Employers wanting to dismiss on grounds of increased pension costs due to age have been given a boost by a decision in the Employment Appeal Tribunal (EAT) last month.
In the case of Woodcock v North Cumbria Primary Care Trust, the EAT ruled that employers can objectively justify age discrimination in a redundancy situation.
Woodcock was chief executive of North Cumbria Primary Care Trust and was made redundant following the merger of a number of Primary Care Trusts (PCTs) in the area. He claimed that his dismissal amounted to direct age discrimination as notice to terminate his employment was given so as to expire one month before his 50th birthday, when he would have benefited from an enhanced pension.
Woodcock applied for one of the new chief executive roles after the PCT merger but he was unsuccessful and no alternative employment for him was found. In August 2009 the Employment Tribunal found he had suffered direct discrimination by being dismissed without proper consultation, but that it was justified as it was a proportionate means of achieving a legitimate aim – which included the avoidance of a significant cost to the Trust.
Rachel Dineley, employment partner and head of the Diversity and Discrimination Unit at law firm Beachcroft LLP says: “This decision gives employers much needed comfort as to whether you can objectively justify age discrimination when cost is a key issue. In this case the steps taken by the employer to avoid the employee securing a “windfall” were justified. The approach is consistent with other appeal cases where tapering or the capping of redundancy payments has been found to be legitimate.
Much will depend on the facts (including the timing and process followed) in any particular case. Perhaps most important of all, the EAT has cast doubt on the case of Cross v British Airways, that “cost alone” can never constitute objective justification.
“With careful planning and proper consideration of relevant issues, it should now be easier for employers to seek to save money (including taxpayers’ money, in public sector organisations) when conducting redundancy and restructuring exercises. In the current climate, the case is very welcome and well timed.”