Fischer Tube Technik SA v Bayene and Another ZALAC (21 May 2024)
In a recent Labour Appeal Court Judgement handed down in May 2024, the court investigated the application of bumping when applying selection criteria to dismissals for operational requirements.
The concept of bumping, also known as ‘transferred redundancy’, refers to the dismissal of an employee not initially selected for retrenchment to open the position to another employee, usually an employee with longer service, whose position has become redundant. Bumping is generally considered when LIFO (last in first out) is applied as a selection criterion.
Bumping can manifest in two different forms: horizontal bumping and vertical bumping. Horizontal bumping occurs when an employee in a redundant post displaces an employee with shorter service at the same or similar level. Vertical bumping occurs when an employee in a redundant post replaces an employee with shorter service engaged in a lower position in the organisation.
In Porter Motor Group v Karachi (2002) 23 ILJ 348 (LAC), the court observed that horizontal bumping assumes similar status, conditions of service, and pay, while vertical bumping assumes a diminution in status, conditions of service, and pay. It was also reiterated that horizontal bumping should always be considered first, and only if no suitable similar position is available to accommodate the employee should vertical bumping be considered. The terms and conditions attached to any form of bumping that is implemented is a separate matter, best dealt with in the consultation process. It is also well established that both parties are responsible for raising any possible alternatives to dismissal, including bumping.
In the matter at hand, two employees were facing possible retrenchment due to their positions in the company becoming redundant. In consultation with the employees’ union, it was agreed that LIFO and vertical bumping would be the applied selection criteria for dismissal. This was proposed by NUMSA as opposed to the department-specific approach initially considered by the employer. The employer identified two employees in the cutting and calibration department to be bumped, and their jobs were offered to the redundant employees at the rates applicable to the positions. The offer was declined, and the employees insisted on being retained on their existing salaries. The employees were subsequently dismissed for operational reasons, and they had forfeited severance pay by their unreasonable refusal of a reasonable alternative to dismissal.
The union contended that the employees’ dismissals were substantively unfair as the employer had unfairly applied the principles of bumping by not offering the lower grade positions to the employees at their existing salaries. The court made it clear that there was no duty on an employer to retain employees bumped vertically into lower positions at the same salaries enjoyed at higher positions. It was in fact the nature of vertical bumping that employees be placed in lower positions with the terms and conditions applicable to those positions. The reality of bumping is that the bumped employee steps into the shoes of the employee displaced from the position and cannot expect preferential treatment once so removed to such position.
The employer had showed valid reasons for not employing horizontal bumping under the circumstances, i.e., that no positions existed horizontally into which the employees could be accommodated. It also provided valid reasons for not retaining the employees at higher salaries in the lower positions, which included its wish not to create unfair wage disparities between employees working at the same level, as well as not being able to afford the higher salaries at that level. Once the union had agreed to vertical bumping, it could not include further conditions to the move not initially agreed to, nor could it dictate to the employer how such bumping should occur.
The employer had fully consulted with the parties in good faith, had a valid rationale for the dismissal of the employees, and had utilised fair and objective, and indeed agreed to, selection criteria in identifying the employees to be dismissed. The selection criteria had further been applied fairly and rationally. The dismissals were thus deemed both substantively and procedurally fair, and the union’s case was dismissed.
