Last in, first out

Many agreed redundancy procedures use last-in-first-out (LIFO), which protects employees with longer service from being selected before those with shorter service.

LIFO agreements have been challenged on the grounds of age discrimination on the basis that they work against younger workers with shorter service. However, the EHRC has confirmed in its Code of Practice that using LIFO as one of a group of selection criteria is acceptable, although using it as the only or most important criterion will be open to challenge.

In Rolls-Royce plc v Unite the Union [2008] EWHC 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. This is now reflected expressly in the EHRC’s Code.

The High Court also found that where an employer’s aim, in signing a collective agreement containing LIFO as a redundancy selection criteria, is to secure a peaceable process of selection, this is likely to provide a defence to claims of age discrimination. However, on its own, the need for good industrial relations cannot justify either indirect discrimination or direct age discrimination (Kenny v Ministry of Justice ECJ-C-427/11).

The High Court also agreed with Unite that the use of LIFO was an age-related benefit linked to length of service that was capable of justification (EA 10 Schedule 9:10 (Benefits related to length of service)).