Bumping Redundancies – Fair Or Not?

I struggle with the idea that we can remain the fourth wealthiest country in the world if we continue to allow manufacturing to decline year on year, whilst reducing employers’ competitiveness by giving employees more rights. Down here in the South West, with our relatively poor communication links, there seems to be an even greater threat to our manufacturing companies that should not be ignored.

As an employment lawyer I see the personal consequences of a decline in manufacturing through regular rounds of redundancies.

However, both employers and employees need to understand that even if a company or organisation has to make jobs redundant there are procedures that must be complied with. A recent case presents a salutary lesson to employers and something that employees, faced with the threat of losing their jobs, should consider.

In 2003 a company called Leventhal Limited encountered serious financial difficulties. Mr North was the company’s most expensive employee and so, perhaps not unnaturally, his position was selected for redundancy. It is important to remember that jobs are redundant, not people.

Very sensibly Mr North, when faced with losing his job, put forward a list of cost cutting suggestions that did not involve compulsory redundancies.

Unfortunately the company decided that they were not practical and went ahead and terminated his employment. He brought an unfair dismissal claim.

The Tribunal found in Mr North’s favour. The most interesting reason for this decision was that the company, according to the Tribunal, should have considered dismissing a more junior employee creating a vacancy that could have been offered to Mr North. This had not been suggested by Mr North and he had not said that he would take a more junior position.

The company appealed and lost. It was decided that it can be unfair to dismiss somebody who is in a redundant job when the employer has the option of sacking a more junior employee and offering the more senior person the junior’s job. Relevant factors in most cases will be: how different the two jobs are, can the senior employee do the junior’s job; the difference in pay; the relative lengths of service of the two employees and the qualifications of the employee in the redundant job.

What does it mean for employers? If you have long service employees in jobs that you no longer need and shorter serving or even temporary staff doing work that those employees could do, you should consider “bumping” the short service or temporary staff out and offering the vacancies created to the longer serving employees. Remember, this will not cost you any more as the longer serving employee would be paid at the normal rate for the new position.

The first step for employers, having identified a potential “bumping” situation, would be to ask the more senior staff if they would take a more junior position at a lower rate of pay if one was available. If the answer is no, the issue goes away. If the answer is yes, you need to give it further consideration.

If you are an employee faced with a redundancy situation and you would rather take a pay cut than be unemployed, do not be shy in identifying more junior roles that you would be prepared to do. Remember, if you will find it hard to get another job and/or you will not receive a large severance package, a lower paid job is generally better than no job at all.

Published 27/09/2004.