Last in, first out

Many agreed redundancy procedures use the criterion of last in, first out (LIFO), which favours employees with longer service. LIFO agreements have been questioned because of the potential to discriminate but it is now generally accepted that LIFO can be used as long as it is one of a number of criteria for selection. Using LIFO on its own, or as the most important criterion is open to challenge as unlawful age discrimination. This view is supported by guidance from the Equality and Human Rights Commission.

In Rolls Royce PLC v Unite [2008] EWCH 2420, general union Unite challenged the employer’s decision to remove LIFO as one of the selection criteria. The High Court ruled that length of service is likely to be a fair indicator of loyalty and experience that would not necessarily be reflected by other selection criteria. The court also found that the role of LIFO in helping achieve a peaceable process of selection is likely to support a defence to any claim of age discrimination.

The court agreed with Unite that using LIFO, although age discriminatory, could be justified in this case because it reasonably fulfilled the business need to maintain a loyal and stable workforce. A need for industrial harmony cannot be a main or only justification for age discrimination (Kenny v Ministry for Justice [2012] EUECJ C-427/11).