Updated 16 July 2020
With recent figures suggesting the UK economy has contracted by as much as a quarter since lockdown began the economic consequences of coronavirus are beginning to take effect. Many employers have made use of the Coronavirus Job Retention Scheme and placed staff on furlough to avoid the need for redundancies. As the scheme begins to wind down, employers will be required to contribute towards the cost of furloughed employees from 1st August, meaning, inevitably, there is a prospect of further redundancies as a result of the economic consequences of coronavirus.
Follow a fair redundancy process
Before making staff redundant employers will need to ensure they follow a fair redundancy process and where applicable this should involve 'bumping'. 'Bumping' relates to the process whereby an employee whose role within an organisation is at risk of redundancy is redeployed into an alternative role, and the individual who previously undertook that role is dismissed as redundant instead.
This can often strike employees and companies as unfair, as it culminates in the dismissal of someone whose role was not actually deemed to be potentially redundant, but not only is it a legitimate option in redundancy situations, the case of Mirab v Mentor Graphics considered whether an employer requires to give consideration to the option of bumping in every situation?
The claimant, Mr Mirab, brought a claim for unfair dismissal on the ground that his employer, Mentor Graphics, had not considered all available alternatives to redundancy.
Mr Mirab took his claim to the Employment Tribunal (ET) and thereafter appealed to the Employment Appeal Tribunal (EAT). The EAT ruled that the failure of an employer to consider the 'bumping' of a more junior employee to make way for a more senior member of staff in a redundancy situation will not render the dismissal of the senior employee automatically unfair. The fairness of the dismissal will depend entirely upon the circumstances in each case. However, notwithstanding that 'bumping' is not automatically required, the EAT did suggest that it is best practice to consider this as an option.
Mr Mirab was employed by the Respondent as a Sales Director, a senior role within the company, and was directly responsible for a team of six members of staff. Following a restructure in the sales division, Mr Mirab's responsibilities were altered significantly and thereafter he managed a team of two. At this time Mr Mirab expressed his unhappiness at this situation, complaining that this reduction in responsibilities was effectively a demotion to a role as an Account Manager – a role he was unwilling to accept.
Thereafter it became evident that Mr Mirab's role was not required at all and he was advised that he was at risk of redundancy. The Respondent assured Mr Mirab that there would be a period of consultation and all possible alternatives to redundancy would be explored.
After a period of consultation it was decided that no suitable alternatives existed and the Claimant was made redundant. The Claimant raised an internal appeal alleging that the dismissal was unfair as he was being 'singled out' due to personal differences with the head of Division and suggesting that he should have been scored against other Account Managers from out with the UK. Both of these points were rejected and the Claimant brought a claim for unfair dismissal.
The ET held the situation was not one of unfair dismissal for the following reasons:
- The reason for dismissal was redundancy, which constituted a fair reason for dismissal.
- The Respondent had given due consideration to alternatives to dismissal despite failing to consider bumping because the Claimant had not raised the possibility that he may be interested in such a role.
- Although the internal appeal process was deemed by the ET to unfair, it made no difference to the fairness of the dismissal overall.
The Claimant appealed to the EAT on the basis that the ET had erred in relation to the internal appeal and the issue of bumping.
The EAT agreed with the Claimant and held that the ET had erred in its approach. It allowed the appeal and remitted the case back to the ET.
The EAT emphasised that in a genuine redundancy situation, the fairness of the redundancy will be judged by whether all parts of the dismissal process satisfied the range of reasonable responses test.
The decision confirms that there is no rigid rule which requires an employer to consider bumping in order to dismiss fairly in every redundancy case. Equally however, there is no requirement on an employee to raise the possibility of bumping before an employer has to consider it.
Mr Mirab had indicated to his employer following the restructure that he was not agreeable to a change to his responsibilities which would, in his view, essentially constitute a demotion. Given these comments the Respondents believed that Mr Mirab would not have been interested in such a role. However, the Claimant had previously suggested that one of the account managers should be made redundant instead of him. The EAT held that a reasonable employer should therefore have asked Mr Mirab if he would consider such a role in order to save his employment.
The implications for employers
The EAT's decision in this case clarified the law in this regard. While employers need not give consideration to the option of bumping in every situation where a redundancy is considered, it is best practice to include the option in the general consideration of alternatives to redundancy. The fact the employee concerned did not suggest the option of bumping does not in itself release the employer from their duty to consider all possible alternatives. Employers considering redundancies in light of coronavirus should consider if bumping is appropriate at the outset of any redundancy process to ensure any dismissals for redundancy are procedurally fair.
On the internal appeal point, the EAT noted that while the usual function of an internal appeal process is to remedy any earlier defects in the dismissal process, a superficial appeal process can of itself make a dismissal unfair. They emphasised that this would not always be the case, employers should take note and should therefore always attempt to conduct a fair and impartial appeal process.
Get in touch
For more information about managing a redundancy procedure related to coronavirus and how to best consider fairness in your process, please contact one of the employment team.