Last in first out - Can this still be used in redundancy selection?

When selecting employees for redundancy, employers must follow a certain procedure and must apply any selection criteria fairly. These are general, well established principles of employment law.

There is no correct set of selection criteria although common examples of acceptable criteria include the following:

• Attendance record
• Disciplinary record
• Standard of work and performance record
• Skills, knowledge, qualifications and experience

These examples can more easily be quantified and employers should avoid criteria which tend to suggest a degree of subjective assessment.  These might include criteria such as “flexibility” or “team player” or, as in one case, “contribution to the company”.

Last in first out or LIFO was traditionally used and is now regarded as old fashioned and to be avoided.  It is discredited largely for reasons relating to discrimination.  From the employer’s point of view it means that a relatively recent employee who is a stellar performer of great value to the future of the business may have to be sacrificed for a time server nearing retirement with no enthusiasm for his or her employment (which is not to suggest that is the case for all older employees or that all younger employees are stellar performers).  From employees’ point of view, last in first out tends to be indirect sex discrimination against women, because women tend to have shorter employments than men in particular by reason of breaks for child care.  It can also be age discrimination, because younger employees are less likely to have had the opportunity to acquire long service records.

In the case of Allan v Oakley Builders and Groundwork contractors Limited the tribunal held that a last in first out approach was not an irrational method of redundancy selection.  In that case, all employees at risk of redundancy were female and the person selected, Mrs Allan, was in fact the oldest person in the selection pool.  The tribunal also remarked that Mrs Allan was comparing herself with the daughter of the director of the company.  It therefore may be said that it was nepotism to favour her over Mrs Allan but that had nothing to do with age and everything to do with a father/daughter relationship which is not unlawful discrimination.

In summary, last in first out is not entirely destined for the history books and it could for example be used as a tie-breaker in a situation where the other selection criteria produce a similar score.

Selecting for redundancy is never easy and at the end of the day, somebody has to come bottom.  However by adopting certain established principles, employers should be able to avoid costly and time consuming employment tribunals.

To discuss redundancy or other employment issues please contact Paul Grindley by calling 0113 320 5000 or emailing @email.