With many employers continuing to review staffing levels a recent EAT decision highlights the importance of knowing your pooling from your bumping when making staff redundant. In Fulcrum Pharma (Europe) Ltd v Bonassera the EAT held that a dismissal was unfair because the employer had failed to consider bumping the employee who was at risk of redundancy into a more junior role.
Bumping is the process whereby potentially redundant employee A is given B’s job and B is dismissed instead. B’s dismissal still constitutes a redundancy for unfair dismissal and statutory redundancy payment purposes, even though there may be no cessation or diminution in the requirement for employees to do B’s work. If A and B do broadly similar jobs then this is usually the result of pooling them together and deciding A is the one to be retained. However, if their roles are materially different (and where there is otherwise no redundancy threat to B’s job) then this is bumping. The distinction is often easier to make in theory than in practice as this case shows.
Many employers are nervous about bumping because of its obvious unfairness (in the nonstatutory sense) to B. Selecting employees for redundancy can be difficult at the best of times without introducing another complicating factor. Previous cases make it clear, however, that whilst employers are not obliged to bump, a failure to do so can in certain circumstances be fatal to the fairness of a dismissal.
Fulcrum had a small HR function, comprising an HR Manager, Mrs Bonassera, and under her an HR Executive, Mrs Carter. It decided that for financial reasons it no longer needed a HR Manager and accordingly put Mrs Bonassera at risk of redundancy. She argued that the HR Executive should also be included in a pool for selection, but the employer concluded that it should be Mrs Bonassera who was made redundant, as it was her role that was disappearing. So the argument was whether Mrs Bonassera’s job was part of a wider contraction in HR support, pointing to a pooling of both those within it, or a free-standing role without the need to consider others.
The EAT said that the employer had erred in determining that because the HR Manager’s role had to go the pool was inevitably just her, without any further consideration of this issue, in particular of whether the more junior HR Executive role should have been included in the pool for selection. On the face of it, it was the HR Manager role which was dispensed with, which pointed the finger of fate at Mrs Bonassera. However, if she would agree to do the HR Executive role at HR Executive money then there would be nothing between her and Mrs Carter in terms of cost and her greater experience might make her technically better in that role. In those circumstances they would have to be pooled. Fulcrum made two mistakes at the consultation phase. First, it did not ask whether Mrs Bonassera would be willing to do the HR Executive job as an alternative to her dismissal, so it could not say that she would not. Second, more embarrassingly, it had prepared a consultation meeting “script” which included reference to asking her that question and a tacit recognition that pooling may be appropriate if she said yes. Even though there was debate about whether the HR Executive job should be subsumed upwards into Mrs Bonassera’s HR Manager role (i.e. allowing the HR Executive to be dismissed and Mrs Bonassera to retain her HR Manager salary), that script was not ultimately used and the point went unaired.
Some employers may feel this decision was a little harsh, but it has always been the case that employers are required to address their mind to the issue of the selection pool at the outset of a redundancy exercise. What this case makes clear is that employers should be wary of making assumptions – just because a role has been identified as redundant does not automatically mean that the employee who is currently performing that role is the person who should go. Although of course in the vast majority of situations this will be the case, that outcome should always be seen to be the product of some active thought on the part of the employer. It may be that having considered the matter an employer concludes that it would be inappropriate to have any other employees in the pool because, for example, the role is unique and/or there are no other employees doing work of a similar kind or who have interchangeable skills. Employers still have a fairly wide discretion when it comes to selecting a pool of potentially redundant employees – provided they can be seen to address their mind to the issue of who is in that pool it will be difficult for an employee to challenge the decision. If its reasoning is clear, even if objectively questionable, the employer’s decision should be fairly robust. The Employment Tribunal may not substitute its view for that of the employer. However, if the employer’s view is patently unreasonable (and an absence of any visible thought process will tend to this conclusion) then the Tribunals will feel themselves able to go behind that reasoning.
Does this decision mean that employers always have to include more junior staff in the pool for selection? Not necessarily, but the EAT made it clear that this is an issue that should be addressed as part of a redundancy selection exercise, if only to discount it. The EAT confirmed that in determining whether a more junior employee should be included in a redundancy pool (with a view to bumping the other employee into his role) employers should be seen to consider a number of factors, including: how different the two jobs are; the difference in remuneration between them; the relative length of service of the two employees; and the qualifications of the employee who is at risk of redundancy. Consideration of bumping is likely to be appropriate when an employer is proposing to make a senior role redundant but retain a more junior role (as in Fulcrum), especially if the senior employee has longer service, better qualifications etc. In such circumstances it would be prudent to ask the more senior employee if he would be prepared to consider the more junior role at the reduced salary. In the vast majority of cases the employee will be unwilling to accept such a position and this will be the end of the matter. If the employee expresses an interest then the employer should give the matter further thought. A paper trail should always be kept to demonstrate that bumping was considered, even if ultimately the employer decides against it. An employer might legitimately conclude, for example, that a senior employee forced by circumstance into a more junior job would be unhappy, resentful and likely to leave at the earliest opportunity. Alternatively, the potentially displaced junior employee might have money, family or health issues which would make his dismissal of greater adverse impact than usual. It might decide that bumping would create a cascade of uncertainty in the business as each displaced employee looks to bump out his subordinate in turn.
Despite the many issues it creates, it is worth bearing in mind that bumping does not have to be a negative thing. It can be a useful tool for employers who wish to retain the skills and experience of an employee who would otherwise be made redundant even though at the expense of someone less valuable.