Rolls-Royce plc v Unite the Union

The Court of Appeal considered whether a length‑of‑service criterion, expressed as points in a redundancy selection matrix incorporated in collective agreements, amounted to unlawful indirect age discrimination under Regulation 3(1)(b) of the Employment Equality (Age) Regulations 2006 and/or fell within the exception in Regulation 32. The court decided it had jurisdiction to hear the test case and that, on construction of the Directive and the Regulations, a properly framed length‑of‑service criterion can be a legitimate, proportionate means of achieving a legitimate employment aim and can amount to a "benefit" within Regulation 32(1). The court concluded that, in the context of the collective agreements before it, the criterion was only one of several selection factors, was not determinative and could be objectively justified; accordingly the employer’s challenge failed.

The court also addressed procedural concerns about bringing the matter in High Court Part 8 proceedings without individual employees before the court, and recorded that affected employees remain free to bring Employment Tribunal claims on unfair dismissal or discrimination arising from any actual redundancy exercise.

Background and relief sought. Rolls‑Royce brought Part 8 proceedings seeking a judicial determination whether inclusion of length of service as a criterion in redundancy selection matrices in collective agreements would breach the Employment Equality (Age) Regulations 2006 and so be unlawful. The claim was heard by Sir Thomas Morison (Deputy High Court Judge) who dismissed the claim; Rolls‑Royce appealed.

Procedural issue. The Court of Appeal first considered whether it should entertain what might be an "academic" or "test" appeal brought by private parties via Part 8. Balancing the public interest in authoritative interpretation of an EU‑derived instrument, the practical consequences for a large workforce, prior High Court consideration and the parties’ agreement to be bound, the court concluded it would hear the appeal while expressing reservations about the absence of individual employees from the proceedings and emphasising that Employment Tribunal remedies remained open.

Issues for decision.

• Whether the length‑of‑service criterion constituted indirect discrimination under Regulation 3(1)(b).
• What constitutes a "benefit" for the purposes of Regulation 32(1) and whether Regulation 32(2) was satisfied.
• Whether the use of length of service was a proportionate means of achieving a legitimate aim (justification/proportionality).

Court’s reasoning and conclusions. The court construed Council Directive 2000/78/EC and the Regulations practically. It accepted that length of service might operate to disadvantage younger employees (indirect discrimination) but held that the Directive and Regulations permit differences of treatment where objectively and reasonably justified by legitimate aims. The Court of Appeal concluded that rewarding loyalty, experience and promoting an agreed, peaceable redundancy process were legitimate aims. On proportionality the court placed weight on the context: the length‑of‑service rule was one criterion among many, was not deterministic (not a strict LIFO rule), formed part of carefully negotiated collective agreements with high union density, and included safeguards (over‑checking etc.). On that basis the court found the criterion could be objectively justified and that the term was capable of being a "benefit" under Regulation 32(1). Different members expressed varying emphases: one Lord Justice would have answered only the narrow construction question about "benefit", reserving factual proportionality to tribunals. The court dismissed the appeal.

Subsidiary findings: the court emphasised the limited nature of its ruling, the continuing ability of employees to bring Employment Tribunal proceedings, and expressed procedural unease about Part 8 but accepted hearing the test case was appropriate in the circumstances.

The appeal is dismissed. The Court of Appeal held that it had jurisdiction to hear this test case and, on construction of the Directive and the Employment Equality (Age) Regulations 2006, a length‑of‑service criterion in a redundancy selection matrix can constitute a "benefit" under Regulation 32(1) and may be objectively and reasonably justified as a proportionate means of achieving a legitimate aim. In the context of these negotiated collective agreements the criterion was one of several selection factors, was not determinative, and could be lawfully retained; accordingly the employer's declaratory challenge failed. The court noted procedural concerns and confirmed that affected employees remain free to pursue Employment Tribunal claims arising from any particular redundancy exercise.

First instance: Part 8 proceedings in the Queen's Bench Division before Sir Thomas Morison (sitting as a deputy High Court judge) who gave a reserved judgment dated 17 October 2008 ([2008] EWHC 2420 (QB)) dismissing the company's claim. Permission to appeal was granted by the trial judge. The appeal was heard in the Court of Appeal ([2009] EWCA Civ 387) which dismissed the appeal.