Employment & Immigration Legal Updates 3/11/2008

The High Court Gives its Decision as to Use of Length of Service Criteria in a Redundancy Matrix

In Rolls Royce PLC v Unite the Union the High Court considered whether using length of service in a redundancy matrix is discriminatory in accordance with the Employment Equality (Age) Regulations 2006 ("the Age Regulations") and by awarding points under the matrix for length of service whether, this could be considered as awarding a benefit in accordance with Regulation 32 of the Age Regulations.

Background

Rolls Royce and Unite negotiated collective agreements regarding redundancy and redeployment of staff.

Unite, although opposed to compulsory redundancies, recognised a framework could be put into place "to enable peaceable restructuring, and fair selection of affected employees without disruption to the business".

A matrix was put in place "designed to ensure that the selection process is fair in general terms and fair to the individual". The matrix provided for employees to score 4 to 24 points under measured criteria of achievement of objectives, self motivation, expertise, knowledge, versatility/application of knowledge and wider personal contribution to the team.

One point was received for each continuous year of service and points were deducted on a sliding scale basis for unauthorised absences. Employees with the lowest scores were selected for redundancy.

Questions for the Court to Consider

Was the Length of Service Criterion Indirectly Discriminatory and if it was, could this be Defended by Means of Justification?

To be justified it had to be established that the inclusion of length of service as a criterion corresponded to a real need, was appropriate with a view to achieving the objectives pursued and was necessary.

Was the inclusion of Length of Service in the Matrix a Benefit?

Regulation 32 of the Age Regulations creates a number of exceptions, allowing employers to treat workers differently by reference to length of service when awarding benefits. Benefits are defined as something which improves an employee's terms of employment and specifically excludes benefits awarded to an employee due to them ceasing to work.

Decision of the court

On the Question of Indirect Discrimination.

The Court held that the collective agreements between Rolls Royce and Unite were a compromise. If redundancy was to be carried out they would both want this to be done peaceably and fairly. Length of service demonstrated both loyalty and experience which may not have been fully taken into account in the other redundancy criteria.

The assessment matrix provided Rolls Royce with a defence to age discrimination. The criteria of length of service reflected loyalty and experience and protected older employers from losing their jobs in the current financial climate.

On the Question of Whether Length of Service was a Benefit.

The Court held the words "award and benefit" in the regulations were to be interpreted widely. By providing points for long service in a redundancy selection matrix this awarded a benefit to the employee. The benefit here was retaining their jobs, rather than losing them.

The length of service criterion was one of a number of measured criteria which had been negotiated with a recognised trade union and was likely to be considered as reasonably fulfilling a business need.

Comment

Whilst the Court found that the length of service criterion was both objectively justified and regarded as a benefit under the Regulations, employers would be wise to exercise caution of its use.

The length of service criterion was amongst other measurable criteria and had been expressly negotiated with a recognised Trade Union.

The court explicitly stated its decision may have differed if the company had used a straightforward 'last in first out policy' rather than the length of service criterion.

The European Parliament Adopts the Agency Workers Directive

The European Parliament has approved a proposal for a Directive on Temporary Agency Work ("the Directive").

This will ensure that the United Kingdom's approximate 1.3 million agency workers will get the same pay and basic conditions as permanent staff, after being employed for a 12 week qualifying period. This period was negotiated by the United Kingdom and departs from the Directive, which awards these rights from day one.

Once incorporated into United Kingdom law the Directive will provide:

• Equal treatment for temporary agency workers after a 12 week qualifying period compared to permanent workers in terms of basic working and employment conditions (this will include pay, holidays, working time, rest periods and maternity leave).
• Equal access to collective facilities such as canteens, child care facilities or transport services).
• Better access to training for agency workers either whilst on assignments or between assignments.

The Directive will be implemented into UK law and must take effect within three years.

The Employment Bill Undergoes Amendments by the Public Bill Committee

The Public Committee in the House of Commons has proposed a number of controversial amendments to the Employment Bill.

These proposed amendments seem to be rather drastic in nature and there is much speculation that some are unlikely to be approved and retained in the Bill.

The most controversial amendments are:

• The losing party in employment tribunal proceedings having to pay the costs of the winning party.
• An award of up to 25% of a claim to a respondent where the claimant's action is vexatious.
• A change in the uplift (or reduction) to awards made by a tribunal where an employer or employee unreasonably fails to follow the ACAS Code of Practice on discipline and grievance, which we presume will replace the current statutory disciplinary and dismissal procedures, from 25% to 50%.
• Excluding from the calculation of national minimum wage, tips paid to employees in the service industry.
• Creation of a Fair Employment Commission to deal with national minimum wage, employment agencies, health and safety and gang masters.

One of the most contentious of the proposed amendments is that the losing party will pay the winner their costs. It is likely this represents a vast departure from the current tribunal rationale as it would deter many employees from bringing proceedings against their employer.

We will keep you updated as the Bill progresses further.

This article copyright © 2008 Steeles Law llp. All rights reserved.