What is the principle of bumping, and are employers required to implement it when applying the “Last In, First Out” (LIFO) principle?
This question was addressed in Fischer Tube Technik SA v Bayene and [2024] 9 BLLR 917 (LAC).
What Happened in the Case?
Two employees were retrenched because their positions became redundant. During the retrenchment consultation, the employer discussed the principle of vertical bumping and offered the employees lower-level positions. However, the employees declined these roles because they involved a salary reduction. As a result, they were retrenched.
What is Bumping?
Bumping refers to a process where an employee whose position becomes redundant takes over another employee’s role. This often impacts someone with shorter service who was not initially selected for retrenchment.
There are two types of bumping:
- Horizontal Bumping: The redundant employee replaces someone with less service at the same level, retaining similar conditions and salary.
- Vertical Bumping: The redundant employee replaces someone with less service at a lower level, often with reduced conditions and salary.
Employer’s Obligations
Employers are not obligated to implement bumping but must discuss the possibility during retrenchment consultations. If LIFO is applied as the selection criterion, the employer must engage with employees about both horizontal and vertical bumping.
If no agreement is reached, the employer must justify its decision to bump or not to bump. This decision should balance fairness between:
- The employer might face business disruption.
- The redundant employee, who risks losing their job if bumping isn’t applied.
- The displaced employee might lose their job if bumping is applied.
Key Takeaways
- Employees are entitled to refuse vertical bumping offers (lower positions with reduced salaries). Refusing such an offer does not make a dismissal unfair.
- Employers must show that their decision regarding bumping is fair and reasonable.
Practical Tips for Employers
- Consultation Is Key: Discuss bumping options (both horizontal and vertical) with employees during retrenchment consultations.
- Fairness and Justification: Be prepared to justify your decision to bump—or not to bump—based on fairness and business needs.
- Transparency: Clearly communicate the impact of bumping on all employees involved.
In summary, while bumping is not a legal requirement, fairness in its consideration is crucial. Employers should aim for mutual agreement but ensure they can defend their decisions if challenged.
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Author:
Justin Blignaut
Labour and Consumer Protection & POPI Legal Advisor
B.Com LLB Degree