Redundancy Bumping Rules for Employers

Redundancy is a difficult process, requiring the employer to balance the needs of the business with handling the procedure lawfully and sensitively. Before embarking on a redundancy process, the employer is required to consider alternative options, which may include redundancy bumping.

Redundancy bumping is when an employee at risk of redundancy is offered an alternative role within the organisation, resulting in another employee being displaced and made redundant instead. It allows employers to retain key skills and experience while making necessary workforce adjustments. Although it can be a useful tool for businesses, redundancy bumping must be handled carefully to ensure fairness and compliance with employment law.

A key consideration for employers is whether bumping is a reasonable alternative to direct redundancy. Decisions must be made based on objective criteria, such as skills, experience, and business needs, to avoid potential claims of unfair dismissal from the displaced employee. Clear documentation of the decision-making process is essential to demonstrate that all options were carefully reviewed and that the process was conducted fairly.

Employers must also engage in meaningful consultation with affected employees and provide opportunities for alternative employment where possible. Failure to follow a fair procedure could lead to legal challenges and reputational damage.

The following practical guide for employers, HR personnel or anyone responsible for the redundancy process looks at the redundancy bumping rules, from what these are and whether bumping is legal. We also look briefly at the benefits and risks around redundancy bumping, providing some best practice tips on how to use redundancy bumping effectively.

 

What is redundancy bumping?

 

Redundancy bumping, or more technically referred to as a transferred redundancy, is where an employee whose job is not redundant is dismissed to make way for another employee whose role has become redundant. This often happens when a more senior role needs to go following, for example, a business restructure, leaving more junior roles untouched.

A transferred redundancy, or redundancy bumping, is therefore the process in which an employee whose role is actually at risk of redundancy is redeployed into an alternative role and the individual who previously undertook that role is dismissed as redundant instead.

 

Example of redundancy bumping

 

In general terms, redundancy bumping is where one employee who is potentially at risk of redundancy (A) is moved into another role currently being carried out by someone else (B), in this way resulting in employee B being made redundant instead of employee A. This could be where employee A is being considered for redundancy and employee B is in a lower or horizontal position, where it would be classed as redundancy bumping if employee A was offered employee B’s role, making employee B redundant in their place.

Redundancy bumping is essentially any scenario in which an employee who is to be made redundant is put into another role held by someone else. Understandably, this is unlikely to represent a smooth process, where employee B may object to the potential injustice of this scenario, challenging the decision made in favour of employee A. However, redundancy bumping can initially be offered as a voluntary process used to reduce compulsory redundancies through redeployment to another position with a volunteer wishing to exit.

 

Is redundancy bumping legal in the UK?

 

Even if redundancy bumping is a compulsory arrangement imposed on the person whose position is not redundant, rather than being offered as a voluntary option, there is nothing in law prohibiting an employer from reassigning jobs in this way. Equally, while transferring an employee whose own position is redundant into another position is not commonplace in the UK, making the holder of that second position redundant instead, this is not illegal.

In the USA, reassigning jobs in a redundancy context, typically based on seniority, is known as contractual bumping. This is where union representatives seek to incorporate contractual bumping rights into the terms and conditions of workers’ employment when negotiating with employers. In this way, a senior employee whose job role has become redundant would be contractually entitled to replace a more junior employee in a role for which both employees are qualified. However, even in the absence of contractual bumping rights, and despite the potential injustice to the employee made redundant, this is legally permissible in the UK, provided the correct procedure is followed in respect of the bumped employee.

The process of moving a potentially redundant employee into another role that is already filled was readily accepted in W. Gimber & Sons Ltd v Spurrett (1967) EWHC QB 2. In this case, it was held that where there is a reduction in the requirements for employees in one section of an employer’s business and an employee who becomes surplus is transferred to another section of that business “…an employee displaced by the transfer of the first employee and dismissed by reason of that displacement is dismissed by reason of redundancy.”

 

What is meant by ‘genuine’ redundancy bumping?

 

Under the Employment Rights Act 1996, redundancy is one of five potentially fair reasons for dismissal under UK law, where dismissal on the grounds of redundancy is not strictly limited to where there has been a cessation or diminution of the work carried out by the dismissed employee. Instead, a genuine redundancy situation can still arise where there has been a diminution in the need for the same number of employees. This means that redundancy can still be construed as a fair reason for dismissal, provided it is the redeployment of the notionally redundant employee into the role of another employee who is not otherwise at risk of redundancy that causes the bumped employee to lose their job.

In circumstances where one employee is offered the role of another employee as an alternative to redundancy, but the bumped employee is dismissed for an entirely separate reason, such as misconduct or poor performance, this will not constitute a true bumping scenario. The reality here is that the employee originally at risk of redundancy has simply filled a vacancy that has arisen independently of the redundancy situation. As such, the decision to make someone redundant in this context must be because of ‘genuine’ bumping.

