Rolls Royce plc v Unite the Union; [2009] EWCA Civ 387; [2009] WLR (D) 157

EMPLOYMENT — Discrimination — Age — Collective redundancy agreements — Agreements retaining length of service as selection criteria for redundancy — Whether court appropriate forum for determining claim — Whether criterion “proportionate means of achieving a legitimate aim” — Whether criterion constituting a “benefit” — Employment Equality (Age) Regulations 2006, regs 3(1), 32(1), (2) — Council Directive 2000/78, arts, 2(2)(b), 6

Rolls Royce plc v Unite the Union;

[2009] EWCA Civ 387; [2009] WLR (D) 157

CA: Arden,Wall,Aikens LJJ: 18 May 2009

A length of service criterion within the selection matrix for redundancy selection, contained in collective agreements between a company and a workers’ union, was not in breach of the Employment Equality (Age) Regulations 2006, in that the inclusion of the criterion was a “proportionate means of achieving a legitimate aim” within reg 3(1)(b).

The Court of Appeal (Aikens LJ dissenting) so stated when dismissing the appeal of the employer, Rolls Royce plc, against a decision by Sir Thomas Morison (sitting as a deputy High Court judge) [2008] EWHC 2429 (QB) on 17 October 2008, dismissing the employer’s CPR Pt 8 claim against Unite the Union (“the union”) for a declaration that the inclusion of length of service within the redundancy matrix as selection criterion, was unlawful.

The two collective agreements, which were made before the 2006 Regulations came into force, contained a clause providing: “where two or more employees in a surplus occupation group have the same total assessment score, length of service with the company will be the deciding factor and the longest serving employee will be retained”. The employer announced that it would be consulting the union on job reductions and it took the view that the length of service criterion fell foul of regs 3(1)(b) and 32. The Regulations, which transposed Council Directive 2000/78 (“Equal Treatment Directive”), provided by reg 3(1)(b), inter alia, that a person discriminated against another if he applied an age-related criterion which was not “a proportionate means of achieving a legitimate aim”. Regulation 32 provided an exception for the provision of certain “benefits”. The employer brought proceedings under CPR Pt 8 seeking declaratory relief. The judge proceeded with giving a determination despite “misgivings” that such questions should normally and desirably be determined by the employment tribunal.

WALL LJ said that the court had jurisdiction to hear the appeal despite having misgivings about the fact that it was being asked to decide an issue which was likely to affect a large number of people (redundancy candidates) who will have had no say in the decision. Because of those anxieties, the issues would be approached on a narrow basis. On the substantive issues, art 6 of the Equal Treatment Directive provided a defence of objective and reasonable justification by legitimate aim. The length of service criterion qualified under art 6 as “legitimate employment policy” and a “labour market objective”. To reward long service by employees in any redundancy selection process was, viewed objectively, a reasonable and legitimate employment policy and one which a conscientious employer would readily and properly negotiate with a responsible union. The Equal Treatment Directive envisaged that the United Kingdom could legitimately provide in its own legislation that terms such as the length of service criterion would provide an exception to the concept of indirect discrimination contained in art 2(2)(b) of the Directive. The judge below had not addressed the critical question of whether or not the company was able to show that the criterion was not “a proportionate means of achieving a legitimate aim” under reg 3(1)(b). On the assumption that reg 3(1)(b) applied to establish indirect discrimination, the length of service criterion was proportionate. The legitimate aim was the reward of loyalty, and the overall desirability of achieving a stable workforce in the context of a fair process of redundancy selection. The proportionate means was demonstrated by the fact that the length of service criterion was only one of a substantial number of criteria for measuring employee suitability for redundancy and that it was not determinative. Equally, the length of service criterion was consistent with the overarching concept of fairness. Furthermore, in relation to reg 32(2), the key word was “reasonably”. Viewed objectively a length of service criterion of more than five years did reasonably fulfil a business need of the company—of having a loyal and stable workforce. The length of service criterion was capable of constituting a “benefit” within the meaning of reg 32, without any violence to the word’s meaning and in the absence of any statutory definition which inhibited the word from otherwise having its wide dictionary definition.

ARDEN LJ agreed.

AIKENS LJ, dissenting, said that, due to the concerns that those most affected by the decision were not before the court, it was wrong for the Court of Appeal to do anything other than answer two very narrow questions of statutory construction in relation to regs 3(1) and 32, and to otherwise refuse to grant declaratory relief. On an issue of fact, the length of service criterion was, objectively and in the circumstances, not a proportionate means of achieving a legitimate aim within reg 3(1)(b). That question required full investigation by a fact finding tribunal, and it should not be decided in absence of the parties that it would affect most: those who were potential redundancy candidates. On the issue of reg 32, the grant of points to potential redundancy candidates in accordance with the length of service criterion constituted a “benefit” for the purposes of reg 32(1).

Appearances: John Bowers QC and Simon Cheetham (instructed by Eversheds) for the employer; Peter Edwards (instructed by Rowley Ashworth) for the union.

Reported by: Susanne Rook, barrister.