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HR tip: Last in, first out redundancy selection


These questions are being answered by Learn HR, a market leader in the provision of HR and payroll training and nationally-recognised professional qualifications.

Q: "We practise "last in, first out" when carrying out redundancies. Should this be department by department or across the board?"

A: You may choose either method but must then apply it consistently. You must not mix and match. As the method is likely to select younger rather than older people it will almost certainly contravene the age discrimination legislation that comes into law on 1 October 2006. You would do far better to use a system that reflects the needs of the business. Identify the important factors to consider such as skill, flexibility and so on, and give each a relative weighting. Then arrange for each employee in the affected areas to be evaluated by at least two people.

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One Response

  1. LIFO – It’s not just an age discrimination issue.
    As well as having potential age discrimination implications using “LIFO” to select staff for redundancy can also lead to sex, race or disability discrimination claims if your organisation employs more longer serving men (or women) or fewer long serving staff who have a disability or come from minority ethnic backgrounds.

    When looking at alternative methods do bear in mind that they may be less cost effective as the staff may have longer service. Voluntary redundancy schemes tend to attract the staff who will receive higher redundancy payments and can lead to even lower morale as those whose applications are turned down can be demotivated.

    Whether the redundancies should be across the board rather than limited to specific departments is likely to depend on how transferable staff and skills are within the organisation. To include all staff in the redundancy pool when only a few skill groups need to be reduced could also add to your costs as retaining may be required for any staff who are moved to other departments. It might also be seen as discriminatory if certain groups are affected who would not otherwise have been. This will be an issue if some departments tend to have primarily younger / older employees, more staff of one sex or with a disability or have a different racial mix to the rest of the organisation.

    If you move to a performance based scheme you will need to ensure that any disabled staff are not adversely affected. “Reasonable Adjustments” may need to be made to the performasnce measures to take into account any impact that an employees disability may have on their performmance.

    Hope these thought help.

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