Justification and age discrimination
In the recent decision in Woodcock v Cumbria Primary Care Trust, the Court of Appeal concluded that dismissing a Chief Executive for redundancy without formal consultation, in order to avoid an enhanced pension entitlement, was justified and did not therefore constitute unlawful age discrimination.
This decision follows the findings in the Seldon case that forced retirement can be justified.
In March 2007, Mr Woodcock’s employer realised the significance of giving Mr Woodcock notice before his 49th birthday on 17 June 2007 because if he was still employed on his 50th birthday, he would have been entitled to take early retirement on enhanced terms. This would significantly increase the cost of his retirement for the PCT by at least £500,000.
Mr Woodcock brought an Employment Tribunal claim for unfair dismissal and for age discrimination on the basis that the timing of the notice of dismissal deprived him of the benefit of being in employment with the PCT at the age of 50.
The case went to the Court of Appeal. In relation to justifying age discrimination, the Court held that the PCT had a legitimate aim and saving the costs of the enhanced pension by serving the notice when it did was also a legitimate part of that aim. As for the issue of proportionality, a balance had to be struck between the needs of the PCT and the effect of the discriminatory treatment on Mr Woodcock. