Age-based redundancy criterion not discriminatory
Rolls-Royce had entered into collective agreements with trade union Unite that set out the agreed approach to be taken in a redundancy situation. In a redundancy selection process, employees would be assessed against five criteria, namely: achievement of objectives, self-motivation, expertise/knowledge, versatility/application of knowledge, and wider personal contribution to the team. An individual could score between four and 24 points against each criteria. As part of the process, each employee would receive one point per year of continuous service. Those with the least points overall were selected for redundancy.
Unite wanted the application of the agreed redundancy selection process to continue and disagreed with Rolls-Royce’s view that the award of points for length of service (‘the age award’) amounted to age discrimination as it was to the benefit of older workers. Unite’s position was that if the age award did amount to indirect age discrimination, it could nonetheless be objectively justified.
Unite also maintained that the age award fell within the exception available under the age discrimination regulations, which allows use of a length of service criterion of more than five years where using that criterion fulfils a business need such as encouraging loyalty or motivation or rewarding experience (‘the length of service exception’).
Unite and Rolls-Royce asked the High Court to decide whether or not the age award is discriminatory.
The High Court held that the age award is not discriminatory. It decided that the redundancy scheme is one that would enable Rolls-Royce to succeed with an objective justification defence to any claim of indirect age discrimination it might face. The legitimate aim of the scheme is the advancement of an employment policy that achieves a peaceable process of redundancy selection agreed with the union. The age award respects the loyalty and experience of the older workforce and protects older employees from being put on the labour market at a time when they are particularly likely to find alternative employment hard to find.
The court also decided that the age award fell squarely within the length of service exception. In a redundancy selection exercise, awarding an employee points for long service does confer on them a ‘benefit’, namely the chance of remaining in employment while others lose their job. An agreed redundancy scheme, which included an age award as part of a wider scheme of measured performance, could be regarded as reasonably fulfilling a business need.
For employers who wish to preserve a redundancy scheme that includes length of service as a selection criteria in conjunction with other performance criteria, this decision provides a positive indication that reliance on such a scheme may not result in successful age discrimination claims. It is interesting, however, that in this case it was the employer which argued that the agreed scheme was discriminatory.
At a time when many organisations are having to consider activating their redundancy policies, employers want to have as much flexibility as possible over which staff are retained and which are released. A scheme that provides specific protection for older employees can detract from this flexibility. Employers considering increasing their options for flexibility by relying on age discrimination as a reason for altering a redundancy scheme may find this harder to achieve in light of this High Court decision.
Russell Bradley, partner, DLA Piper