'Last in, first out' redundancies on the wane

The days of the 'last in, first out' (Lifo) redundancy selection procedure look as though they are numbered, a new survey published this week revealed

The new research found that only 14 per cent of more than 100 companies used length of service as the key criterion for retaining staff. By contrast, the most popular factors were skills (63 per cent), performance (54 per cent) and relevance to future business needs (50 per cent).
“For a number of years, clients have been moving away from any form of Lifo being applied and have focused on a more skills-based selection process,” commented Stefan Martin, an Allen & Overy employment partner who heads up its workplace, representation and consultation group. The group surveyed 125 organisations, two-thirds of which employed more than 500 employees.
The rejection of Lifo is seen as evidence of a concerted effort by UK business to remain competitive in the global marketplace and to retain the best employees. “Lifo is a blunt instrument; you don't necessarily retain any particular skills or people within the industry, you're simply going to retain those who have been with you for the longest,” commented Martin.
The lawyer pointed out that “a more skills-based selection process” was much more vulnerable to legal challenges. “One of the key factors that a tribunal will look at is whether you've used objectively a fair selection criteria and, if you're using a skills-based process, ultimately it comes down to other people's opinions, and that isn't always transparent.”
The research also discovered that employers were taking a commercial view as to the risks of legal action by raising the level of compensation they are paying out to employees to mitigate the risks of claims. It was revealed that 64 per cent of respondents offered more than the statutory minimum compensation – 35 per cent of them offering four weeks of actual pay for each year of service.
“No doubt there will be some organisations that want to cushion the blow,” said Martin. “But there will be others that are doing it because their selection process may not be rigorously objective and defendable, and feel that they're less likely to receive claims if they're generous.”