Last in, first out

Many agreed redundancy procedures use the criterion of last in, first out (LIFO). LIFO protects employees with longer service from being selected before those with shorter service. LIFO agreements have been questioned because of the potential to discriminate. It is now generally accepted that using LIFO as one of a number of criteria for selection is acceptable, but using it as the only, or the most important criterion is open to challenge. 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 decided that length of service is likely to be a fair indicator of both loyalty and experience, which would not necessarily be covered by other selection criteria. The Court also found that an employer’s use of LIFO to help negotiate a peaceable process of selection is likely to support a defence to any claim of age discrimination (although it cannot be the main or only justification — see Kenny v Ministry for Justice C-427/11). The Court agreed with Unite that even though LIFO is a length of service benefit which requires “justification” (see Chapter 6: Age discrimination), it could be justified here because it reasonably fulfilled a business need: to maintain a loyal and stable workforce.