Since the age regulations came into force in October 2006 it has been unlawful to treat employees differently because of their age unless such treatment can be objectively justified.
One area where this has important implications is where an employer uses ‘length of service’ as the sole criterion or one of several criteria in a redundancy selection exercise. The problem for employers has been that the use of ‘length of service’ as a criterion is potentially indirect age discrimination and therefore possibly unlawful under the regulations.
Indirect age discrimination occurs where a ‘provision, criterion or practice’ used by an employer, in this case the use of ‘length of service’ as a redundancy selection criterion, places an employee or group of employees of a certain age group at a particular disadvantage compared to other employees not of that age group. Where an employer uses ‘length of service’ as a criterion then younger workers may argue that this disadvantages them as, due to their age, they have not had the opportunity to accrue length of service equivalent to their older colleagues.
In Rolls Royce v Unite the Union [2009] the Court of Appeal dealt specifically with the question of whether length of service could lawfully be used as a redundancy selection criterion. In this case a collective agreement existed which provided that redundancies would be dealt with by using a matrix selection process which included various criteria including ‘length of service’. The employer wanted to avoid using this criteria as it felt that its then business needs would not be well served by selecting staff using ‘length of service’ as one of the criteria.
Prior to the employer’s appeal to the Court of Appeal the High Court had held in this case that:
- using ‘length of service’ as a criterion was objectively justified and therefore not unlawful under the regulations;
- length of service is likely to be a fair indicator of both loyalty and experience which were qualities that might not be fully taken into account were length of service not included as a criterion;
- the criterion of length of service respects the loyalty and experience of the older workforce and protects the older employees from being put into the labour market at a time when they are particularly likely to find alternative employment hard to get.
The Court of Appeal largely agreed finding that use of ‘length of service’ as one of several criteria in a redundancy selection was allowable. Significantly, the High Court (with the Court of Appeal agreeing) found that if ‘length of service’ was used by the employer as the only criterion in a redundancy exercise (i.e. applying ‘last in, first out’ (LIFO)) then this might be objectionable under the regulations.
What should you do?
The Unite case shows that employers can confidently continue to use ‘length of service’ as a selection criterion in a redundancy exercise provided that it is used as one of a range of criteria applied to the employees in the redundancy selection pool.
Use of LIFO as the sole redundancy selection criteria may still be permissible in particular cases but employers should seek expert employment law advice before adopting this. Furthermore, as this is just one aspect of the law relating to redundancy, employers should be cautious and seek expert advice when planning and implementing any redundancy dismissals.
For further advice contact David Seals on 01737 854573 or at david.seals@morrlaw.com.
