Rolls Royce Plc v Unite the Union

JurisdictionEngland & Wales
CourtQueen's Bench Division
Judgment Date17 October 2008
Neutral Citation[2008] EWHC 2420 (QB)
Docket NumberCase No: HQ08X02171
Date17 October 2008

[2008] EWHC 2420 (QB)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

Royal Courts of Justice

Strand. London. WC2A 2LL

Before:

Sir Thomas Morison

(Sitting as a Judge of the High Court)

Case No: HQ08X02171

Between:
Rolls Royce Plc
Claimant
and
Unite The Union
Defendant

Simon Cheetham (instructed by Eversheds LLP) for the Claimant

Peter Edwards (instructed by Rowley Ashworth Solicitors) for the Defendant

Hearing date: Thursday 9th October 2008

Preliminary

1

The parties have invited this court to determine the answer to the following questions:

(i) Is the retention of length of service as a criterion within a selection matrix for redundancy, as contained within the collective agreements relating to the Claimant's Derby and Hucknall sites, a proportionate means of achieving a legitimate aim within Regulation 3(1) of the Employment Equality (Age) Regulations 2006?

(ii) Can the service related selection criterion properly be classified as a “benefit” within Regulation 32(1) of those Regulations? If so, does the service related selection criterion “fulfil a business need of [the Claimant's] undertaking” within Regulation 32(2) of the Regulations?

2

It will be immediately apparent that the questions which relate to achievement or fulfilment of legitimate aims or business needs are ones which, in the employment context, would normally and desirably be determined by 'an industrial jury' namely an Employment Tribunal or The Employment Appeal Tribunal. I sit as a single Judge without the benefit of the advice and wisdom which the lay Members of those Tribunals bring to questions of the sort being asked. Despite my misgivings, at the request of both counsel, I was pressed to proceed to a determination under Part 8 of the CPR. There are no issues of fact to be determined; there has been no oral evidence. I have been provided with witness statements on behalf of both parties which, essentially, set the scene for the resolution of their disputes. With considerable misgivings, I acceded to the request of both parties.

3

One curiosity that arises from the parties' positions is that the employers, Rolls Royce, contend that the length of service criterion in their Collective Agreements is unlawful age discrimination which cannot be justified, whereas the Union, Unite, contend that the criterion is lawful. One might have expected the arguments to be the other way round.

The background

4

I start with the Collective Agreements

(i) There are two collective agreements, relating to redundancy, entered into between the employers and Trade Union: one for staff and the other for works employees at the Derby and Hucknall factories. It is only necessary for present purposes to consider one [that for Staff], because they are essentially the same, and they raise the same issues.

(ii) The Agreement defines its subject matter as Redeployment and Redundancy. It provides for an Assessment Matrix which the Agreement records

“has been designed to ensure that the selection process is fair in general terms and fair to the individual.”

Appendix 1 to the Agreement sets out the framework for Manpower Reduction. It recites that

“The Company and its employees need to be able to restructure flexibly and peaceably”.

The Union records its opposition to compulsory redundancy but recognises that there may be circumstances which require a framework “to enable peaceable restructuring, and fair selection of affected employees without disruption to the Business.”

(iii) The Notes for Guidance of the Redundancy Matrix show that assessors were to carry out assessments for the purpose of the selection process. There are five measured criteria: Achievement of Objectives, Self Motivation, Expertise/Knowledge, Versatility/Application of Knowledge and Wider personal Contribution to Team. An individual could score between 4 and 24 points under each head. As part of the process, each employee was to receive one point per year of continuous service. If the individual had unauthorised absences, then, on a sliding scale, those absences produced negative points which were deducted from the employee's total. Those with the least points were selected for redundancy.

The Statutory Framework

5

On 20 November 2000 the Council of the European Union adopted Directive 2000/78/EC. Article 2(2) outlaws direct and indirect discrimination on grounds of age. Article 6, headed “Justification of differences of treatment on grounds of age” permits Member States to provide that differences of treatment on grounds of age shall not constitute discrimination if they are objectively and reasonably justified by a legitimate aim, including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary. This Article goes on to give examples of what differences of treatment may include [therefore the list is obviously not intended to be exhaustive or exclusive] “the fixing of minimum conditions of age, professional experience or seniority in service for access to employment or to certain advantages linked to employment”. En passant, I note that justification is a defence to both direct and indirect discrimination.

6

In response to this Directive, the UK Government introduced into law the Employment Equality (Age) Regulations 2006. There are only a very few parts of the Regulations that are relevant to this case. Regulation 3 provides:

“(1) For the purposes of these Regulations, a person (“A”) discriminates against another person (“B”) if

(a) on grounds of age A treats B less favourably than he treats or would treat other persons or

(b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age groups as B, but

(i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons and

(ii) which puts B at that disadvantage,

and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim.” [my emphasis]

7

Regulation 7(2)(d) makes it unlawful, subject to the defence of justification, to discriminate on age grounds against an employee by dismissing him or subjecting him to any other detriment.

8

Regulation 32 provides:

“(1) Subject to paragraph (2) nothing in Part 2 or 3 [which includes the field of employment] shall render it unlawful for a person (“A”) in relation to the award of any benefit [my emphasis] by him to put a worker (“B”) at a disadvantage when compared with another worker (“C”) if and to the extent that the disadvantage suffered by B is because B's length of service is less than that of C.

(2)Where B's length of service exceeds 5 years, it must reasonably appear to A that the way in which he uses the criterion of length of service, in relation to the award in respect of which B is put at a disadvantage, fulfils a business need of his undertaking (for example, by encouraging the loyalty or motivation, or rewarding the experience, of some or all of his workers.”

Sub-regulation (7) of Regulation 32 defines “benefit thus: ““benefit” does not include any benefit awarded to a worker by virtue of his ceasing to work for A”.

Finally, in the interpretation Regulation “benefit” is further defined to include facilities and services [subject to irrelevant exceptions].

The Parties' arguments

9

These were very well presented by both counsel and I would like to thank them for their assistance.

For the Employers

10

Mr Cheetham made the following points, which I summarise from his skeleton argument.

(i) It is essentially common ground that, unless justified, the application of the service criterion is potentially unlawful It discriminates against the younger employee, so that, for example, of two employees aged, say 35 and 55, who each started work when they were 20, and who scored the same as each other in relation to the 'measured criteria', the younger would score less points overall because of his length of service due to his age.. The evidence shows that many employees start work with Rolls Royce at the age of 16 and 17. Therefore, to be lawful, the length of service criterion would have to be justified.

(ii) The principles which apply to cases of 'justification' are to be found in a very recent and, as yet, unreported decision of the EAT: McCulloch v ICI UKEAT/0119/08, BAILII: [2008] UKEAT 0119_08_2207. At issue was the lawfulness of a severance payment agreement which gave more to the older members of staff with longer service. These principles are helpfully extracted from that case at paragraph 36 of Counsel's skeleton submission and I set them out here:

“(1) The burden of proof is on the [employer] to establish justification

(2) The classic test [of justification] was set out in Bilka-Kaufhaus etcUNK [1984] IRLR 317 in the context of indirect sex discrimination. The ECJ said that the court or tribunal must be satisfied that the measures must “correspond to a real need… are appropriate with a view to achieving the objectives pursued and are necessary to that end”. This involves the application of the proportionality principle, which is the language used in Regulation 3 itself. It has subsequently been emphasised that the reference to “necessary” means...

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