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Myths of the workplace: 'Last in, first out' is how people are chosen for redundancy

'Last in, first out' (LIFO) used to be one of the most common ways of objectively determining who was going to lose their jobs in a redundancy situation. In fact, it was once so prevalent that many people believe that it's still the default means for redundancy selection chosen by companies today. This, however, is a myth. So, what's the problem with LIFO?

It may be objective, but LIFO isn't necessarily fair when used as the sole selection criteria. Since the enactment of equality and anti-discrimination legislation, LIFO taken on its own is no longer considered as legally safe as it once was and is generally avoided by employers.

For example, younger workers are more likely to lose out under a LIFO system, as they tend to be the people who have worked for the shortest time at an organisation. As they are at a disadvantage based on their age, they may have grounds to make a claim for indirect age discrimination.

Similarly, if part-time work is not counted in the same way as full-time service under LIFO, then women may be at a disadvantage, as they are more likely to hold part-time jobs. As such, they could pursue claims for indirect sexual discrimination.

There are business disadvantages to LIFO too, including the potential danger of losing workers with key skills who have joined the organisation recently.

Employers should consult employees and representatives about selection criteria, and seek to find a method that can be consistently applied in a fair and objective way, ideally with an appeals procedure. Typically criteria may include attendance and disciplinary records, skills and experience, performance, aptitude, formal qualifications and specialist skills.

Whatever the selection criteria, care has to be taken that they are not directly or indirectly discriminatory under equality legislation. Employers have to be able to justify selection choices objectively as a proportionate means of achieving a legitimate aim. LIFO, therefore, could be used if this can be shown - and this only likely to be possible when employees have scored similarly on a range of other criteria.

Acas has given detailed information on how to address selection criteria issues in the pdf icon Advisory booklet - Handling large-scale (collective) redundancies [521kb]. Acas training in Redundancy issues helps employers and managers search for alternatives to job losses, explains the law, and outlines best practices for implementing a restructure.

Visit the Acas Training Courses, Workshops and Projects area for more information.

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