What Is LIFO?
LIFO is a redundancy selection method based entirely on length of service. The employee who joined most recently is selected first, working backwards until the required number of redundancies is reached. It was once widely used because it appeared objective and easy to justify. In practice, it is neither as fair nor as legally safe as many employers assume.
Is LIFO Legal in the UK?
The short answer is: it depends on how it is used.
LIFO is not automatically unlawful. It can be used as one factor within a broader selection matrix. However, using it as the sole selection criterion is legally problematic for two distinct reasons:
Indirect Age Discrimination Under the Equality Act 2010, selecting employees purely on the basis of length of service disproportionately disadvantages younger workers. A 28-year-old with two years of service is far more likely to be selected under a LIFO system than a 55-year-old with twenty years of service — purely because of when they joined, which is closely correlated with age. This constitutes indirect age discrimination unless the employer can demonstrate it is a proportionate means of achieving a legitimate aim. In most redundancy scenarios, that justification is extremely difficult to make.
Unfair Selection ACAS guidance and Employment Tribunal case law consistently indicate that employers should use a balanced, points-based selection matrix covering a range of objective criteria — skills, performance, attendance, disciplinary record, flexibility, and experience. A selection process based on a single criterion, particularly one that can mask discrimination, is unlikely to withstand tribunal scrutiny.
"I had been with the company for fourteen months," one reader told us. "My colleague in the same role had been there for three years. I was selected. When I asked for the criteria, I was told it was based on length of service. Nothing else. I had outperformed my colleague on every measurable target that year."
This experience is far from unusual — and it describes a selection process that would face serious challenge at tribunal.
When Can LIFO Be Used Lawfully?
Length of service can be included as one criterion within a broader redundancy selection matrix. For example, a scoring matrix that awards points across five or six criteria — including skills, performance, attendance, disciplinary record, and length of service — may lawfully include a service element without falling foul of the Equality Act, provided the overall process is balanced and the outcome does not disproportionately disadvantage younger workers.
The key test is proportionality. If length of service is weighted so heavily that it effectively drives the outcome regardless of other factors, the protection of including it within a matrix disappears.
What the Statistics Tell Us
Age discrimination claims at Employment Tribunals have increased year on year, with redundancy selection identified as a key trigger Research by ACAS found that many small and medium-sized employers still use informal or single-criterion selection processes — leaving them significantly exposed Workers under 35 are statistically more likely to be selected under LIFO-based processes, despite often having comparable or superior performance records Employment Tribunal awards in age discrimination cases are uncapped — meaning successful claims can result in substantial compensation with no upper limit Practical Steps — What to Do If This Happened to You
Request the selection criteria in writing immediately. Your employer must be able to explain how and why you were selected. Ask formally, in writing, and keep a copy of everything. Ask for your scores. If a matrix was used, you are entitled to see how you were scored across each criterion. Compare your situation with retained colleagues. If others in the same role with similar or lower performance were kept on, that is relevant evidence. Consider whether the criteria disproportionately affected you because of your age. If you are younger than the colleagues who were retained, this is worth examining carefully. Do not sign a settlement agreement without independent legal advice. This is a legal requirement — and your employer must contribute to the cost of that advice. Act quickly. Employment Tribunal time limits are strict — three months minus one day from the date of dismissal. Do not delay seeking advice. Your Rights Are Clear — Use Them
If you were selected for redundancy based solely or primarily on how long you had worked for your employer, and that decision left younger workers disproportionately affected, you may have grounds for both an unfair dismissal claim and an age discrimination claim. Both carry significant legal weight — and the age discrimination claim carries no compensation cap.
Take Action Today
👉 Read your full redundancy rights: https://myredundancyrights.co.uk/blog 👉 Use our free template letters to request your selection criteria formally 👉 Calculate what redundancy pay you are owed: myredundancyrights.co.uk 👉 Find a specialist employment solicitor through our Partner Network 👉 Download our free Redundancy Action Plan — step by step from day one
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