When can LIFO be used in a redundancy selection in Northern Ireland?

Posted in : Seamus Says - Employment Law Discussion on 5 February 2021
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered: LIFO; Redundancy Selection

A recent case criticised the employer for using LIFO as a criterion for selection. When can LIFO be used in a redundancy selection, if at all, in Northern Ireland?

Let's look for Northern Ireland first. I know you're going to bring in the GB situation and maybe Rolls Royce and so on, but what about the situation? There's issues, particularly, to deal with affirmative action and religious discrimination. There's issues around other types of discrimination. What is the situation? Is it banned or is it still okay to use LIFO in Northern Ireland when making redundancies?

Seamus: Well, LIFO or last in, first out, it's a common factor that's considered in redundancy situations. I think that's the general point, but the problem with it is that it's not always fairly applied. And what you're really looking at is, you know, tends to be length of service, and it can be a helpful criterion for assessing individuals for redundancy. But it can be problematic and it can give rise to indirect discrimination, you'd mentioned some there, but also sometimes age where younger employees have shorter lengths of service and have less opportunity to acquire a long service record compared to older employees or sometimes on gender women tend to have shorter lengths of service than men due to the fact that they've taken breaks in their employment for childbirth or childcare purposes.

So it can be controversial in my experience, it is still used, and it is still used here in Northern Ireland. The position with LIFO that actually gave me a bit of a shock to the system because I remember preparing an article in relation to the Rolls Royce and United case. This was a Court of Appeal case and then when I looked at the date of it, it was July 2009, and I couldn't quite believe that I can't remember whether I was preparing an article maybe just for my own purposes, or whether it was for Legal Island at the time. But a long time ago, but I mean that the essence in and around that case was that it was fine, that LIFO was still okay to use but there was more of a concern in and around it as using as a sole selection criteria or criterion at the time.

And so my experience tends to be that sometimes people will use it as a tiebreaker criteria at the end of a process. But I find it's, in essence, when you're trying to retain your skill base and your knowledge base, it can be helpful to make them understand why employers want to use it. I find that it's logical and it provides objective criteria and often, we were speaking there before, Scott, and we were saying that often the problem is with the criteria that you . . . that the objective criteria doesn't take you anywhere. It doesn't give you a, you know, a common denominator between your employees or some sort of distinction. And then if you stray into the subjective criteria it becomes very difficult to gain and because it's very difficult to stand over that aspect of it.

So it's a tricky one. But it tends to be used, you know, maybe not as the sole criteria certainly and maybe more as a tiebreaker basis to keep it fair.

Scott: Yeah, I mean, I suppose it is clearly discriminatory on a number of grounds and if it is indirectly discriminatory, it would have to be justified, and it would have to be seen to be a proportionate means to a justifiable end. The bottom line has been whenever I've looked at it and many cases gone by when I worked at the Labour Relations Agency just so many employers don't keep records. And the only thing they do know is the start date of the employees. So that's why the . . .

You know they have this great matrix and there's nothing to put in it, except starting date and finish end. You know, so it's maybe for some people the reality is that they're going to be using LIFO and going to have to justify it and most people, I think, would see there's a, you know, it seems a bit harsh getting rid of somebody that's got 20 years and keeping somebody that's got two months. So people can see that kind of thing coming up.

But my view is that redundancy is almost impossible to get right, unless everyone just volunteers, or you're closing everything down, and you're as well doing non ET settlements the Labour Relations Agency because there's always a valid claim or a potentially valid claim, when it was . . .

Seamus: The arguable claim, yes.

Scott: It's so difficult to get right for employers. You're damned if you do and you're damned if you don't as an employer when it comes to the redundancies, and you're trying to get the best workforce to take the place forward once you've made those redundancies, and that's . . . LIFO's easy and people can understand it but it's very blunt, you know, so maybe not the best one to use.

This article is correct at 05/02/2021

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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