The Court of Appeal has ruled that it is potentially lawful to use length of service as a criterion when selecting employees for redundancy. Length of service is indirect age discrimination. However, the Court concluded that in the circumstances, it could objectively be justified. Although such decisions always turn on their particular facts, it is instructive as to the viability for employers wishing to use length of service in future.  

Rolls-Royce Plc v Unite (the Union) [2009] EWCA Civ 387  

Rolls-Royce and Unite had entered into two collective agreements which pre-dated the Employment Equality (Age) Regulations 2006 (the “Age Regulations”). In November 2007 Rolls-Royce announced that it would be consulting on job reductions. As the proposed redundancies would affect 20 or more people, they were obliged to consult collectively with the recognised union, Unite, under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992. Rolls-Royce took the view that the length of service criterion in the two collective agreements fell foul of the Age Regulations and was unlawful. The union resisted. Rolls-Royce sought a determination as to whether the age criterion was unlawful. They argued that the criterion constituted indirect age discrimination and that this could not be objectively justified as they could not show that it was a “proportionate means of achieving a legitimate aim”. They argued that, at the time they entered into the collective agreements, length of service was important. However, the company’s business needs had changed and their need was to retain those employees best able to adapt to the changed environment, not those who had served longest. As with all Trades Unions, Unite were keen to retain length of service as it protected those members most vulnerable in the market place – the older, longer serving employees.  

The High Court ruled earlier this year that using length of service as one of a number of selection criteria for redundancy could be justified objectively. Rolls-Royce appealed the decision.  

The Court of Appeal, while emphasising that it was a decision entirely on its own facts, found that the length of service criterion was neither dominant nor necessarily determinative of the redundancy selection process, as it was one of a number of criteria in the redundancy scoring process which contributed to an overall score. This was crucial in the Court's view. They expressed an opinion that using length of service on its own would be very difficult to justify. It also said that rewarding long serving employees in any redundancy selection process, when viewed objectively, is an entirely reasonable and legitimate employment policy and amounted to a "benefit" under the Age Regulations. It was therefore a proportionate means of achieving a legitimate aim and the fact that Rolls-Royce doubted whether a business need was fulfilled was irrelevant. Although future courts and tribunals remain free to make their own findings on length of service in future, it is helpful guidance as to the general approach that is likely to be taken. Employers will have to be careful in its use – either there will have to be a collectively negotiated agreement covering its inclusion, or, in businesses where there is no such agreement, careful reflection and documenting of the decision-making process and rationale in order to justify the use of a criterion which does indirectly discriminate against younger workers.