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 challenged because of the potential to discriminate against younger, female and ethnic minority workers, who may have less continuous service.

The general view is that LIFO can be used as one of a range of selection criteria but that using LIFO on its own or as the most important criterion is open to challenge as unlawful 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 from the Rolls Royce redundancy 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 agreed with Unite that using LIFO, although potentially age discriminatory, could be justified in this case because it reasonably fulfilled the business need to maintain a loyal and stable workforce.

The court also found that using LIFO can help achieve a peaceable selection process, and that this factor can be relied on in some circumstances to help justify age discrimination. A more recent case has confirmed that although the need for industrial harmony can help justify age discrimination, it cannot be the main or only justification (Kenny v Ministry for Justice [2012] EUECJ C-427/11).