Length of service criterion in
redundancy selection is lawful
The
Court of Appeal has confirmed, by a majority,
that using length of service in redundancy
selection criteria is lawful.
In
Rolls Royce plc v Unite the Union,
Rolls Royce had two collective agreements with
the union which set out its approach to
redundancy situations. Both agreements outlined
a redundancy selection matrix where points were
awarded based on a number of factors, including
achievement of objectives; self motivation and
expertise/knowledge. Each employee would also
receive one point per year of continuous
service. Rolls Royce and the union asked the
High Court to determine whether the length of
service criterion complied with the Employment
Equality (Age) Regulations 2006.
The
High Court, as reported in our earlier Employment
Update, held that although the
criterion was discriminatory on the grounds of
age, it was objectively justified. The High
Court confirmed that the collective agreements
represented a compromise negotiated between the
employer and the union and it was in both
parties' interests that a redundancy exercise
was carried out peaceably and in a way which was
perceived to be fair. This was considered to be
a legitimate business aim. The length of service
criterion was considered to be a fair indicator
of both loyalty and experience, protecting the
older employees from being put onto the labour
market at a time when they are particularly
likely to find it hard to find alternative
employment. Rolls Royce appealed.
The
Court of Appeal agreed with the High Court and
dismissed the appeal. It made a declaration that
the use of length of service as a criterion in a
redundancy selection process was indirectly
discriminatory but it was justified as it was a
proportionate means of achieving a legitimate
aim. The legitimate aim was the reward of
loyalty and the overall desirability of
achieving a stable workforce in the context of a
fair redundancy selection process. It considered
it proportionate to use length of service as it
was only one of a substantial number of criteria
used to measure employee suitability for
redundancy and was not determinative. The length
of service criterion was entirely consistent
with the overarching concept of fairness.
The
Court of Appeal also expressed the provisional
view that awarding points for length of service
was capable of constituting a "benefit" within
the meaning of regulation 32. This regulation
broadly provides that an employer may treat
workers differently by reference to length of
service in relation to the "award of any
benefit" and, where length of service exceeds
five years, requires that it must reasonably
appear to the employer that the way in which it
uses the criterion of length of service fulfils
a business need. The Court noted that length of
service could objectively be seen to reasonably
fulfil a business need of the company, of having
a loyal and stable workforce.
This
decision, together with its implications for
employers, will be examined in further detail in
our forthcoming edition of People, the
Employment and Pensions Newsletter. Click
here if you would like to subscribe to
People.
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Date scheduled for Heyday
It
has been reported that the Heyday case is due to
be heard in the High Court on 16 and 17 July
2009. The long awaited hearing should determine
whether the compulsory retirement of workers at
age 65 in the UK is justified.
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in December 2006, Age Concern, operating as
Heyday, challenged the provisions in the
Employment Equality (Age) Regulations 2006
allowing for the compulsory retirement of
employees at 65. The High Court referred a
series of questions to the European Court of
Justice (ECJ), which delivered its judgment
earlier this year, confirming that legislation
which provides for compulsory retirement at 65
is permitted under the Equal Treatment Framework
Directive if it can be justified by reference to
a legitimate aim.
The
High Court will now decide how the ECJ's ruling
applies to the Regulations. We will report on
its decision in a future Employment Update.
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NMW on the
up
The
national minimum wage is on the up from 1
October 2009.
The
adult rate is due to rise from £5.73 to £5.80 an
hour, the rate for 18 to 21 year olds should
rise from £4.77 to £4.83 an hour and the rate
for 16 and 17 year-olds is due to rise from
£3.53 to £3.57.
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Consultation on Agency Workers
Directive
The
Department for Business, Enterprise and
Regulatory Reform has published a consultation paper
on the implementation of the Agency Workers
Directive.
The
consultation, which closes on 31 July 2009,
seeks views on:
-
who
should be covered by the Directive
-
the
implementation of the 12-week qualifying period
previously agreed by the CBI and
TUC
-
the
definition of pay
-
how
equal treatment should be
established
-
who
should be liable for compliance with obligations
under the Directive
-
the
means of dispute resolution
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New
Equality Guide
New measures to
improve payment of employment tribunal awards
