Last In, First Out: Is it Fair Redundancy?

For a while, “last in, first out,” or “LIFO,” was one of the most popular principles adopted during a redundancy. However, with changes to equality law, it can now be problematic for employers to focus on this approach solely.

Below, we outline the meaning of LIFO in redundancy and whether its application is fair and lawful. We then discuss some frequently asked questions surrounding the topic and what individuals can do if they believe their rights have been breached. 

If you have any queries about redundancy last in, first out, or need legal assistance, please contact Redmans Solicitors now. As experts in the employment law sector, we can provide specialist advice to help solve your problem. Learn how we could help you today by:

What is the Principle of Last In, First Out in Redundancy?

The meaning of LIFO in redundancy is when employers choose those most recently hired to be dismissed first over those with a longer tenure. The logic behind this approach is that longer-serving employees have demonstrated loyalty, acquired experience, and contributed significantly to the business, making the decision fair.

However, the introduction of the Equality Act 2010 reinforced protections against discrimination based on protected characteristics, such as age, gender, or race. While the Act didn’t outlaw last in, first out, it highlighted the risk of indirect discrimination if this method disproportionately impacted certain groups. As a result, LIFO’s use in isolation became increasingly discouraged.

Is LIFO in Redundancy a Fair Way of Selecting Employees?

The fairness of the redundancy last in, first out principle has largely been up for debate. Some view it as a simple, objective method, but others argue it can sometimes lead to unfair outcomes, particularly for younger employees and those from underrepresented groups.

Arguments in favour point to its:

  • Objectivity – LIFO is based on length of service, removing subjective biases from redundancy selection.
  • Focus on Loyalty and Experience – Employees who’ve worked for a company longer may have more experience and understanding of the business.
  • Ease of Application – Unlike performance-based criteria, which require detailed assessments and records, LIFO is simple to implement.

However, while these points may appear logical, the principle is far from black and white. Those with concerns over its application highlight:

  • The Potential for Discrimination – LIFO may indirectly discriminate against younger employees (who’ll likely have less service length), women (who may have taken career breaks for childcare), or individuals from underrepresented groups.
  • Loss of Talent – A new hire with exceptional skills may be dismissed over a long-serving but less productive employee.
  • Workplace Diversity – If recent hires come from diverse backgrounds, LIFO could disproportionately affect minority groups, reducing workplace inclusivity.

Because of these concerns, employment tribunals have ruled that the last in, first out method shouldn’t be used in isolation. Instead, the selection criterion should be combined with other objective measures, such as skills and performance, to ensure fairness.

When is Last In, First Out Unfair?

LIFO in redundancy is not inherently unlawful, but it can be legally challenged if it results in indirect discrimination or unfair dismissal. For example, indirect age discrimination may arise if younger employees, often with shorter service lengths, are disproportionately selected for redundancy. Similarly, gender discrimination could result, since many women’s service lengths are affected by childcare commitments.

Furthermore, if an employee believes they were selected unfairly for redundancy based on discriminatory grounds, they might be able to claim unfair dismissal. Therefore, to avoid such repercussions, employers must ensure LIFO’s application is justifiable and doesn’t disproportionately impact protected groups under the Equality Act 2010.

To reduce legal risks, it’s best to combine the principle with other objective selection criteria. Examples include factors like skills, performance, disciplinary records, attendance, or individuals volunteering for redundancy.

FAQs

Is Last In, First Out a Legal Requirement for Redundancy?

LIFO is not a legal requirement for redundancy. Employers can choose their redundancy selection criteria, provided they are fair, objective, and legally compliant.

Can LIFO be Used as the Only Redundancy Criterion?

Employers should avoid using LIFO as the sole criterion in redundancy situations. On its own, this principle can lead to unfair dismissal claims and potential discrimination under the Equality Act 2010. Consequently, it’s best to apply LIFO alongside other selection criteria.

Is Last In, First Out Discriminatory?

If used in isolation, LIFO can be discriminatory. Indirect discrimination can arise if its application disproportionately affects individuals with protected characteristics, such as younger employees, women, and individuals from diverse backgrounds. To ensure fairness, employers should avoid using LIFO on its own and be able to justify its use.

What to Do If Last In, First Out Redundancy Was Unfair

If an employee has been made redundant due to their employer using the redundancy last in, first out principle and they believe this was unfair, there are several steps they can take to challenge the decision and seek justice.

First, it’s wise to obtain a written explanation of the decision. The employee should ask their employer for written clarification about the selection criteria used. This can help determine whether LIFO was applied in isolation or alongside other factors.

If the employee believes LIFO was used unfairly, it would then be appropriate to formally challenge the decision. This should be done in writing and as per the employer’s internal appeals process, should they have one. The employee should outline why they are appealing the redundancy decision, highlighting the specific discriminatory or unfair conduct.

Should the matter remain unresolved following an internal appeal, the employee could then contact the Advisory, Conciliation and Arbitration Service (Acas). Acas provides free, impartial advice on employment disputes and could facilitate a settlement via early conciliation. This process must be undertaken before an employment tribunal claim can be brought.

Unfortunately, not all disputes are resolved through Acas. If this is the case, the employee’s last option is to take legal action. Claims must usually be brought within three months less one day from the date of dismissal and satisfy specific eligibility criteria. Before initiating an employment tribunal claim, though, it’s wise to seek legal advice. Employment law specialists can assess one’s circumstances, advise on their best possible next steps and guide them through the legal process.

Get Help From Redmans

If you have any questions about the redundancy last in, first out principle or believe your employment rights have been breached, contact us immediately. Redmans Solicitors are employment law specialists, and following a quick consultation, we could advise on how you could proceed.

Learn more about the help we provide today by: