A leading Midlands’ employment lawyer is warning employers not to fall foul of age discrimination legislation when making workers redundant.

Tim Lang, partner and head of employment at Black Country law firm George Green LLP, says employers have to be aware of how age discrimination might affect the criteria they use to chose which workers to make redundant and how much compensation to pay them.

“A redundancy policy of ‘last in - first out’ used to be fairly common in some industries, until the advent of age discrimination legislation, but now just using this measure could be seen as discriminatory. However, a recent court ruling states that it can still be used, as long it is only one of the criteria for selection,” explains Mr Lang, who is based in George Green’s Cradley Heath offices.

The High Court ruled in a case involving Rolls Royce plc that using length of service as one of the criteria for redundancy did indeed discriminate against younger workers, because in general younger workers were more likely to be selected for redundancy, where all other criteria were equal.

However, when used alongside other criteria as part of a ‘wider scheme of measured performance’, it can serve a justifiable aim of the employer, namely rewarding the loyalty and experience of longer serving employees and protecting older employees from being put onto the labour market at a time when they are particularly vulnerable, because of the difficulty that older workers find in securing alternative employment.

According to Mr Lang, employers also need to ensure that they are fair and equitable to workers of all ages when it comes to any enhanced redundancy payments.

Mr Lang says: “In a recent case ICI was challenged over a redundancy scheme whereby employees were entitled to a severance payment (over and above the statutory requirement) based on age and length of service. However, the formula used gave rise to wide variations in the severance payments and it was claimed that this discriminated on the grounds of age both directly and indirectly, as a 36 year old employee with seven years' service was entitled to 55 per cent of gross salary under the scheme, while a colleague with 10 years' service, aged 51, was entitled to 175 per cent of gross salary.

“The court found that while the scheme had legitimate aims of encouraging and rewarding loyalty; operating a scheme that increased opportunities for junior employees; and making larger payments to workers who were likely to be more vulnerable in the job market, there needed to be a fair balance between the reasonable business needs of the company and the scheme's discriminatory effects.”

Mr Lang says: “Unfortunately the impending recession means that more businesses are having to consider making workers redundant. It is essential that they take advice on the criteria and the process, otherwise they risk facing an employment tribunal which could end up costing them a great deal more money.”

For further information, contact Jonathan Reay, Reay Public Relations Tel: 0788 4433 475. Email: jonathan@reaypr.co.uk