Bumping

A restructure removes a role. The person holding it has long service. Rather than retrenching them, the employer moves them into a role held by someone with shorter service and retrenches that second person instead.

That is bumping. The distinguishing feature is that the person who ends up leaving held a role that was never surplus. Their position was eliminated by the movement of someone else into it.

It is contentious for exactly that reason, and it is not arbitrary: it is usually an attempt to comply with a rule about who should go first when a category of workers is reduced.

Section 71 of the Industrial Relations Code, 2020 provides that where a worker who is a citizen of India is to be retrenched and belongs to a particular category of workers in the establishment, then in the absence of any agreement between the employer and the worker the employer shall ordinarily retrench the worker who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other worker.

Three things follow, and each is frequently misstated.

• The rule operates within a CATEGORY of workers, not across the whole establishment. Defining the category is therefore most of the analysis.
• It applies in the absence of an agreement, so an agreement between employer and worker can displace it.
• It is the ORDINARY position rather than an absolute one. The employer may retrench someone else, provided the reasons are recorded.

The third point is the one most often lost. Last in, first out is a default with a documented exception route, not a prohibition. What it does require is that a departure be reasoned and that the reasoning exist in writing at the time rather than being constructed later.

Because the order operates within a category, the practical dispute in almost every case is what the category is.

An employer that draws the category narrowly will find fewer people in scope and less bumping. One that draws it broadly will face more displacement of people whose own roles were secure.

Neither is automatically correct, and the choice has to be defensible on the facts of how the work is actually organised rather than selected for the outcome it produces. A category defined after the selection, to justify it, is visible in the sequence of documents.

The employee bumped out is being retrenched, and every obligation attaching to retrenchment applies to them.

Under section 70, a worker in continuous service of not less than one year may not be retrenched until one month's notice in writing indicating the reasons has expired or been paid in lieu, compensation of fifteen days' average pay has been paid for every completed year of continuous service or part in excess of six months, and notice has been served on the appropriate Government.

Where Chapter X applies under section 77, to establishments of not less than three hundred workers, section 79 requires three months notice instead.

Section 72 then gives them a re-employment claim: where the employer proposes to employ any person within one year of the retrenchment, retrenched workers who are citizens of India must be given an opportunity to offer themselves, and those who do have preference over other persons.

That last provision has real force in a bumping situation, because the roles being filled in the following year may closely resemble the one the displaced person held.

Bumping is lawful in principle and difficult in practice, and it is worth being clear about what it costs.

• It removes someone whose own position was secure, which is understood by everyone else in the team as arbitrary regardless of the legal reasoning.
• It moves a long-serving employee into a role they may not want and may not be suited to, which frequently produces a resignation shortly afterwards and no saving at all.
• It multiplies the process: two employees affected instead of one, with consultation, notice and documentation for both.
• It concentrates the outcome on shorter-serving employees, who in a growing organisation are disproportionately recent hires, and any uneven pattern in that group is worth checking before proceeding.

Where the longer-serving employee could do the surviving role and wants it, bumping can be the fairer outcome and the one the statutory order points towards. Where they could not, or would not, the exercise achieves nothing except a second exit.

The decision belongs at the point the category is defined, with the reasoning recorded, rather than being reached by working backwards from who the organisation would prefer to keep.