Member Article

Age discrimination may be justified in redundancy selection criteria

With Watson Burton LLP Law Firm

For the increasing number of companies looking to make redundancies as a consequence of the downturn in the economy, the case of Rolls Royce Plc v Unite the Union [2008] EWHC 2420 will be of interest. This is the first time that the use of length of service as a redundancy selection criterion has been considered in the light of UK age discrimination legislation.

The Employment Equality (Age) Regulations 2006 (the Age Regulations) establish that indirect discrimination occurs where a provision, criterion or practice is applied which puts someone at a disadvantage because of their age. Indirect discrimination is unlawful under the Age Regulations, unless it can be justified as a proportionate means of achieving a legitimate aim. The Age Regulations contain a number of specific exemptions whereby certain actions, although having an impact in terms of age, are lawful. One such exemption is contained in regulation 32 of the Age Regulations, which provides that it shall not be unlawful to award a benefit to an employee based on continuous service of over 5 years, if using a service related criterion fulfils a business need.

Rolls Royce agreed, as part of a collective agreement with its recognised trade union, to apply an assessment matrix in any redundancy selection process. The five measured criteria were: achievement of objectives, self motivation, expertise/knowledge, versatility/application of knowledge and wider personal contribution to the team. As part of the process, each employee was also to receive one point per year of continuous service, and points were deducted for unauthorised absences. Those with the least number of points were to be selected for redundancy.

It was argued by Rolls Royce, in an attempt to avoid the effect of the collective agreement, that taking length of service into account when selecting employees for redundancy was unlawful indirect age discrimination which could not be justified. The Union asserted that it was lawful in accordance with the exception under regulation 32 of the Age Regulations, but that it was otherwise justified in any event.

The High Court found in favour of the Union. In his Judgment, Sir Thomas Morison indicated that a simple ‘last in first out’ scheme might have been objectionable, but in this case length of service had been just one of a number of factors considered. Although using length of service as a criterion discriminated against younger employees, the Judge found that its application was a proportionate means of achieving the legitimate aim of carrying out compulsory redundancies “peaceably”. He noted that the length of service criterion “respects the loyalty and experience of the older workforce and protects older employees from being put out onto the labour market at a time when they are particularly likely to find alternative employment hard to find”. Additionally, he determined that, in any event, this case fell within the ambit of the exemption contained within regulation 32 of the Age Regulations.

This Judgment has been hailed as a landmark ruling, and is claimed to set a precedent for protecting older workers from the effects of redundancy. Rolls Royce, however, has been given permission to appeal this ruling in recognition of the importance of this point.

If you have any comments or questions about this article or any employment matters, please contact Eleanor Wild of Watson Burton LLP at eleanor.wild@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .