Redundancy: ‘Last in, first out’ policies

Q My company is considering several lay-offs for economic reasons and we, in HR, have been asked to advise which criteria should be applied to select staff for redundancy. Some in HR believe we can use the ‘last in, first out’ approach. I’m concerned this may not be very watertight, legally.

A You are right to be concerned. Operating a ‘last in, first out’ redundancy policy used to be the easiest option for employers, as the alternative often involved using complex selection matrices, which used criteria that could discriminate against women and the disabled, such as attendance records. However, the enactment of the age discrimination legislation in 2006 has made the use of ‘last in, first out’ less straightforward.

If the age profile of your workforce means that most of those selected for redundancy on a ‘last in, first out’ basis are younger employees, you could lay yourselves open to the risk of claims for indirect age discrimination.

Although the legislation does allow you to implement a policy with an age bias to pursue a legitimate aim, you need to be able to objectively justify it and show that the means you are using to achieve that aim are proportionate. It would be down to a tribunal to decide whether selecting those who have been in the job the shortest time to cut costs by minimising redundancy payouts is sufficient justification or is proportionate.

Indeed, claimants could argue that it is more cost-effective in the long run to retain younger staff as they are generally lower paid , and potentially more productive pound for pound, than long-serving, older workers. On a more practical level, ‘last in, first out’ takes no account of skills that you might want to retain.

You should consult staff on alternative options to redundancy, such as modified hours or job sharing. Where suitable alternative options can be identified, you should then consider their feasibility from a business perspective.

Where feasible alternatives cannot be found, you will need to record your reasoning for rejecting the other options, and for selecting certain staff for redundancy, before making any job cuts.

If you have considered the issues thoroughly and have a paper trail to show your rationale, your organisation should be in a far stronger position to defend yourselves should an age discrimination claim arise.

Jon Taylor, head of employment, EMW Law

FAQs on selecting redundancy pools

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