At our recent workshops on the ‘3 Rs’ (redundancy, restructure and reorganisation) one of the questions that came up was about bumping. It is something many people have heard of in theory, but it is rarely applied in practice. We thought we would try and shed some light on this area, using a helpful recent case to illustrate some of the potential pitfalls.
A redundancy situation arises where there is a reduction in the employer’s need for employees to carry out work of a particular kind. There is not necessarily a requirement for the employee who is dismissed to have been carrying out the particular type of work that has diminished. This means that ‘bumping’ can occur – where one employee (A) is made redundant so that another employee (B) can be retained in A’s role – and that this is potentially a fair reason for dismissing A.
As you can imagine, bumping is highly likely to be challenged by employee A, so that is one reason why employers usually steer clear. Over the years there have been a number of cases regarding whether an employer is obliged to bump, or at least consider bumping. The current position is that there is no obligation on an employer to use bumping, but in some circumstances it should be considered (particularly where employee B raises the possibility).
The recent case of Contract Bottling v Cave and others  dealt with the fairness of bumping. Contract Bottling is a drinks company and was having financial difficulties, meaning that redundancies were required. Unusually, the company decided that it would put all of its employees into a single selection pool, regardless of their role or skills, and that out of the 10 staff at the time, 4 would be made redundant. If the retained staff did not have the skills to carry out the remaining roles, they would be trained. The two Claimants in the case both worked in accounts, and after they were dismissed other members of staff had to be trained up in order to cover that function.
The two Claimants argued that they had been unfairly dismissed. The Employment Tribunal said that they were not convinced that there was a genuine redundancy situation at all, and they also had several criticisms of the way that the company handled the selection and redundancy process. Therefore, the dismissals were found unfair. The company appealed to the Employment Appeal Tribunal.
The Employment Appeal Tribunal looked at the case law on bumping and found that the situation did meet the definition of redundancy, because although the requirement for the individual employees’ jobs had not necessarily ceased or diminished, the dismissals did result from a reduction in work of a particular kind. Although they agreed with some of the criticisms of the process, they found that the company had clearly had genuine financial difficulties and the Employment Tribunal had not adequately considered the possibility that dismissal would have been the outcome in any event (the Polkey principle). The case was therefore sent back to the Employment Tribunal to look further at the issue of compensation.
The case illustrates that there is no ‘one size fits all’ when it comes to redundancy and restructure, and although the dismissals were ultimately found to be unfair the principle of bumping was not necessarily a problem. We suspect however that it would have been easier and less risky for the company to take a more straightforward approach and pool the employees by function rather than creating one large selection pool.
We can advise on redundancies including the process and selection. If you would like to talk through a situation you are dealing with, or if you need advice, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]).
Please note that this update is not intended to be exhaustive or be a substitute for legal advice. The application of the law in this area will often depend upon the specific facts and you are advised to seek specific advice on any given scenario.