Be very careful – and take legal advice. Older employees are likely to have been with you longer, so using length of service as a criterion is potentially age discrimination against younger employees. Men may also have longer continuous service than women, so it is potentially sex discrimination too.
However, the High Court has held that using length of service as one of the criteria when selecting employees for redundancy can, in some circumstances, be objectively justified – it is not necessarily age discrimination (although using ‘last in, first out’ is also likely to be discriminatory).
The Court decided that the policy of giving credit for long service on a redundancy amounted to a benefit for the employee concerned – the benefit was the retention of employment which would otherwise be lost.
The tribunal also found that the criterion fulfilled a business need, because length of service equated to loyalty and experience, and meant that older workers were better protected from losing their jobs than younger workers in a difficult economic climate. The employer had therefore justified the impact of the age-related benefit.
However, in another case concerning a pay scheme that rewarded longer service (but, significantly, a claim based on indirect sex discrimination on the grounds that women generally have shorter periods of continuous service than men, rather than an age discrimination claim) the European Court of Justice accepted that, in general, length of service went hand in hand with experience, and experience would enable a worker to perform better. So normally, employers do not need to provide a justification for using length of service as a criterion in pay schemes in order to avoid indirect sex discrimination claims.
But the Court also accepted the ‘serious doubts’ the claimant had raised as to whether, once a worker had reached a certain level of experience, further service made a real difference to their performance. So where a worker can raise serious doubts about the benefit provided by extra experience, using length of service may be a form of indirect discrimination. It is unclear whether this ‘serious doubts’ test could also be applied in an age discrimination case to defeat a justification that, by rewarding length of service, the employer is rewarding experience.