Bumping, redundancies and unfair dismissal
InsightsBumping is the process of moving a potentially redundant employee into another role, and making the employee currently performing that role redundant.
Many companies have taken advantage of the UK Government’s Furlough Scheme following the COVID-19 outbreak to help ease financial pressures, after being forced to close or seeing their operations severely reduced.
However, with the easing of lockdown and the phasing out of the Furlough Scheme over the next few months, many employers now have to consider whether they can retain all of their workforce and in particular, whether those who had been placed on the Furlough Scheme will be required to return to work.
Some large-scale redundancies have already hit the headlines, particularly in badly affected sectors such as aviation. If the media and other commentators are to be believed, job losses are likely to be widespread.
How should an employer who no longer has sufficient work to keep all its employees occupied and can no longer afford their wages react? Making employees redundant is an option but if handled incorrectly, can result in expensive unfair dismissal claims.
An employee dismissed for “redundancy” who has two years continuous service can claim unfair dismissal if either:
Ordinarily, redundancy is where an employer concludes it needs to reduce the number of its employees. The need may arise by reason of:
If the reason for dismissing an employee does not fall into one of these categories then it is unlikely to be a genuine redundancy.
Even if there is a genuine redundancy situation, an employment tribunal will look to see if the employer acted reasonably in reaching and implementing its decision to dismiss an employee for redundancy.
In the leading case of Polkey v A E Dayton Services Ltd, the House of Lords held that an employer will not normally act reasonably unless it:
An employer must therefore consult with employees whose jobs may be at risk with an open mind and provide them with adequate information and time in which to respond.
This will include providing affected employees with certain information, including the category and number of employees who are being considered for redundancy (referred to as the ‘pool’) and the proposed criteria on which the employer will select those who are to be made redundant.
It is important that any selection criteria should, as far as possible, be based on measurable, objective factors rather than being based on subjective opinions. If an employer has attached weightings to criteria, reflecting their relative importance, it should be able to justify any such weightings.
An employer is not obliged to create alternative employment where none already exists, but they should undertake a sufficiently thorough search for alternative employment within the organisation and should document that search (in case it is required as evidence to defend an unfair dismissal claim).
In most cases there is no specified minimum consultation period. It needs to be long enough for the consultation with employees to be meaningful and allow them a proper opportunity to consider and propose alternatives to compulsory redundancy, such as voluntary redundancy terms, job-sharing, short-time working, re-training or re-deployment.
However, if an employer is considering making 20 or more employees redundant, they will have additional duties to inform and consult union and/or employee representatives for a minimum period ahead of making redundancies; and to notify the Redundancy Payments Service.
If an employee is successful in a claim for unfair dismissal against their employer, then the employee may be entitled to:
Any award to an employee will be subject to their duty to mitigate their loss (by finding another job) or could be reduced if an employee is considered to have contributed to their dismissal in some way (which is unlikely in redundancy dismissals).
If an employee does accept voluntary redundancy terms and is willing to sign a Settlement Agreement, they will need to receive independent legal advice, in order for the agreement to be valid.
Care must be taken in entering into discussions with employees about voluntary redundancy packages. Such discussions can, if not properly conducted, be used in evidence in Employment Tribunal claims. Again, it is wise to seek specialist legal advice before opening any dialogue about voluntary redundancy terms and Settlement Agreements.
If you would like to talk to one of our employment team, feel free to ring us on 01753 876800 or email either Andrew Hayward, Victoria Eustace or Catherine Morris.
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