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Rolls Royce plc v Unite the Union (Court of Appeal decision)

14 May 2009

Subjects : Redundancy; Justification; Indirect Discrimination

This is the case about whether using length of service as a criterion for redundancy selection consititutes unlawful indirect age discrimination against younger workers. Rolls Royce sought a declaration from the High Court that continuing to apply a collective agreement which included service in the redundancy selection matrix would be unlawfully discriminatory. The High Court held that using length of service was not unlawful.

The Court of Appeal have now dismissed Rolls Royce's appeal. There are three separate, rather lengthy judgments - large parts of which are concerned with the initial question of whether there was jurisdiction to hear the case under Part 8 of the Civil Procedure Rules. However, on the substantive issues, the Court of Appeal has ruled (by a majority):

  • The inclusion of the length of service criterion satisfies the ordinary test for justifying indirect age discrimination. It is a proportionate means of meeting a legitimate aim - i.e. the reward of loyalty and experience and the desirability of achieving a stable workforce. Proportionate means were demonstrated by the fact that length of service was only one of a substantial number of other criteria and by no means determinative.
  • Alternatively, the length of service criterion constitutes a 'benefit' within regulation 32 of the Age Regulations. Viewed objectively, a length of service criterion of more than five years reasonably fulfils a business need of the employer - i.e. having a loyal and stable workforce.
The upshot of this decision is largely to legitimise the use of service-based redundancy selection criteria. In particular, regulation 32 allows a blanket exception for all service-related benefits where the service taken into account is five years or less and provides a relatively low test of justification in respect of service-related benefits for employees with longer service,
 
Despite this, it would almost certainly be unlawful to apply a "last, in first out" (LIFO) system - i.e. using length of service alone as the basis for selection. In this respect, the CA's judgment is consistent with the High Court's statement that using solely LIFO "might be objectionable". However, “where there is an agreed redundancy scheme ... which uses a length of service requirement as part of a wider scheme of measured performance, it is probable ... that such would be regarded as reasonably fulfilling a business need.”

Click here for a copy of the Court of Appeal's judgment and here for our report of this case in the High Court.