A new decision suggests that, although not mandatory, employers should be careful to consider 'bumping' when making employees redundant to avoid giving rise to unfair dismissal claims.
In Mirab V Mentor Graphics (UK) Ltd, the Employment Appeal Tribunal ruled that although employers are under no obligation to discuss bumping during the redundancy selection process, failure to do so may give rise to a successful claim of unfair dismissal if the Employment Tribunal considers it to be within the range of reasonable responses.
Under s.98(2)(c) of the Employment Rights Act 1996 (ERA), redundancy is a potentially fair reason for dismissal. In deciding whether a redundancy dismissal is fair, the main question for the Employment Tribunal (ET) stems from s.98(4) of ERA: did the employer act within a range of reasonable responses, having regard to the specific circumstances of the individual case?
"Bumping" occurs when an employee's role becomes redundant and, instead of losing their job, they are redeployed to someone else's role, with the other employee being made redundant instead. Typically, this practice allows employers to retain more senior, skilled or long-serving employees, in preference to junior employees, despite the fact that it is the more senior role which has become redundant. Employers are not obliged to bump employees, nor is it the duty of the employee to suggest they are bumped into another role. When assessing the fairness of a dismissal, the ET will decide whether the employer's approach to bumping (i.e. whether they considered or engaged in bumping), was within the range of reasonable responses.
The Claimant was employed in the senior role of Sales Director for the Respondent employer. The Claimant was the only Sales Director in the UK branch of the company and was responsible for Account Managers, who reported directly to him. Following a restructure of the business, the Respondent determined that the role of Sales Director was no longer needed and the Claimant was made redundant.
The Claimant brought a claim for unfair dismissal. The ET dismissed the claim, pronouncing that redundancy was the reason for dismissal and, as the Respondent had sufficiently considered alternatives to dismissal, the dismissal was fair. In particular, the ET acknowledged that although the Respondent had not considered bumping a more junior Account Manager, it was fair in the circumstances because: (i) the employer was only obliged to consider bumping if the Claimant raised it; and (ii) the Claimant had not actively suggested that he would be prepared to consider the subordinate role. Furthermore, although an internal appeal was procedurally unfair it made no difference to the fairness of the original dismissal.
The Claimant appealed to the Employment Appeal Tribunal (EAT) on the basis that the ET had erred in relation to the internal appeal and, specifically, on the issue of bumping.
HHJ Eady QC, sitting alone in the EAT, found that the ET was wrong to assume there was a general rule that employers are not required to consider bumping redundant employees to subordinate positions unless the employees suggest this themselves. This was a plain error by the ET; there is no case law to support this premise at all and the ET failed to show it had applied the band of reasonable responses test in this regard.
Equally so, the EAT acknowledged there is no strict rule that employers must always consider bumping to render a redundancy dismissal fair. However the EAT ruled that the question of fairness falls to the ET to decide whether, in the circumstances, the employer acted within the range of reasonable responses. Accordingly, in making this judgment, the ET should reconsider the employer’s approach to bumping and evaluate whether it was fair, in the circumstances.
Furthermore, the EAT determined the ET was wrong to state that the legitimacy of the internal appeal process was only relevant if the original process had been unfair.
In light of these fundamental errors in the ET's approach to the question of fairness, HHJ Eady QC remitted the case to the ET to reconsider this element of the dismissal in light of the ruling by the EAT.
The EAT's judgment reaffirms that employers are not legally obliged to consider bumping in every case of redundancy; employers are entitled to overlook this practice if they think it is appropriate to do so. However, if the ET determines that consideration of redeployment was reasonable in the circumstances, a failure by an employer to raise it as an alternative option may render an otherwise fair redundancy dismissal as unfair.
Therefore, during the redundancy selection process, where possible, it is recommended that employers at least consider bumping, even if the redundant employee does not raise it. Appropriate records should be kept to evidence this stage in the process. This will help ensure the selection process is not only fair, but also seen to be fair and could, ultimately, avoid instigation of an unfair dismissal claim.
This article was drafted by Kathleen Gallacher, Trainee Solicitor