David Brent is the manager of the Slough branch of the Wernham Hogg paper company and he and some of his staff are having a bit of a rough morning after over-imbibing the night before. When his boss Jennifer Taylor-Clark drops in she tells him that the company can no longer afford both a Swindon and a Slough branch and that one is to be merged into the other. She also tells him there are going to be redundancies. Word spreads through the office quickly but David assures everyone that their jobs are safe.

David hires Donna, his lodger and the daughter of his best friend. While showing her round the office he discovers a doctored pornographic image of himself. Gareth, due to his covert operations skills, is told to catch the culprit.

It's the day to announce the redundancies. Tim tells David he's leaving and is happy to do so. Dawn is actually hoping that she'll be one of the redundancies. When Jennifer Taylor-Clark arrives, she announces to David that she's been promoted and he is in line to replace her. It would mean however that the Slough branch would be reduced in size and bear the brunt of the redundancies. He accepts without hesitation. Gareth takes the news particularly hard. David becomes the hero when he subsequently announces that he's decided to turn down the job to save the branch.

It's the day of the big merger. The Swindon branch has closed and several of the staff, including the new manager of the combined Slough Branch, Neil Godwin, arrive. Tim is comfortable in his new role as the senior sales rep while Dave and Gareth continue with their own wacky humor. Dave in particular puts his foot in it with his welcome speech of jokes and anecdotes that go over like a lead balloon. In the party afterward his racist joke leads to a complaint from one of the new intake as does his feeble attempt at humor about drugs, leading Jennifer Taylor-Clark to reprimand him.

It's the annual comic relief day fund raiser at the office and the employees are up to their usual silliness. Tim raises money from his mates by playing a prank on Gareth. Dawn is selling kisses at reception and the bashful Tim buys one. It leads him to reconsider his relationship with Rachel but he's devastated when he hears of her near-term plans with Lee. Others in the office have their own take on humor but David is again pushed to extremes when the ever popular Neil does a spot on John Travolta imitation from Saturday Night Fever. Humor aside, David has also missed submitting a report and Neil offers him a redundancy package.

It's David's last day and he is outwardly very calm about it all. The company has sent a writer to interview him for an article on leadership and his idea is to dictate the contents rather than answer any of her questions. He thinks he has a bright future as a trainer but gets bad news on that front as well. He tries to reverse Neil's decision but to no avail. Tim decides it's time to have a chat with Dawn. Gareth is convinced that he's in line to replace David.

Tim's world is rocked when Dawn turns up at the office to say hello. Despite a stern warning from Gareth and wise words from Keith in Accounts, Tim can't help but get his hopes up again. Meanwhile, David Brent has been using the services of a dating agency and, in between making celebrity appearances in nightclubs, he meets up for drinks with a rather disappointing selection of single women. The office Christmas party kicks off like any other but there are a few surprises in store...

David Brent is the manager of the Slough branch of the Wernham Hogg paper company and he and some of his staff are having a bit of a rough morning after over-imbibing the night before. When his boss Jennifer Taylor-Clark drops in she tells him that the company can no longer afford both a Swindon and a Slough branch and that one is to be merged into the other. She also tells him there are going to be redundancies. Word spreads through the office quickly but David assures everyone that their jobs are safe.

David hires Donna, his lodger and the daughter of his best friend. While showing her round the office he discovers a doctored pornographic image of himself. Gareth, due to his covert operations skills, is told to catch the culprit.

It's the day to announce the redundancies. Tim tells David he's leaving and is happy to do so. Dawn is actually hoping that she'll be one of the redundancies. When Jennifer Taylor-Clark arrives, she announces to David that she's been promoted and he is in line to replace her. It would mean however that the Slough branch would be reduced in size and bear the brunt of the redundancies. He accepts without hesitation. Gareth takes the news particularly hard. David becomes the hero when he subsequently announces that he's decided to turn down the job to save the branch.

It's the day of the big merger. The Swindon branch has closed and several of the staff, including the new manager of the combined Slough Branch, Neil Godwin, arrive. Tim is comfortable in his new role as the senior sales rep while Dave and Gareth continue with their own wacky humor. Dave in particular puts his foot in it with his welcome speech of jokes and anecdotes that go over like a lead balloon. In the party afterward his racist joke leads to a complaint from one of the new intake as does his feeble attempt at humor about drugs, leading Jennifer Taylor-Clark to reprimand him.

It's David's last day and he is outwardly very calm about it all. The company has sent a writer to interview him for an article on leadership and his idea is to dictate the contents rather than answer any of her questions. He thinks he has a bright future as a trainer but gets bad news on that front as well. He tries to reverse Neil's decision but to no avail. Tim decides it's time to have a chat with Dawn. Gareth is convinced that he's in line to replace David.