This morning the Court of Appeal handed down judgement in the Rolls Royce v Unite the Union case, accepting the High Court decision from October 2008 that awarding points for years of service, when making redundancy selections, is not necessarily unlawful age discrimination, and may be considered a benefit.

Rachel Dineley, Head of the Diversity and Discrimination Unit at law firm Beachcroft LLP, commented: "The Court agreed with Unite the Union and this case is a win for many older employees. In difficult economic times most employers wish to have maximum flexibility in determining who to retain and who to let go - but collective agreements may govern the matter.

"In light of this decision, employers who historically have included points for length of service in their redundancy selection process, may encounter difficulty in abandoning the practice to allow a wider pool of choice for redundancies.

"It is important to note that 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 in agreeing to it was to secure a redundancy exercise 'peaceably'.

"The relevant Regulation - reg 32 of the 2006 age discrimination regulations - allows employers to use length of service as a criterion for awarding benefits, provided that where more than five years' service is taken into account it reasonably appears to the employer to fulfil a business need. The ambit of the Regulation is not limited to more tangible benefits, such as health insurance, annual leave and increments in pay.

"If the criterion had had to be justified on the usual objective basis alone, namely by demonstrating that the discrimination was a proportionate means of achieving a legitimate aim, it would have passed that test in any event. It was only one of a substantial number of criteria for measuring suitability for selection for redundancy, and by no means determinative - whether it could be deployed by employers as a 'tie-breaker' where all other factors are equal was not tested. The judgements of the Court would certainly suggest that there is scope for older workers to press for this, in any consultation on selection criteria. Whether they would have the support of their younger colleagues, with shorter periods of service, who may equally face long periods of unemployment in the current climate, is another matter altogether.

"While the decision gives clarity to the law, it still leaves plenty of scope for negotiation between employers and their workforce. "

In the case, Rolls Royce v Unite the Union, Rolls Royce wished to discontinue the practice of awarding points for length of service, but Unite felt that it did not amount to age discrimination as it was to the benefit of older workers, and even if it did amount to indirect age discrimination, it could be objectively justified. In October 2008, the High Court found that the age award was not discriminatory and that it respects the loyalty and experience of the older workforce, and also protects older employees from being unemployed at a time when they it could be hard for them to find alternative employment. Rolls Royce plc and the union entered into an agreement relating to redundancy which stated that employees would be assessed and awarded between four and 24 points against five criteria including expertise and versatility. They were also awarded one point for each year of service.

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For further comment, please contact: Vanessa Montero/Julia Dudley on 020 7894 6655 or by e-mail at pressoffice@beachcroft.co.uk

Publication Date: 14 May 2009