Employment Solicitors

In Rolls Royce plc v Unite the Union, Rolls Royce contended that the length of service criterion in collective agreements relating to redundancy, entered into with the trade union, amounted to unlawful indirect age discrimination against younger employees under the Employment Equality (Age) Regulations 2006. The outcome of this case will be important for all employers considering making redundancies.

There were no issues of fact to be determined and the case was heard in the High Court at the request of both parties. It concerned two collective agreements, regarding redeployment and redundancy, which provided for an ‘assessment matrix’ for use when selecting employees for redundancy. This was designed to enable the company and its employees to be able to restructure ‘flexibly and peaceably’. There were five measured criteria for which points were awarded, one of which was length of continuous service. Those with the fewest points would be selected for redundancy.

The High Court ruled that the length of service criterion adopted did discriminate against younger employees but it could be objectively justified as a proportionate means of achieving a legitimate business aim – i.e. that if a redundancy exercise were necessary, it would be carried out ‘peaceably’ and in a way that was perceived as fair. The scheme was therefore covered by Regulation 3(1) of the Employment Equality (Age) Regulations. The Court was of the view that ‘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’.

In addition, the Court ruled that giving points for long service as one part of a redundancy selection matrix conferred a benefit on the employee concerned as it might lead to the retention of employment which would otherwise be lost. As such, it was probable that this would be regarded as reasonably fulfilling a business need within Regulation 32(2), which simply requires the employer to justify the impact of an age related award made only to employees whose length of service exceeds five years.

This decision clarifies the position regarding the use of length of service when selecting employees for redundancy. Adopting a scheme where length of service is just one of a number of criteria used to arrive at a fair selection process is likely to enable the employer to defend an age discrimination claim. However, a scheme based solely on ‘last in, first out’ is unlikely to be justifiable.

However, the judge gave Rolls-Royce permission to appeal his ruling on the ground that it was ‘clearly an important point for both parties’.