Dan, SLT, both very informative replies. Personally, I think that for redundancies there should be a last in, first out policy, if only to keep it fair.
But I do agree with the observation that strict seniority lists have a detrimental effect on both the individual pilots as well as the company they work for, as they seem to me a way of rewarding mediocrity. Keep your head down, don't cause waves and eventually you will end up on top. Whereas more adventurous pilots with experience in different operations and companies may end up as "career F/O's", both bad for morale as well as it does not allow the hiring company to put a pilot's experience to good use.
Thanks everyone, I learned a lot.
PS I work in the helicopter industry, where there's a mix of seniority lists and DE slots over several companies. In our case it seems like the most passionate advocates of the seniority system are the F/O's coming up for command, for understandable reasons. The rest don't seem so bothered until contracts change operators..