It is only by linking a dismissal to a diminution in the need for employees that a redundancy situation will lawfully arise for the bumped employee. In these circumstances, this will still be a genuine redundancy dismissal, even if there is no actual or anticipated cessation or diminution in the work which the dismissed employee carried out.

 

Do employers have to consider redundancy bumping?

 

There is no strict legal requirement on employers to consider redundancy bumping when selecting for redundancy. However, an employer must follow a fair process, including consideration of suitable alternative employment, where appropriate, even if redundancy bumping will result in the dismissal of someone whose job role is not in fact redundant.

In the case of Mirab v Mentor Graphics (UK) Ltd [2018] UKEAT/0172/17, the Employment Appeal Tribunal (EAT) was asked to examine the question of whether or not employers are always required to consider redundancy bumping as a possible option. On the facts of this case, Dr Mirab was dismissed after his employer determined that his role of sales director was no longer needed. Dr Mirab’s claim for unfair dismissal was brought on the basis that his employer, Mentor Graphics, had not considered all available alternative options to redundancy, including redundancy bumping, even though he himself had not asked for this.

In determining whether the dismissal had been fair, at first instance, the tribunal had concluded that the employer had done enough in terms of looking for alternatives, and that it had not been required to consider bumping any other employee working at a subordinate account manager level, where there were no other sales director roles. This is because it was said that such an obligation only arose if the employee himself raised it, where Dr Mirab had given no sign that he would have been willing to work as an account manager.

In allowing Dr Mirab’s appeal, the EAT found that while no rule existed that an employer must always consider bumping in order to fairly dismiss on the grounds of redundancy, similarly, there is no requirement for the employee to ask for bumping before the employer is placed under an obligation to consider it. As such, the question is one of fact, depending upon the particular facts of the case and whether what the employer did fell within the range of reasonable responses in those circumstances. This means that an employer’s failure to consider the bumping of a more junior employee to make way for a more senior employee in a redundancy situation may make the dismissal of the senior employee unfair.

 

Employer considerations

 

The comments made by the EAT in the case of Mirab endorse the EAT’s earlier decision in Lionel Leventhal Ltd v North [2004] UKEAT/0265/04. In this case, it was held that in circumstances where there had been no suggestion by the employee, nor consideration by employer, of alternative employment in a subordinate capacity, the determination of whether a redundancy dismissal was fair or unfair would be a matter of fact.

In making it clear that employers cannot necessarily rely on a failure by the employee to raise the question of them accepting alternative subordinate employment as being a defence to an allegation of unfair dismissal, the EAT also cited the following redundancy bumping factors that may be relevant in the context of any unfair dismissal claim:

 

• whether or not there is a vacancy
• how different the two jobs are
• the difference in remuneration between them
• the relative length of service of the two employees
• the qualifications of the employee in danger of redundancy.

 

Importantly, however, even though the employer’s appeal against the finding of unfair dismissal was rejected in Lionel Leventhal, the matter was remitted back to the tribunal for a determination as to the level of compensation. This is because the tribunal had failed to consider what might have happened had the employer consulted properly or offered the employee a less well-paid position in exchange for his being retained. As such, depending on the facts involved, if an employee is likely to have rejected an alternative role, a finding may follow that consideration of redundancy bumping would have made no difference.

The net effect of this outcome is what is known in employment law terms as a Polkey reduction. In the House of Lords decision in Polkey v Dayton [1987] 3 All ER 974, it was made clear that the question of whether a fair procedure would have made a difference is not relevant to liability for unfair dismissal, but is highly relevant to the question of remedy. If the employee would have been dismissed in any event, such that the employer’s procedural errors would have made no difference to the outcome, any compensation must be reduced to the time it would have taken to dismiss following a fair procedure.

 

Benefits and risks of redundancy bumping

 

The benefits of redundancy bumping are not limited to minimising litigation risks, although caselaw makes it clear that employers should consider all alternative employment options, including displacing one employee for another, so as to avoid allegations of unfairness. This should be the case, even where the employee has not themselves raised this as a possibility.

Redundancy bumping can also represent a way to retain a key member of staff, where employers should not assume that a less senior position, even one at a reduced salary, would be of no interest to them. Some employees may be willing to accept a demotion and pay cut, depending on their personal circumstances at the time. Still, the flip side to redundancy bumping is the possibility of any challenge that may be raised by an employee made redundant because of this, where a fair process must be followed at all times.

 

Best practice advice

 

As a matter of best practice, employers should:

 

• explore the possibility of redeploying employees into roles already filled, regardless of whether this has first been raised by or on behalf of an employee at risk of redundancy
• consult with the employee at risk of redundancy to explore whether they would be willing to consider an alternative role, rather than simply considering this without asking them
• if possible, offer voluntary redundancy to those willing to exit the business in roles that can then be filled by employees whose roles are redundant and need to be redeployed
• consider widening the pool for selection for redundancy, both horizontally due to an overlap in duties, as well as vertically due to the possibility of bumping
• where subordinate employees are not included within the selection pool, consider all forms of alternative employment for employees at risk of redundancy, including any roles that are already filled by other members of staff, even more junior roles on lower pay.

