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Age awareness when making redundancies

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Age awareness amongst employeesAge discrimination has been unlawful since 2006. Uncertainty has remained, however, with many employment tribunal claims stayed as a result of the Heyday challenge. Andrew Bayjou explains what employers can do to minimise the risk of age-related claims when making redundancies.


Recessionary times

Faced with the current economic climate, some employees are uncertain about their future and concerned about being made redundant.

Consequently, employees are likely to be more proactive and find out what their rights and entitlements are even before an employer makes any announcements or takes any steps to select them. Most employees will be able to access an array of information on this via the internet and some will have access to helplines. Employees therefore may have acquired information that will encourage them to scrutinise more closely the redundancy procedures followed by employers. Employees may realise therefore at an early stage that the selection process could provide scope for challenging their selection.

“Employers should ensure that the redundancy selection process is transparent and fair.”

Against this backdrop, employees of any age may be more inclined to threaten to lodge an employment tribunal claim if they believe there is some scope to argue the selection process is discriminatory on the grounds of age.

With this in mind it is important employers ensure that any redundancy selection criteria are fair and objective. Crucially the criteria must be unrelated to an employee’s age unless they can be objectively justified as a means of achieving a legitimate aim.

Selection criteria

Employers should ensure that the redundancy selection process is transparent and fair and that the selection matrix which sets out the criteria does not discriminate against employees on the grounds of age (or at all).

To avoid any suggestion that the criteria are discriminatory, employers should ensure the selection matrix can be applied universally irrespective of age. How can this be done? This can be achieved by focusing on using a number of criteria, for example,

  • an employee’s conduct

  • attendance and punctuality

  • client relationships, performance

  • qualifications and skills

Many employers used the ‘last in, first out’ approach in the past. However last in first out would usually place younger employees at a significant disadvantage. Care also has to be exercised when using other criteria like qualifications or skills as younger employers could argue that they have been disadvantaged by not having had the time to acquire those skills.

Unlike other forms of discrimination, direct age discrimination can be justified on the basis that it is done to achieve a legitimate aim. The employer therefore could argue that it is necessary to secure the future viability of the business to retain certain skills and qualifications.
Many employers want to be able to rely on length of service at least as one of the criteria. However can an employer justify using length of service as a criterion?

Length of service as appropriate selection criteria

This point was considered in the High Court case of Rolls Royce PLC .v. Unite EWHC 2420 (QB). Rolls Royce and Unite the Union had entered into a collective agreement in respect of redundancies. The agreement contained a criterion based on length of service – each employee would be awarded a point for each year of continuous employment. Rolls Royce thought this criterion was unlawful and sought a declaration from the High Court to determine this.

The High Court formed the view that the criterion was “part of a wider scheme of measured performance” and that on that basis it was not unlawful. The High Court pointed out that use of length of service in this way encourages loyalty and rewards experience.

“Employers should ensure any decisions are made on objective and fair grounds, unrelated to age or any other unlawful discrimination.”

Crucially however this decision reinforces the view that using the ‘last in, first out’ approach in isolation is discriminatory.

This is one of the first decisions considering the use of length of service in the selection process. Given the significance of this, Rolls Royce has been given permission to appeal the decision.

The Rolls Royce decision was based on its facts and employers who want to use length of service as part of their selection process should ensure they have considered the rationale of doing so. Importantly they should be able to show it can objectively justify its inclusion as part of the criteria.

Opening the floodgates

Extra care should be taken when determining the selection criteria to avoid discriminating on the grounds of age. A failure to do so would expose an employer to an uncapped award of damages if an employee succeeds with a claim in the Employment Tribunal.

Employers should ensure any decisions are made on objective and fair grounds, unrelated to age or any other unlawful discrimination. Carefully planning the process and selection criteria and taking advice in advance to ensure the criteria and process are not unlawful, is crucial to avoiding expensive severance settlements or costly employment tribunal claims.


Andrew Bayjou is an associate with employment lawyers Loch Associates.

One Response

  1. A qualified approach to redundancy criteria
    Thanks Andrew,

    This is a very helpful synopsis of age related issues in discrimination.

    I would however point out that using “qualifications” as a criteria can discriminate against older workers as they are less likely to have received formal qualifications as part of their training than younger staff who are more likely to have qualifications from NVQs through to degrees.

    For example, only 10% of school leavers went to university in the 60/70s compared to around 50% today. In the 60s/70s and 80s many professions, such as accountancy, trained “A” level school leavers but today most trainees would have a degree. Using “qualifications” like degrees as redundancy selection criteria would discriminate against the older members of staff. In the same way, few staff who started working in shops / hotels in the 60/70s received formal qualifications but today there are NVQs for virtually everything and, if they are used as redundancy selection criteria, older staff will be disadvantaged.

    Regards

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