Court rules Rolls-Royce redundancy system discriminatory but legitimate

Union Unite took Rolls-Royce to court because the manufacturing firm’s redundancy policy of awarding staff one point for each year of service could help them avoid redundancy. Unite argued this length of service award did not comply with age regulations.

The High Court ruled this is age discriminatory but was a ‘proportionate means of achieving a legitimate aim’.

It judged Rolls-Royce was not operating a ‘last in, first out’ principle.

Employers are allowed, by Regulation 32 of the Employment Act 2002, to use length of service as a criterion for awarding benefits, provided they can justify it fulfils a business need. In this case the court showed the regulation is not limited to tangible benefits like health insurance, holidays or bonuses.

Rolls-Royce also awards points against five criteria including expertise and versatility. The court deemed its means to be fair and that length of service respects employee loyalty and experience. It also protects older employees from being made redundant at a time in their lives when it is harder to find employment.

Rachel Dineley, head of the diversity and discrimination unit at law firm Beachcroft LLP, said: The judgment in this case will be helpful to employers in most circumstances – for example, when seeking to negotiate criteria for redundancy selection. However, if employers are in consultation with unions and wish to avoid giving employees any credit at all for length of service, this case decision may prove to be positively unhelpful.

It is important to note this is in no way an endorsement of the old-fashioned ‘last in, first out’ approach. On the contrary, in most cases this would be very difficult to justify, even if the objective was to secure a redundancy exercise peaceably.