Key points
Those seeking to rely on length of service as a redundancy selection criterion can take comfort from this decision.
An important element of this case is that the court was influenced by the fact that the selection matrix had been collectively agreed and there was no evidence that younger employees objected to it.
It is important to remember this decision is not authority for the use of last in first out (LIFO) as a sole selection criterion. LIFO on its own is unlikely to pass the objective justification threshold or even the lower Regulation 32 “business needs” test.
What you should do
Review your redundancy selection criteria and ensure that if length of service is used, it is applied in conjunction with other criteria.
The case
The Court of Appeal has decided that using length of service as part of a redundancy selection matrix is not unlawful age discrimination.
The collective agreements between Rolls-Royce and its trade unions, relating to redundancy for workers at Rolls-Royce’s Derby factories, were entered into before the Employment Equality (Age) Regulations 2006 came into force. The redundancy selection matrix allocated employees one point for each year of continuous service, but it also included scores against other behaviour-based criteria, including expertise and versatility. As such, length of service criterion was not the sole criteria.
The Court of Appeal decided that while the inclusion of length of service as one of the criteria within the matrix was indirect discrimination, it was objectively justified. It held that it was a proportionate means of achieving a legitimate aim and therefore lawful.
The court said that the legitimate aim was the reward of loyalty and the overall desirability of achieving a stable workforce in the context of a fair process of redundancy selection.
The proportionate means was demonstrated by the fact that length of service was only one of many selection criteria and was “by no means determinative or definitive of selection” for redundancy, and that there was no evidence that younger employees (who will generally have fewer years of service) were unhappy with the arrangement.
The court also said that awarding points for length of service when selecting for redundancy could amount to a “benefit” under Regulation 32 of the regulations. This provision makes the award of benefits based on length of service of more than five years lawful where the benefit “reasonably fulfils a business need” (a lower test than the objective justification test). The court’s view was that “benefit” should be interpreted widely, so as to include the dictionary meaning “advantage” and that the award of points for length of service in this context was covered.
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