Veitch Penny LLP - Exeter | Crediton, Devon

Case

Rolls Royce Plc v Unite the Union
High Court – 17 October 2008

Issues

(1) Age discrimination
(2) Redundancy criteria
(3) The Employment Equality (Age) Regulations 2006 ("the Regulations")

Facts

Rolls Royce ("the Company") and the Union had entered into a collective agreement in relation to the management of redundancies within the Company. The policy set out a redundancy assessment matrix by which employees would be assessed, against five service-related criteria with which to assess the at risk employees, the terms of which were set out in a policy document. The criteria were:

1. the achievement of objectives
2. self-motivation
3. expertise/knowledge
4. versatility of application of knowledge
5. wider personal contribution to the team

When assessed, an employee could score between 4 and 24 points for each of the service-related criteria. In addition, each employee received one point for each year of continuous service (known as "the length of service criterion"). If there were any unauthorised absences, then those would produce negative points deducted from the total. Once the selection process was completed, those with the least points were selected for redundancy.

The Regulations outlaw direct and indirect discrimination on grounds of age. Provisions in contracts of employment relating to length of service can be found to be indirectly discriminatory because longer serving workers tend to be older and would be scored more favourably. However, if such a provision is found to be a "service-related benefit", then it may be possible to justify the alleged discrimination against shorter-serving employees if the provision is a legitimate way of achieving a "business aim".

In this case, the Company brought proceedings, alleging that the length of service criterion in the collective agreement was unlawful age discrimination against younger workers. It argued that the only business aim in applying the redundancy selection criteria was to retain the best workers for the future. The Union maintained the criterion was lawful. The Union argued that there were other aims behind the agreement and consequently the term could be justified.

The Court had to consider whether a length of service criterion was discriminatory on grounds of age. Was the use of the criterion a proportionate means of achieving a legitimate aim?

Decision

The Court confirmed that the criteria was not discriminatory. There was a legitimate reason justifying the use of the criteria. The legitimate aim was that it was in the interests of both parties that a redundancy exercise could be carried out in a fair manner. The length of service criterion acknowledged the loyalty and experience of the older workforce and recognised that older employees may have more difficulty in locating alternative employment if made redundant. The Court concluded that using the length of service criterion could be acceptable.

Comments

This case is useful to those employers who wish to use length of service as a selection criterion, although using such a criterion may not provide an employer with the flexibility needed in determining the best staff to be kept on after a redundancy exercise. Employers may also find themselves on the receiving end of arguments that length of service should be used in order to protect older employees.


Rachel Billen – Associate Solicitor, Commercial Department at Veitch Penny.
Tel: 01392 278381, Fax: 01392 410247, Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it


This Employment Law Update does not constitute legal or other professional advice and should not be relied on as such. You should take specific advice regarding your circumstances before taking any action based on the information contained within this Update.