The High Court has ruled in Rolls Royce v Unite that using length of service as a redundancy selection criterion can be lawful.
Rolls Royce had entered into collective agreements with the trade union Unite relating to redundancy. These agreements provided that redundancy selection will be based on a points rating system – and as one component of that each employee would receive one point per year of continuous service. There were two unusual features of the case. First, that Rolls Royce rather than the union was arguing this feature of the scheme was unlawful age discrimination. Second, that the case was in the High Court, rather than the Employment Tribunal.
Two parts of the Employment Equality (Age) Regulations 2006 were at issue:
First, Regulation 3 which prohibits discrimination on grounds of age unless the treatment of employees or the criteria imposed by the business is a "proportionate means of achieving a legitimate aim". The Court decided that a collective agreement on redundancy falls within the definition of a "legitimate business policy" within the meaning of Article 6 of the 2000 EU Directive on age discrimination, by advancing a "peaceable process of selection".
Second, Regulation 32 which states that the award of any benefit is not unlawful if a worker is at a disadvantage due to a shorter length of service. However, where the award of such benefit is based on length of service of more than 5 years, the employer must show that it fulfils a business need of the company to take advantage of the exception. The Court supported the union's assertion that the collectively agreed redundancy scheme reasonably fulfilled such a need.
It is evident that the Court viewed the parties entering a collective agreement as central to their finding the service related feature was lawful. The High Court has given Rolls Royce permission to appeal but until then both employers and unions can take some comfort that collectively negotiated redundancy schemes – which are more than "last in first out" alone – may be lawful.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 06/11/2008.
