As part of a selection procedure, criteria such as skills, knowledge, qualifications and experience can be taken into account when selecting for redundancy, provided they can be shown as necessary for the future needs of the business. Employers should be aware that some selection criteria may have the effect of being indirectly discriminatory, for example, on the grounds of age. In particular, when using the “last in, first out” criterion by selecting employees with the shortest length of service for redundancy, the employer may need to show that using this criterion can be objectively justified. In most cases, it is not advisable for an employer to use “last in, first out” as the only criterion for selection if there are other factors that can be taken into account. Otherwise this may entitle employees to make claims for indirect age discrimination (the sole use of length of service is unlikely to be proportionate where the criterion is indirectly discriminatory) and/or a claim of unfair dismissal. It is more commonly used by employers as a “tie breaker” for selecting for redundancy where all other factors are equal.
The Court of Appeal has confirmed that the use of length of service as a criterion for redundancy selection is lawful where it is fairly applied, although it may constitute indirect age discrimination that requires objective justification in order for the discrimination to be fair.
Whether “last in, first out” can be a fair and non-discriminatory criterion for redundancy selection was recently considered by an employment tribunal. In that case, the claimant worked for a building company as an administrative assistant. The claimant was told in her interview for the position that in the event of there being a redundancy situation there would be a “last in, first out” method of selection for redundancy. There were three other workers in the office and an office manager. Just over 2 years after she commenced employment, she was told there might have to be redundancies. She was told that this would be on a “last in, first out” basis i.e. it was the only criterion that would be applied in determining who would be made redundant. Applying this criterion, as the shortest serving employee, the claimant was told her position was redundant. The employee claimed that her dismissal was unfair and discriminatory on the grounds of age.
The tribunal noted that the “last in, first out” criterion for redundancy selection tends to result in indirect sex discrimination against women, because women tend to have shorter employments than men, in particular by reason of breaks for childcare. It can also result in age discrimination, because the young have less opportunity to acquire a longer length of service in their employment when compared to older employees. However, neither of these issues were relevant in this case, as the entire pool of administration staff at risk of redundancy were female and the claimant was the oldest rather than the youngest of the pool at risk of redundancy.
In dismissing the claim for age discrimination, the tribunal noted that whilst “last in, first out” is “not everyone's first choice these days” it cannot be said to be an irrational method to choose. It is an entirely objective criterion and avoids the employer having to judge people on a subjective basis. The tribunal also rejected the claim for unfair dismissal, finding that there was no dispute that there was a genuine redundancy situation and it was always made clear at the outset that the method of redundancy selection to be used was “last in, first out”, which was a rational criterion to apply in the circumstance.
In this case, the criterion of “last in, first out” was not found to be discriminatory on the grounds of the claimant’s age, such that the employer was not required to justify any indirect age discrimination. However, had the criterion been discriminatory in this case, the fact that it was the only criterion used would have made it difficult for the employer to justify the discrimination as a proportionate means of achieving a legitimate business aim, such as rewarding loyalty or to maintain a stable workforce.