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29-07-2009

Length of service redundancy criterion did not discriminate on age grounds

In the past, when faced with making redundancies, employers often chose “LIFO” – “Last In First Out” to select redundancies. A recent Court of Appeal judgment – Rolls-Royce v Unite the Union [2009] – makes clear that relying only on “LIFO” would amount to age discrimination against younger employees.

Rolls-Royce’s redundancy procedure contained “length-of-service” as one of the selection criteria. The Court of Appeal held that this was indirectly discriminatory to younger employees. However, its inclusion was justified and not therefore unlawful – it was a proportionate means of achieving a legitimate aim.

• The legitimate aim was to reward loyalty and create a stable workforce
• It was proportionate because “length of service” was one of a number of criteria used within a fair redundancy selection procedure – relying only on “length of service” – a policy of “last in first out” – would not be proportionate

A redundancy procedure must be based on fair selection criteria that have been properly applied. This requires planning for the possibility of redundancies as early as possible; effective preparation can minimise the possibility of costly and time-consuming employment tribunal claims.

If there may be redundancies in your organisation, please contact us – we would be happy to discuss these matters with you.

Contacts:

Employment Department

Raj Dhokia: r.dhokia@fgdlaw.co.uk
Martin Fine: m.fine@fgdlaw.co.uk