Usefully Employed

It has been widely assumed, and advised, that Last In, First Out (LIFO) was no longer a permissible means of selecting employees to be made redundant, as it offends against age discrimination legislation. Prior to 2006 LIFO was the only formulaic and arbitrary selection method which was acceptable for unfair dismissal purposes, and many lamented its passing. LIFO will usually effect younger employees adversely - it is impossible for a 21 year old to have accrued ten years of service, compared with his 51 year old colleague.

Similar considerations attach to the commonly-seen factor in a selection matrix - length of service.

These issues have finally been touched on in a reported case - Rolls Royce Plc v UNITE the Union [2008] EWHC 2420, although only lightly. Indirect age discrimination is of course capable of being justified, if the employer can demonstrate it to be a ‘proportionate means of achieving a legitimate aim’. In this case Rolls Royce sought to depart from a collective agreement with UNITE that included length of service as a selection factor by arguing it was unlawful. The court found that:

The Collective Agreements represent a compromise between them. It is in both parties’ interests that a redundancy exercise, if such is needed, is carried out in a way which is perceived as fair and can be executed “peaceably”. In my Judgment, this is a legitimate business aim. It is an aspect of a “legitimate business policy” within the meaning of Article 6 of the Directive. The fact that the parties have achieved a peaceable transition following redundancy does not necessarily mean that Rolls Royce have achieved their defined business aim, although it seems to me that length of service is likely to be a fair indicator of both loyalty and experience which might not be fully taken account of in the measurement process … It seems to me that the parties have adopted a scheme which enables the employer to succeed in a defence to an age discrimination claim under Regulation 3: the legitimate aim is the advancement of an employment policy which achieves a peaceable process of selection agreed with the recognised Union. The criterion of length of service respects the loyalty and experience of the older workforce and protects the older employees from being put onto the labour market at a time when they are particularly likely to find alternative employment hard to find.

However:

Had the Court been concerned with a Scheme which was LIFO alone then that might be objectionable

So large negotiated compromises may well be able to cross the hurdle of justification. But what does this mean for the small employer? Is LIFO completely forbidden? Usually, but not always. To bring a claim of age discrimination, it is not enough to show that the means of selection were discriminatory, it must also be shown that the Claimant has suffered a detriment as a result. So if I have two 35 year old members of staff, one of whom has five years’ service and the other 18 months, using LIFO, or length of service as a factor in selection, may well still be acceptable. This might even go so far as to benefit larger pools for selection where the age difference is very small (a couple of years) and the various lengths of service of a similar duration.