In the recent Court of Appeal case of Woodcock v Cumbria Primary Care Trust, the Court of Appeal upheld the Employment Tribunal’s and Employment Appeal Tribunal’s judgments that the Trust’s decision to dismiss Mr Woodcock without proper consultation to avoid his entitlement to enhanced pension was not unlawful age discrimination because the treatment was objectively justified.
The Claimant, Mr Woodcock, was a Chief Executive employed by the North Cumbria Primary Care Trust. Owing to a reorganisation of the Primary Care Trusts in the North-West region, in which a number of trusts were merged, Mr Woodcock’s role was put at risk of redundancy. Mr Woodcock was given a guarantee that as a result of the reorganisation, his employment would not be terminated before 30 June 2007. Mr Woodcock’s contract of employment contained a 12 month notice period and it was intended that any such notice would be given so as to expire by the end of the guarantee period if he was not offered alternative employment. However, no such notice was given. Mr Woodcock applied for one of the new Chief Executive roles but was informed in July 2006 that his application had been unsuccessful.
By March 2007, the Trust had realised the importance of giving Mr Woodcock his dismissal notice before he turned 49 on 17 June 2007, because if his employment terminated after the age of 50, he would be entitled to an early retirement pension, the cost of which was estimated to be at least £500,000.
Mr Woodcock was invited to a redundancy consultation meeting on 10 April 2007, but was unable to attend the meeting. The next mutually convenient date for the parties was 6 June 2007. The Trust believed that Mr Woodcock was deliberately delaying the meeting so that his employment would end after his 50th birthday, and he would therefore receive the enhanced pension. In order to avoid this risk, on 23 May 2007 the Trust served Mr Woodcock with 12 months’ notice of termination on the grounds of redundancy, unless alternative employment could be found before his employment was terminated.
Mr Woodcock brought a claim against the Trust for unfair dismissal and age discrimination, but it was the age discrimination claim that was the subject of this appeal.
Was the Trust’s treatment age discriminatory?
Under the Employment Equality (Age) Regulations 2006, a person discriminates against another person if on the grounds of age that person treats another less favourably than he treats other persons because of their age, unless that treatment can be shown to be a proportionate means of achieving a legitimate aim. These Regulations were in force at the relevant time and, although they have since been repealed, the current test is substantially the same.
In this case, the Trust’s treatment of Mr Woodcock was, on the face of it, age discriminatory. The Trust had issued a dismissal notice before engaging in a formal consultation process in order to avoid paying him an enhanced pension. It would not have taken the same approach to a 47 year old, as that individual would not have been entitled to an enhanced pension.
The main issue before the Court of Appeal therefore was whether this treatment was a proportionate means of achieving a legitimate aim.
Court of Appeal Decision
The arguments before the Court focussed on the “costs plus” approach. This approach requires that the avoidance of cost, in itself, cannot be used to justify discriminatory treatment. There must be another factor in addition to cost. The Court considered that there was a degree of artificiality about this approach as “almost every decision taken by an employer is going to have regard to costs.”
The Court held that the Trust’s treatment was not aimed solely at saving or avoiding costs. The Trust had genuinely decided to terminate Mr Woodcock’s employment by reason of redundancy. The dismissal of an employee on such grounds was a legitimate aim. The reason for Mr Woodcock’s dismissal was not his age: the Trust had intended to dismiss him before it realised the implication of when it did so, but in deciding to serve the notice when it did, the Trust were protecting its position and the taxpayer’s money. While the Trust had not engaged in a formal consultation process, this in fact did not deprive Mr Woodcock of anything of value as the consultation would have not have achieved anything.
Mr Woodcock was criticised for adopting the position that the consultation was inappropriate as the dismissal notice had already been served, instead of treating the meeting as an opportunity to open a consultation process which could continue for 11 months. The Court considered that Mr Woodcock’s stance was unconstructive and pointless, given that it was well established that a consultation can continue until after employment has been terminated.
Mr Woodcock was aware that he had to consider all options available to him, and in fact he had benefited from having a very generous period in which to find alternative work. Mr Woodcock had a period of 30 months from first becoming aware of the reorganisation until his employment terminated. The Court therefore considered that the Trust had treated Mr Woodcock with an appropriate degree of fairness.
The Court also pointed out that the Trust could have given the dismissal notice immediately after the meeting on 6 June 2007. If it had done so, it is difficult to see what complaint Mr Woodcock would have had.
Employers should not see this decision as a green light to rely on costs factors alone when seeking to justify the treatment of employees. The facts in this case were very unusual and the real issue was whether the treatment was a proportionate way of achieving a legitimate aim. There is still a risk that dismissing an older or younger employee in order to save costs will result in a successful age discrimination claim. Given that the Trust is a public body, the fact that it sought to save taxpayer’s money was seen as a positive approach. It is not clear whether the same approach would have been seen as positive had the employer been a private company.