Key Labour Cases in UK

Redundancy selection 

Rolls-Royce v Unite
(unreported, EWHC 2420 (QB) 17 October 2008, HC)

Rolls Royce alleged that the redundancy selection matrix they had agreed with the trade union Unite could not proceed as it amounted to age discrimination. The redundancy selection process used a points system based on five criteria: achievement of objectives, self-motivation, expertise and knowledge, versatility and application of knowledge, and wider personal contribution to the team. In addition, each employee could receive one extra point for each year of continuous service. Those with the least points were selected for redundancy.

Unite argued that:

  • even if the continuous service points were indirect age discrimination, they could still be objectively justified, and
  • the continuous service points fell within the exception available under the age discrimination regulations, allowing length of service criteria of more than five years which fulfil a business need.

The High Court agreed with the union that the continuous service points were objectively justified. Given the use of these points with the other criteria within the matrix, the length of service points were capable of being justified under Regulation 3 as they did achieve a legitimate aim. The scheme agreed with the union had the legitimate aim of peaceful redundancy selection, and the aim of respecting the loyalty and experience of the older employees and protecting older employees who find it harder to get jobs from becoming unemployed. In addition the age award fell squarely within the length of service exception.

Implications for employers

  • Employers should have in place a carefully planned redundancy procedure which can be used if the need to make redundancies arises.
  • One of the best methods to adopt for selecting employees remains the redundancy score sheet or selection matrix approach.
  • Selection criteria used in any redundancy procedure must be objective and verifiable against, for example, attendance and personnel records. Selection criteria must be applied fairly and not be discriminatory.
  • It remains safer for employers to avoid length of service criteria as part of a redundancy selection process.
  • However, if employers do use length of service criteria as part of a redundancy selection process, they may be able to defend their use of this criterion if they can show it fulfils a business need or achieves a legitimate aim of the business.
  • The old method of 'last in, first out' (LIFO) used as a sole method is likely to still be age discriminatory. However, as part of a matrix, length of service may be a valid and fair indicator of loyalty and experience.
  • Careful employers may therefore use a redundancy scheme which includes length of service in conjunction with other criteria, although they may still have to justify this approach.
  • Employers who wish to use age discrimination as a reason for changing an existing redundancy scheme may find this a less compelling reason following this decision.

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