Is 'upgrading' staff actually illegal?

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It's all the rage, but upgrading employees (AKA replacing a competent but mediocre kind of person with a high performer, probably let go from a top tier house) is not entirely legal.

For a redundancy to be a redundancy, the role must be made redundant, and not the person. If one person is replaced by another - better - person, the role still exists.

Employment lawyers say banks are well aware of this.

"If you're replacing someone it's not a genuine redundancy," says one lawyer, who works for banks and therefore wishes to remain anonymous. "Nor can you validly dismiss someone for poor performance if they were, in fact, a competent performer and you want to replace them with a strong performer," he adds.

To get around this, the lawyer says banks mostly make people redundant and then offer them a large severance package. The severance package is contingent upon the person losing their job signing a compromise agreement preventing the redundancy from being contested in a tribunal.

Employment lawyer Philip Landau says there's a simpler way around the issue: banks simply have wait three months before employing the upgraded staff. "Unfair dismissal claims must be brought within three months of dismissal. A prudent employer will simply wait," he says.

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