Redundancy and bumping - a new perspective

09/12/2010

By Nick Hobden, Partner and Head of Employment.

In the recent case of Fulcrum Pharma (Europe) Ltd v Bonassera and another, the Employment Appeal Tribunal (EAT) tackled the issue of redundancy selection pools and bumping.

Facts

The HR team at Fulcrum Pharma (FP) was made up of just two individuals; Mrs Bonassera (the HR manager) and an HR executive who assisted her. FP made the decision that it no longer required an HR manager and carried out a consultation process which ended in Mrs Bonassera being made redundant. As part of that process, FP concluded that the selection pool should consist solely of the HR manager. Aggrieved at the way in which she had been treated, Mrs Bonassera claimed that she had been unfairly dismissal.

The Employment Tribunal (ET) held that FP had not given any real thought to the redundancy pool. The ET noted that the manager had previously carried out the executive's role and the executive had covered for the manager during periods of sick leave. The ET concluded that, in the light of the similarities between the two roles, this was a situation in which there was a general reduction in the requirement for HR people from two to one. As a result, the HR executive should have been pooled for selection for redundancy with the HR manager. By failing to do so, FP had unfairly dismissed the claimant.

The appeal

FP appealed to the EAT. The EAT agreed with the ET's decision, but disagreed with its reasoning. Firstly, the EAT stated that the employees' ability to cover each other's positions was not in itself sufficient reason to include both in the selection pool. The EAT then went on to disagree with the ET's conclusion that the HR function generally was diminishing from two employees to one. It stated that the diminishing need for work was the work of the HR manager, not the HR team as a whole.

However, the EAT noted the possibility that FP could have given the HR manager the HR executive's job, effectively 'bumping' the HR executive out instead. In deciding whether a more junior employee should be included in the redundancy selection pool, making it possible for that person to be 'bumped' out, the EAT said that the employer should have regard to the possibility that the potentially redundant employee (in this case the HR manager) could be moved into the more junior position. The EAT highlighted some accepted factors to take into account when considering this:

  • whether there is a vacancy
  • the difference between the two jobs, including remuneration
  • the length of service of both employees
  • the qualifications of the employee in danger of redundancy and
  • any other factors particularly relevant to the individual matter.

The EAT upheld the unfair dismissal ruling on the basis that FP had failed to consult the HR manager about the possibility of assuming a more junior role and therefore failed to consider the possibility that both HR employees could be placed in the selection pool.

Comment

This case illustrates the importance of adequate consideration with employees regarding matters relating to the redundancy selection pool. The EAT noted, with regard to the bumping issue, that the onus is on the employer to raise the possibility of a more senior employee being moved down to a lesser position. The employer in this case had considered the possibility, but had never mentioned it to the HR manager because she had not brought it up. This was not sufficient.

Ultimately, employers need to be able to show that they have sufficiently considered and consulted with affected employees about the redundancy selection pool. While employers have a relatively wide discretion in deciding on the selection pool, unless proper consideration has been given to the possibilities, subsequent dismissals may be unfair as a result.