Bumped off

If you’re made redundant, then surely your job will disappear? That’s not always the case now ‘bumping’ has appeared on the redundancy scene

As 3,000 employees now face redundancy every working day, an increasing number of them will face the chop in the coming months, not because they have been made redundant, but because someone else has - and has been given their job.

Bumping, or transferred redundancy, usually happens when a more senior employee is prepared to take a step down the career ladder and accept a more junior job rather than be out on the street. And that means that the person already doing the junior job will probably without warning find themselves clearing out their desk and having a farewell drink in the pub around the corner.

Hot topic

“Redundancy bumping has become a number one hot topic in employment law as employers try out different ways of cutting costs and shedding non-essential staff,” says employment lawyer David Hillary. “While bumping represents a technically legitimate way to do this, it is also causing confusion and resentment because many victims simply don’t think it fair to be sacked just to keep someone else in a job.

“Of course, employers aren’t allowed to bump employers out of their jobs willy-nilly - there must be a genuine redundancy situation and the employee’s dismissal must be caused by that redundancy. But bumping is very much a grey area and is a major cause of redundancy disputes.”

Indeed, it seems that not even industrial courts are always certain about the legality of bumping, as in the recent case of a departmental head who was made redundant in a cost-cutting exercise without being offered a more junior job at a reduced salary - and argued that he had been unfairly dismissed. A tribunal found that the employer had acted unfairly by not offering alternative employment, even though the department boss hadn’t asked for it.

But a similar case ended with a very different decision. A tribunal found that failing to sack a junior employee in order to give his job to an experienced senior colleague was not unreasonable - there was no obligation to bump, or to even consider it.

Experts say that as a general rule successful bumping depends on these factors:

• whether there’s a vacancy for a junior role
• how different the two jobs are
• the salary difference between the two jobs
• the service of the two employees
• the qualifications of the employee threatened with redundancy.

So if you suspect you might be a future bump victim, you would be wise to find out your rights under redundancy law, before it actually happens, according to employment solicitor Brigit Foster. For instance, you should be notified that your job is at risk. You are entitled to a consultation to see if there is any alternative to redundancy.

If future alternative employment is mentioned as an option to redundancy you have the right to know about pay, job title, status and responsibility. And remember that before you are made redundant you can claim a reasonable amount of time off with pay to look for new work or retrain.

If you accept the offer of a new downgraded job with your employer you have the right to a four-week trial, during which time you can quit the job and be regarded as redundant. You also have the right to know just where the job will be. In a recent case, a manager in Southampton was offered a downgraded job in the Outer Hebrides.
A word of warning: if you refuse an offer of suitable alternative employment there is a danger of losing statutory redundancy pay if your refusal is judged to be unreasonable. You don’t qualify for full redundancy pay unless you have worked for the firm for two years. Then weekly pay is capped at £310 and length of service at 20 years.

Be careful about tax if you are being bumped. After redundancy the first £30,000 is usually free of tax, but care is needed if redundancy money is claimed and employment continues in another form - say you become a consultant for the firm. The taxman might want to check the authenticity of the termination.
You are protected from unfair dismissal if you have been made redundant because of pregnancy, care leave, certain health and safety reasons, or if you have blown the whistle on irregularities or breaches of the law. In these cases, you don’t need to have worked for the firm for more than a year before you can claim unfair dismissal.

If you think you have been bumped unfairly you must lodge a written grievance to which your employer has 28 days to reply. Check your home insurance - you could find that legal expenses for employment claims are covered.
If the business is being sold as a going concern, the Transfer of Undertakings Regulations 1981 protect your terms and conditions with the new employer. If you are being bumped as a result of the transfer you could probably claim unfair dismissal, unless the management can prove that getting rid of you was for organisational or technical reasons.

If lay-offs are genuine, an employer must consult the workforce before redundancy notices are issued. Workers should be told the reason for the redundancies, who will be involved, how the lay-off victims will be selected and how any redundancy payments over the legal minimum will be worked out.
What happens if you volunteer to be a bump victim? “It sounds a simple question, but there is certainly no simple answer,” says Geoffrey Boardman, a Birmingham University expert on employment law. “A voluntary redundancy payment is often larger than compensation paid for compulsory redundancy, but when the taxman has had his share the volunteer could even be worse off.”

This is because a payment made to workers resigning voluntarily is generally seen as a ‘golden handshake’ or terminal bonus, and as such can be subject to tax and National Insurance contribution rules.

Minefield

Experts agree that the current voluntary redundancy legislation can be a minefield for the unwary. For instance, what happens when workers take voluntary redundancy - and then change their minds and want to take a lower paid position under a bump scheme? When this happened recently to a small engineering company, bosses were told that it was important to understand that when workers volunteer to be made redundant they are actually volunteering to be dismissed by reason of redundancy, not by dint of resignation.

This means that their employment doesn’t end when they volunteer, but when they are actually dismissed. And most requests for voluntary redundancy give employers the right to refuse applications to ensure they keep key staff. But once workers have been issued with a formal notice of termination they usually have no option but to go - unless they can prove that not getting their jobs back is unreasonable. Then they might be able to sue for unfair dismissal.

“Bumping schemes can get like something out of Alice in Wonderland if you’re not careful,” Geoffrey Boardman says. “It’s sensible for both workers and employers to seek specialist advice if they feel they’re getting into uncharted waters.”