Let’s face it - the recession is here to stay for some time yet. Many companies are facing diminishing profits, and tighter controls on finances and overdrafts by the banks. As a result, employers have to consider ways to become more efficient and to cut costs if they are to survive which may include making redundancies.
When considering redundancy procedures and, in particular, the criteria against which employees are assessed and selected for redundancy, employers can be forgiven for thinking that employment law can often be a tangle of inconsistencies and unnecessary complications, especially in relation to the length of service of an employee. In trying to reward long service, will an employer find himself in breach of the Employment Equality (Age) Regulations 2006 (“the Regulations”) which prohibits discrimination on the grounds of age? The length of service criterion could constitute indirect discrimination because younger employees tend to have a shorter length of service. This has been an ongoing concern since the Regulations were introduced, and therefore length of service, as a redundancy criterion, has fallen out of favour in recent years. But is it about to be revived?
The Court of Appeal recently ruled that length of service can be used as one of a range of determining factors in a redundancy situation. The case was brought by Rolls Royce plc against Unite the Union. Unite wanted length of service to be included as a criterion to help protect the jobs of older workers, while Rolls-Royce wanted to abandon this factor, fearing that it indirectly discriminated against younger employees. Collective agreements relating to redundancy for workers at the company’s Derby factories were entered into before the Regulations came into force. The Court of Appeal stated that whilst they constituted indirect discrimination, it could be justified as it achieved a legitimate aim by proportionate means (known by most of us as common sense!). The legitimate aim was to maintain a stable work force during a redundancy exercise and to reward loyalty.
However, it is important to remember that, despite this decision, length of service should not be the only criterion used or, indeed, the determining criterion. In some situations, it could be acceptable to give more weight to the length of service criterion. For example, where an employer has three members of staff, all aged 33, one of whom has eighteen months’ service and the others have five years’ service. In this case, the employee is not selected on an age criterion but because of length of service but it will depend on the circumstances at the time.
In general, when determining selection criteria, employers must be aware that all criteria used should be objective rather than subjective, so age really does come before beauty! Recommended potentially fair selection criteria include attendance, disciplinary record and appraisal scoring (obviously, beauty is not one of them). Any weighting of criteria, and/or use of any subjective criteria should be used with caution.
For further information on carrying out a fair redundancy process, please contact Deborah Boylan at Raworths LLP Solicitors on 01423 566666 or at deborah.boylan@raworths.co.uk.