 

It is also strongly advised that employers seek expert legal advice prior to embarking on any redundancy process so as to ensure that the selection pool and approach taken is fair.

 

Need assistance?

 

For expert guidance, contact our employment law specialists.

 

Redundancy bumping FAQs

 

What is redundancy bumping?

Redundancy bumping occurs when an employee who is at risk of redundancy is moved into another role within the organisation, which may result in another employee being displaced and made redundant instead.

 

Is redundancy bumping legal in the UK?

Redundancy bumping is legal in the UK, provided it is carried out fairly and in compliance with employment law. Employers must ensure they follow a fair selection process and consider whether bumping is a reasonable alternative to dismissal.

 

When should an employer consider redundancy bumping?

Employers should consider redundancy bumping if it could help retain skilled employees, avoid unnecessary job losses, or support business continuity. It may be particularly relevant where an employee at risk has transferable skills that could be used in another role.

 

Does an employer have to consider redundancy bumping?

Employers are not legally required to consider redundancy bumping, but they must demonstrate that they have explored all reasonable alternatives to redundancy, including whether bumping could be a viable option.

 

What are the risks of redundancy bumping?

The risks include potential claims of unfair dismissal from the displaced employee, challenges to the fairness of the process, and disruption to team dynamics. Employers must ensure the decision is objectively justifiable and well-documented.

 

How should an employer implement redundancy bumping fairly?

Employers should follow a clear and transparent process, considering the skills, experience, and suitability of both employees involved. Consulting with affected employees and providing opportunities for alternative employment where possible is crucial.

 

Can an employee refuse a bumped role?

Yes, an employee can refuse an alternative role offered through redundancy bumping. If the new role is deemed suitable and the employee refuses, they may forfeit their entitlement to redundancy pay.

 

What happens if an employer fails to consider redundancy bumping?

If redundancy bumping is not considered and it could have been a reasonable alternative, the employee at risk may bring a claim for unfair dismissal. Employers should document their decision-making process to demonstrate fairness.

 

Does redundancy bumping affect redundancy pay?

If an employee is successfully redeployed into another role through redundancy bumping, they would no longer be entitled to redundancy pay. However, if they are subsequently made redundant, their entitlement would be based on their continuous service.

 

What factors should be considered before implementing redundancy bumping?

Employers should assess the suitability of the role, the impact on both employees, and whether it aligns with business needs. They should also consider the legal risks and ensure that any decision is made in good faith.

 

Glossary

 

Term	Definition
Redundancy Bumping	The process where an employee at risk of redundancy is moved into another role, leading to the displacement and redundancy of another employee.
Redundancy	The dismissal of an employee due to a reduced need for their role within the business, often due to economic or organisational changes.
Unfair Dismissal	A legal claim that an employee may bring if they believe their dismissal was not conducted fairly or in accordance with legal requirements.
Consultation Process	A formal process in which employers discuss redundancy proposals with affected employees and consider alternatives to dismissal.
Suitable Alternative Employment	A different role offered to an employee facing redundancy that is deemed appropriate based on their skills, experience, and job level.
Statutory Redundancy Pay	The legally required financial compensation paid to eligible employees who are made redundant, based on their length of service, age, and weekly earnings.
Employment Tribunal	A legal body that hears disputes between employers and employees, including claims related to redundancy and unfair dismissal.
Fair Selection Process	The employer’s obligation to use objective and non-discriminatory criteria when selecting employees for redundancy.
Redeployment	The process of offering an employee a different position within the organisation to avoid redundancy.
Consultation Rights	The legal entitlement of employees to be informed and consulted about redundancy proposals and potential alternatives.
Continuous Employment	The length of time an employee has worked for an employer without significant breaks, which affects redundancy pay entitlements.
Bumping Candidate	The employee who is displaced and made redundant as a result of another employee being moved into their role.
Business Case	The justification provided by an employer to support redundancy decisions, including financial and operational reasons.
Alternative Employment Offer	A job offer made to an employee at risk of redundancy, which they have the right to consider before being dismissed.
Trial Period	A period of time during which an employee can try a new role offered as an alternative to redundancy, usually lasting four weeks.
Objective Selection Criteria	A fair and measurable method used to determine which employees should be selected for redundancy, such as skills, experience, and performance.
Appeal Process	The right of an employee to challenge their redundancy through the employer’s internal procedures.
Legal Compliance	The requirement for employers to follow employment laws and regulations when conducting redundancies to avoid legal disputes.
Consulting Trade Unions	The process of engaging with trade unions to discuss redundancy plans and explore options to minimise job losses.
Notice Period	The period of time an employer must provide to an employee before their redundancy takes effect, as outlined in their contract or by law.