Last In, First Out (LIFO) definition

A policy used in collective redundancies whereby the most junior employees, by time of service, are selected for redundancy over those that have been at the company for longer.

Since the Equality Act 2010 came into force, employers have to be wary as LILO policies could open them up to age discrimination claims because it tends to put young people at a disadvantage, as they are likely – as a group – to have been at the company for the shortest time. Employers must prove that LILO is an objective, proportionate method – this often comes down to using it as part of the redundancy selection criteria rather than the sole criteria.

Alternative methods of redundancy selection include self-selection, where employees may volunteer themselves, sometimes in exchange for certain benefits, or on past performance and appraisals.


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