Length of service has traditionally been used as a central feature of redundancy selection exercises. However, following the introduction of the Employment Equality (Age) Regulations in October 2006 use of last in, first out, which obviously is directly linked to length of service, has been challenged in the courts. So, should employers continue to use "last in first out" as a selection criterion?

We would advise all our clients against using it as the sole or main criteria for selection - it could be very expensive decision!

LIFO can be deemed a form of indirect age discrimination - the younger employees are, the less they build up service. If the youngest employee happens to have the shortest service and is made redundant using LIFO as a selection criterion, then beware. It is easy to see how employees could argue that they have been discriminated against on the grounds of age. LIFO could also be deemed indirect sex discrimination because breaks in service taken by women having children and raising families are likely to make them more recent recruits. There is also scope for race discrimination claims.

LIFO can be justified, however, providing it is not used as a blunt instrument. By this we mean if it is used as part of a selection process, and is just one of a number of criteria. Employers have to now justify using length of service as a criterion to select employees for redundancy.

To succeed, the selection policy must have a legitimate business aim - perhaps you wish to reward loyalty or to retain experienced workers. In addition, the operation of the policy must be an "appropriate and necessary" means of achieving those aims.

As there are other non-discriminatory criteria, such as disciplinary record or attendance, performance or skill level, an employer that bases its selection mainly on length of service could find LIFO difficult to justify as a blunt tool.

And recent case law has highlighted this very point. And ironically it was the employer arguing against its use with the Unions who were in favour of length of service criteria.

So in Rolls-Royce plc v Unite the Union the company claimed that its agreed selection policy was contrary to the Age Regulations. It awarded points for length of service, but this was only one of a number of different criteria used by the company. Unite argued that it was a "sophisticated and measured" selection policy and not the "blunt tool" of last in, first out.

The High Court agreed with the union. They held that the policy was justified under the Regulations, and furthermore that the selection policy also fell within the exemption that allows employers to award benefits to its employees based on their length of service. In its view, the possibility of retaining a job was a 'benefit' under the regulations.

However, they did comment that had it been asked to judge a redundancy selection policy based on last in, first out alone, such a procedure may have been "objectionable".

The Court of Appeal have recently heard the case and come up with similar conclusions but albeit on slightly different bases in that it fell within the exception provided it reasonably appeared to Rolls Royce that the criterion fulfilled a business need of the undertaking.

The Court went on to consider whether the scheme which awarded extra points for long service was indirectly discriminatory on grounds of age. It concluded that even if it was indirectly discriminatory, it could be objectively justified. 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 principle of proportionality 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.

It is a shame that the Employment Appeal Tribunal with its lay members did not get to rule on this case

LIFO on its own is likely only to be justified in exceptional cases now. It is difficult to imagine the circumstances which would justify it. It might be used as a 'tie-breaker' where a selection process has already been conducted based on other criteria.

So, use length of service only if you have to as one of a balanced selection criteria or as a tie-breaker especially if that is what your policy states. This is unlikely to breach the Age Regulations, as the Rolls-Royce case has shown and common sense dictates. After all it is usually the most objective of criteria and even if the case goes to the House of Lords any current redundancies are likely to be history should the decisions be reversed.