levels in the business and affect morale. This risk will have to be weighed up against the risk of an unfair dismissal claim for failing to widen the pool. It is clear from the Fulcrum case that the starting point may be to explore with the employee during the consultation process whether they would be willing to consider a junior role at a reduced salary. The pool could then be defined once the employer has ascertained the position with the employee. In the current economic climate some employees may prefer a demoted post and view this as the lesser of two evils in comparison to the very real possibility of a lengthy period of unemployment. Clearly it is of great importance to ensure that no assurances of continued employment are given to any employees expressing a willingness to consider a junior role but rather the focus is on inclusion in a wider pool for selection.
If employers wish to utilise the option of bumping in order to retain valued employees, full consideration should be given to the reasons for proceeding in this way. It should be borne in mind that the employee who has been bumped will have a potential claim for unfair dismissal. It is advisable that a proper redundancy process (including consultation and consideration of alternative employment) is followed with the employee who has been bumped and that a paper trail of the employer’s decision making process in relation to bumping is retained.
Cases referred to:-
Thomas & Betts Manufacturing Ltd v Harding  IRLR 255, CA
Murray and Another v Foyle Meats Ltd  IRLR 562
Barratt Construction Ltd v Dalrymple  IRLR 385
Byrne v Arvin Meritor LVS (UK) Ltd EAT/239/02
Lionel Leventhal Ltd v North EAT/0265/04
Fulcrum Pharma (Europe) Ltd v Bonassera and Another EAT/0198/10
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