Must employers consider bumping in a redundancy situation?

In Mirab v Mentor Graphics (UK) Ltd the EAT confirmed that there is no general rule that an employer is only required to consider bumping if it is raised by the employee. However, significantly, the EAT also confirmed that there is no general rule that an employer should always consider bumping in order for a redundancy dismissal to be fair.

Bumping is where employee A’s role is made redundant, however, instead of employee A losing their job, they are redeployed to employee B’s role (which is not at risk of redundancy) with the result that employee B is made redundant instead. Employee B is said to have been ‘bumped’ out of their role.

The EAT in this case ruled that it would depend on the particular facts whether bumping should be considered as part of a fair redundancy process and that the Employment Tribunal would need to determine whether the way the employer acted fell within the range of reasonable responses.

Background and Employment Tribunal decision

Dr Mirab was Director of Sales for Embedded Systems within the Europe, Middle East and Asia region and commenced employment in February 2013. It was a senior position and he managed a team of six people. In February 2015, changes were made to the sales force which made a significant change to Dr Mirab’s responsibilities as well as impacting on his commission. Dr Mirab emailed his manager to inform him of his concerns and that he saw the changes as an effective demotion and that was not prepared to simply become an Account Manager.  The email also stated that he had received advice from an employment lawyer that he would have a very good case if he resigned. Subsequently, because of insufficient business opportunities and lack of growth, on 3 February 2016, Dr Mirab was informed that he was at risk of redundancy because there was no continuing requirement for a Director of Sales. Three consultation meetings took place that month and at the first meeting, Dr Mirab was given a link to an internal website with details of the vacancies worldwide including 10 vacancies in the UK. On 29 February 2016, Dr Mirab was informed that redundancy could not be avoided and this was confirmed in a letter the following day. He unsuccessfully appealed the dismissal decision and then brought an unfair dismissal claim.

The Employment Tribunal held that the dismissal was fair. It found that there was a genuine redundancy situation and that redundancy was the reason for dismissal. Further, the redundancy selection pool of one was not outside the range of reasonable responses. The company had done enough in terms of looking for alternatives and the onus was on Dr Mirab to suggest that he would consider taking a more junior role to avoid redundancy. The company had not acted unreasonably by failing to consider bumping any other employee working at Account Manager level. The Employment Tribunal also took into consideration that Dr Mirab had previously expressed disinterest in moving to a subordinate role. Regarding the internal appeal against his redundancy, Dr Mirab argued that this had been a superficial exercise but the Employment Tribunal disagreed. It held that the appeal was only relevant if the original process was unfair.  Dr Mirab appealed the decision.

EAT decision

The EAT allowed the appeal in part. It held that the Employment Tribunal was wrong in law to state that the internal appeal was only relevant if the original process was unfair and it had failed to recognise the part that the appeal process plays in the overall determination of fairness.

The Employment Tribunal had also erred in its approach to the consideration of alternatives and was wrong to hold that an employer is not required to consider bumping unless it is raised by the employee.

The EAT found that there may be cases where it might be reasonable to look for a vacancy that could be created by bumping. However, there is no rule that the employer must always consider bumping and whether it should be considered will depend on the particular facts of any redundancy. The employer should make a decision based on the circumstances in that particular redundancy and it is then for the Employment Tribunal to decide whether such decision falls within the range of reasonable responses.  The EAT noted that there will be situations where it would not be something that the employer would reasonably be expected to initiate (e.g. senior employee moving into a subordinate and less well paid role).

On the particular facts in this case the Employment Tribunal erred because it considered that bumping could only be relevant if raised by Dr Mirab and he had given no sign that he would take an Account Manager’s position. The Employment Tribunal might have found that even if Dr Mirab had given such a sign the company might reasonably have rejected it because of, for example, the significant pay difference. These issues were relevant to the question of fairness and the Employment Tribunal should have considered them.  The case was remitted back to the original Employment Tribunal.  Dr Mirab had also argued that the Employment Tribunal had failed to take into account the size and resources of the company and failed to consider all the case law cited by him but the EAT dismissed those aspects of the appeal.

Comment

This judgment confirms that there is no rigid rule that bumping has to be considered as part of a fair redundancy process and that it depends on the circumstances. However, in light of the decision, employers would be well advised to consider whether or not to bump another employee to make way for an employee whose position has been made redundant. Not considering bumping will not necessarily render the dismissal unfair but, depending on the circumstances, it could.

Consequently, as part of the redundancy consultation process employers should ask whether or not employees would be prepared to take a subordinate role with lower pay. The likelihood is that a lot of employees will say no to this, but, where an employee indicates that this is an option, bumping should be considered. That is not to say however that bumping another member of staff must then occur as it may not be appropriate in the circumstances. Whatever the discussions and decisions, it is important that these are documented. Interestingly, in Dr Mirab’s case, his reluctance to take an Account Manager role was not made in the context of the redundancy exercise but preceded it.

The decision highlights the importance of considering all options in a redundancy situation and employers will need to ensure that the approach they have taken falls within the range of reasonable responses.