[2009] EWCA Civ 387

In our Pensions update of October 2008, we reported on the original High Court decision in which the employer, Rolls Royce, argued unsuccessfully that using an employee’s length of service as a selection criterion for redundancy was unlawful age discrimination.

Many years before the implementation of the Employment Equality (Age) Regulations 2006, the Union had negotiated with Rolls Royce that as part of the redundancy selection process, employees would be scored under five criteria and would also receive one point for each year of continuous service. Once the Age Regulations came into effect, Rolls Royce claimed that using length of service as part of the selection process would discriminate against younger workers. The Union disagreed and the parties asked the High Court to adjudicate.

The Court agreed with the Union and held that as older workers would have more difficulty in finding new employment following redundancy than younger workers, seeking to protect them under the terms of their redundancy agreements was able to be objectively justified. Under the Age Regulations, a potentially discriminatory treatment may be justified if it is shown to be a “proportionate means of achieving a legitimate aim”. Rolls Royce was granted leave to appeal the decision.

The Court of Appeal dismissed the employer’s appeal having found that the inclusion of the length of service criterion in the redundancy selection process rewarded employee loyalty and helped to achieve a stable workforce.

Comment: Although this case does not relate directly to pension schemes, it does give an indication of what the courts are willing to take into account when considering whether an employer’s policy falls foul of the Age Regulations. However, it is significant that length of service was only one of a number of factors used to select employees for redundancy. It is less likely that it would have been considered a proportionate means of achieving a legitimate aim had it been the only criterion which applied.