Following the introduction of age discrimination legislation it was generally considered that length of service should not be used as a redundancy selection criteria. In the October 2008 case of Unite-v- Rolls-Royce the High Court has approved the use of length of service as one of 6 overall redundancy criteria.
Rolls-Royce had agreed redundancy procedures with the union Unite. If redundancy selections had to be made 5 criteria would be used, with a minimum score of 4 and a maximum of 24 for each one :
- achievement of objectives
- self-motivation
- expertise/knowledge,
- versatility/application of knowledge, and
- wider personal contribution to the team.
Additionally each employee would receive one point per year of continuous service If an individual had unauthorised absences, then, on a sliding scale, those absences produced negative points which were deducted from the employee's total.
Rolls-Royce felt obliged not to apply the agreed procedure with points per year as they considered it would be age discrimination. The Union did not concede that and argued (1) that come what may even if it was indirect age discrimination, the defence of objective justification should apply (2) the age discrimination regulations permit use of a length of service criteria of more than 5 years where that
" fulfils a business need of the undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers)" Reg 32(2)
Unite and Rolls-Royce jointly used a procedure available in point-of-law cases to ask the High Court to decide whether or not the age award is discriminatory. The Judge (His Honour Sir Thomas Morison) indicated that he would have preferred this case to be dealt with in an Employment Tribunal. He held that including length of service – which is likely to benefit older workers - is not discriminatory . The objective justification defence could be applied :
"the legitimate aim of the scheme was "advancement of an employment policy which achieves a peaceable process of selection agreed with the recognised Union. The criterion of length of service respects the loyalty and experience of the older workforce and protects the older employees from being put onto the labour market at a time when they are particularly likely to find alternative employment hard to find".
He also found the 5 year length of service exception applied. The Judge's analysis was
"It seems to me significant that Parliament contemplated that a length of service criterion might reasonably appear to an employer to encourage loyalty or reward experience. Where there is an agreed redundancy scheme, negotiated with a recognised Trade Union, which uses a length of service requirement as part of a wider scheme of measured performance, it is probable in my judgment that such would be regarded as reasonably fulfilling a business need."
Unite-v- Rolls-Royce
Reg 32 Employment Equality Age Regulations 2006
Practical Point
Employers with discrimination policies containing length of service as a criteria can now at least consider retaining that as a criteria. This is more likely to be a feature of policies written before the 2006 Regulations came into effect.
Arguably a length of service policy is impersonal and not tailored to the individual. It therefore does not give the employer the same degree of real choice as the other 5 criteria used in this case : and it is worth going back and considering those criteria, which are interesting in their own right : modern, and very much focused on optimising the workforce.
The points per year criteria was only one of a number being applied. This was a scheme that had been agreed with the Union and that seemed to be an important part of the judgment.
Comment
Interestingly the Judge did not seem to be concerned by the fact that length of service could become more important than any other factor as the judgement does not refer to the length of service points being capped at 24 and in theory they could run up to 49 ( assuming an employee started at 16 and retired at 65).
Watch this space, as they say, as inevitably some one will now argue that as the impact of redundancy is harsher on older people than younger people, omitting such a policy is indirect age discrimination !!
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