The High Court has held that use of length of service in redundancy selection criteria can be lawful, both on the basis that it can be objectively justified and because using length of service to select who should keep their jobs amounts to a “benefit” for the purpose of the Regulation 32 exception relating to service-related benefits.

Facts

Rolls Royce had agreed selection criteria for a redundancy assessment matrix in collective agreements with the union Unite.  The matrix scored employees according to achievement of objectives, self motivation, expertise/knowledge, versatility/application of knowledge and wider contribution to the team, with between 4 and 24 points available under each heading.  The scoring system also awarded employees 1 point for each year of continuous service. 

The High Court was asked to determine whether the use of service as a selection criterion was lawful under the Age Regulations.

Decision

Both parties agreed that use of service indirectly discriminated against younger workers.  The Court concluded that the service-related criterion did not breach the Age Regulations on the following grounds

• Although the employer’s stated aim behind the assessment matrix was to retain the people best able to meet the business requirements, the union submitted that the agreed selection process was to produce a scheme which was fair and could be “peaceably” implemented.  The court found that this was a legitimate aim in a redundancy exercise, with the service criterion respecting the loyalty and experience of the older workforce and providing protection for those older employees when they are particularly likely to face difficulties in finding alternative employment; and

• The use of service amounted to a “benefit” under Regulation 32. The court thought that “benefit” should not be construed too narrowly and that giving points to employees for service conferred a benefit on them of remaining in employment. Therefore, the employer only need to justify the use of service beyond 5 years, which it could do if it appeared to the employer that use of service fulfilled a business need.  The court concluded that use of service within a wider scheme could be regarded as fulfilling a business need such as encouraging loyalty or rewarding experience.

Use of length of service in redundancy selection has become less widespread, particularly as a sole criterion.  While this case will no doubt encourage employers who use length of service as one of several factors, there are some unusual aspects to this case.

• The case was brought before the High Court (not the Employment Tribunal) under Part 8 of the Civil Procedure Rules, simply to determine a question of law.  No evidence was heard by the court.  The judge expressed misgivings at being asked to deal with questions which would normally be dealt with by a Tribunal.

• It was actually Rolls Royce, the employer, which brought the case, presumably as it was seeking to remove the use of service from its redundancy selection, and facing resistance from the union.

• Although the employer said that its aim was to retain the best people, the court effectively re-cast that aim, taking into account the union’s view of what the aim should be.  This arguably goes beyond what the Regulations provide, as it is for the employer to justify its practice by reference to its aims, and not the aims of a third party.

• This is also true of the partial justification in Regulation 32.  It must “reasonably appear” to the employer that use of service fulfills a business need.  It is difficult to see how this can be the case if the employer itself does not believe this to be the case.

• Finally, the categorisation of a service-related selection criterion as a “benefit” seems to stretch that word beyond its natural meaning and an Employment Tribunal, more used to dealing with employment matters, may not have reached the same view. 

The judgment is available here.

Rolls Royce plc v Unite the Union [2008] EWHC 2420 (QB)

This case has been appealed to the Court of Appeal. Further information on this appeal can be found here.