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Is ‘upgrading’ staff actually illegal?

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.

Comments (15)

  1. This is utterly ridiculous.

    It should be a company’s fundamental right to be able to easily replace employees with higher quality people should they become available.

    Otherwise you can be lumbered with someone who, whether good or not, you’d rather have someone else instead.

    Large severance packages annoy me. What a waste of profit.

  2. Henry you of all should get self interest.

    Its in the interest of the employee to squeeze the maximum out of the company & at the same time the company would do the same.

    In the end the person who is tactful can add unfair dismissal claim to his list of grievances & hopefully get a healthy settlement and retire to an island(pick your fav) before 30. Better than working until 30.

  3. Henry, you are a tool. It’s a good thing that workers have a modicum of protection from the law to prevent employers turning us into commodities. With no legal protection for workers a company could just as easily shed a competent person to replace them with someone of equal competence, but at a lower cost. During a recession, there will always be someone out of work prepared to do your job for less. Removing workers rights merely hands more power to employers. Workers rights exist to protect the interests of everyone in our society, not just the privileged and overpaid minority that work in the City. These laws exist to protect employees in every sector and, believe it or not, the vast majority of the population doesn’t work in financial services. Most people work in various trades, professions and services, often menial, and they really need this sort of protection. You may not need it, but I guess you’re the kind of selfish git that only thinks about number one.

    Walt Dangerfield Reply
  4. If you really want to reduce the number of employment-related complaints, think long-term. Whenever possible, use agency staff instead of recruiting permanent staff. Outsource everything that moves. And create a work environment that facilitates as many new employees as possible resigning within two years of joining (a key milestone for redundancy rights).

  5. “a company could just as easily shed a competent person to replace them with someone of equal competence, but at a lower cost.”

    Sounds good to me!!

    Why on earth should a company have to pay more for someone if there’s someone else available who can work for less??

    All these stupid rules have resulted in this idiotic, lazy nation pulling their sickies, banging on about their rights, suing for unfair dismissal when they deserved to get fired, demanding more holidays, undeserved pay hikes etc.

    An employer should have the rights, not the employee. If I own a company, I should have the right to do whatever I want. If I want to get rid of anyone, for any reason, I should have that fundamental right as its my company. Why should I have to have someone there in my company if I don’t want them?

    It is these stupid rules favouring employees that have helped destroy this country.

  6. Why does anybody even bother to react to Henry anymore? He is such a cliche! I firmly believe if you ignore him, he will go away. He is just being attention seeking and will get upset if no one thinks he is worth the effort.

    Bored Bored Bored Reply
  7. Bored Bored Bored

    Sums up what I think of Henry and his idiotic comments.

    His company can probably boot him out acatullay and get a chimp in to press a few buttons. That will be cheaper. I wonder if he will moan then

  8. Henry, in your hypothetical company, presumably you wouldnt of hired them in the first place.

    If you did then your an idiot making bad decisions, whether they be not the best person available or not the cheapest person.

  9. How does Henry have a job yet spend so much time spanking his monkey on this website? I know, I know Henry, you are going to say it is because you can multi-task, do you trading job efficiently, be an alpha male and all of that. I suspect it is because you are a douche.

  10. Henry, when you eat at meal times, do you stick a fork in your eye, as an attention seeking strategy ?

    My two year old does this and then screams “fork off, fork off”.

  11. What is the matter with you people? Henry is absolutely spot on. All these abusive comments typify what is wrong with this country. I suspect he makes these comments not to seek attention but because he’s infuriated by unproductive whiny wastrels that get in the way of those of us that know what we’re doing and add value.

    While I’m at it, Sarah puts up reasonable articles and comments and you miserable lot flame her as well. Be positive, get off your lazy backsides and make something of yourselves. And read some Ayn Rand too.

  12. Henry –

    I’m guessing it’s all academic in your line of work as I doubt McDonalds give out severances to their crew members, am I right?


    Fred Sir!

  13. I am in general amused with all this articles and with the silly boy, but Sarah I want to learn something as well when reading EFC. I understand you have to keep mainstream articles in etc but we would love to read some usefull info as well, eg a research on how many front office people got a job offer the last 6 months, how many left for their countries, how many changed to another sector etc. The market is quite simply so different that anything has anyone seen and we would like to learn from this. Stating the obvious and giving the microphone to a 25 year old with a condition is getting boring, I want to use your site to get information. Another example would be to name and shame headhunters (even without using names we can still identify them) or comment on hedge fund turnover etc etc.

  14. Agree with max1. EFC is getting like a tabloid

  15. Henry – Lord Douche of eFC……

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