The Court of Appeal has handed down an important decision on whether employers can objectively justify age discrimination when making a significant costs saving in a redundancy situation.
In this case, Woodcock v. Cumbria Primary Care Trust, Mr Woodcock’s role as Chief Executive of North Cumbria Primary Care Trust became redundant as a result of an NHS reorganisation. As he was entitled to 12 months’ notice and his 49th birthday was looming, the decision was taken to give him notice to expire before his 50th birthday, when he would otherwise have benefited from an enhanced pension, which saved the Trust over £500,000.
The Employment Tribunal found that the Trust’s action was objectively justified in the circumstances. There was no doubt that the reason for dismissal was redundancy for which Mr Woodcock was paid £220,000.
The Court of Appeal has confirmed that Mr Woodcock’s treatment could not be characterised as aimed at avoiding cost and no more. It upheld the decision of the Employment Appeal Tribunal in that the objective justification test was met on the facts and the Trust had not directly discriminated against the claimant.
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Said Rachel Dineley, Employment Partner and Head of the Equality and Discrimination unit at DAC Beachcroft LLP:
“This is a sound and unsurprising decision. Crucially, the Court of Appeal has stated that an employer cannot justify discriminatory treatment ‘solely’ because the elimination of such treatment would involve increased cost.
“That simply means that saving or avoiding cost will not, without more, amount to achieving of a ‘legitimate aim’, and reflects European law.”
She says that the decision is also consistent with the EAT’s decision last month in Benson v. HM Land Registry, which held that in a cost-cutting exercise, conducted in conjunction with a rationalisation of the employer’s office premises, nationwide, it was a matter for the employer to determine its budget for achieving a reduction in headcount, and that it could take cost into account when determining who should be selected amongst those who had volunteered for redundancy.
