Should an employer raise bumping to an employee in the redundancy process?

As redundancy becomes more and more a regrettable necessity, one issue that arises is a request unions sometimes make to implement a ‘bumping’ policy. ‘Bumping,’ more elegantly known as a ‘transferred redundancy,’ is the process of moving a potentially redundant employee into another role, and dismissing the employee currently performing in that role. This employee is then dismissed for reason of redundancy. A failure to consider bumping has, at times, led to the courts finding in favour of employees claiming unfair dismissal. There has been considerable debate surrounding this issue and the recent case of Mirab v Mentor Graphics (UK) Ltd provides some useful guidance for employers.

Bumping may take place across across different limbs of an organisation, for example, where

1. The employees work at separate companies which are part of a ‘group’; or
2. The employees work at separate schools which are both maintained by the same local education authority.

Two requirements must be met in order for the bumped employee’s redundancy to be considered as a fair reason for dismissal. They are:

1. The employer must establish that redundancy was the real reason for the dismissal; and
2. The employer must have acted reasonably, in all the circumstances of the case, in treating redundancy as the reason for dismissing the employee.

In the case in point, the Claimant was employed as a Sales Director from 2013. The sector in which the Claimant worked started to produce profits lower than forecast and a new strategy was adopted which led to a restructuring of the business. After the restructuring the Respondent later came to the conclusion that the Claimant’s role as Sales Director was no longer required and the Claimant was subsequently made redundant. The Claimant argued that he had been unfairly dismissed and that the Respondent had failed to redeploy him elsewhere into the business.  

The Employment Tribunal (ET) held that the Claimant had been fairly dismissed for reason of redundancy. The Claimant appealed this decision to the EAT which criticised the ET’s decision on the basis that the ET had failed to take into account several relevant factors when making its decision. The EAT held that “the ET had erred in its approach to the consideration of alternatives. It assumed there was a general rule that an employer was not required to consider subordinate positions unless raised by the employee”.

More generally, the EAT determined that there is no general rule that an employer must always consider bumping in order to dismiss fairly in a redundancy case. The question will always be for the ET to determine, on the particular facts of the case, whether the actions/decisions of the employer fell within the range of reasonable responses.

However, this finding suggests that it may be sensible for employers to determine, within the redundancy consultation process, whether an employee would be prepared to consider a more junior role at a reduced salary.