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.
I have been looking for an article such as this as I have concerns over the RMT union policies where “seniority” is the preferred method for redundancy selection. The Rolls Royce case touches on this but is not quite the same as the situation here.
According to RMT, if redundancies are to be made, if a man has been here for 10 years and another man has been here for 10 years and one day, then it is the FAIREST option to let the man with one less day go. This is something I have to disagree with. The more “senior” man (ie. he with the longest service) for example could have an appalling attendance record, whereas the junior man could have an impeccable record; the senior man may not have completed or passed as many training courses as the junior man or have the same skills etc. etc. The RMT want to use seniority within band as the sole deciding factor in the redundancy selection process and not take any of these other issues into consideration. I do not believe this is fair and if Network Rail do make redundancies in the near future (which is looking highly likely) then I believe that the wrong people are going to be sent down the road.
LIFO or “seniority”, though they may reward loyalty, offer no incentive to work hard or try to better yourself as time served is all that matters.
So, what I need to know is, is the idea of using seniority as the only selection criteria at all workable or legal?
I am also concerned at some unions insistance on LIFO. There are many good younger workers working under me and also many old hands who appear to get paid merely for putting in an appearance. In any redundancy situation it is the old hands who take priority even though they may not necessarily be the better workers. In the last round of cuts we lost an excellent younger worker in favour of someone I can best describe as a lush who took early retirement less than a year later.
I have recently been put at risk of redundancy along with two other managers with different job titles and responsibilities. A new role has been developed that incorporates some of the responsibilities of the collective three roles but also has additional duties not previous covered.
My organisation operates a policy whereby ‘length of service’ is one of seven criteria and can contribute up to a total of twenty point in a 100 point selection process. My two colleague have over twenty years service each and will therefore score the maximum 20 point whilst I have only 4 years service and will therefore be handicapped in the selection process for this role to a sum of 16 points
I have queried the legitimacy of the use of this process in this context as the new role is essentially a recruitment process. and received the following response:
A: Length of Service is only one criteria of the selection process.. It is not being used as a sole method of selection. Moreover, it is legal and legitimate to have it. For avoidance of doubt, we have already checked the legal situation on this and it is one of the objective criteria that is commonly used in redundancy selection process. (I believe this is based on the Rolls Royce vs UNIT court ruling)
Am I right to argue the following:
Surely this criteria is only fit for purpose in situations where may same role redundancies arise (eg. 40 widget makers are reduced to 10 widget makers). It doesn’t really tackle the issue as we are not in a situation where we are seeking to reduce the number of managers in the same role but are looking to restructure the department and replace three redundant roles with one new one.
My point is that the redundancy selection has effectively been made. Three management roles have been made redundant as part of the restructure and a new post, with a new description and new responsibilities has been developed. In this sense the organisation is seeking to recruit to a new post from a restricted recruitment pool of candidates whose roles have already been identified as redundant in the new structure.
I would point out that of the criteria listed only Absenteeism and Length of Service are truly metric (objective), the other criteria offer opportunity for the decision makers to be subjective. Based on what HR have said I am entering a a recruitment competition knowing that I have a minimum handicap of 16 points before any criteria relating to my suitability for the role will be considered.
I would be interested in any views.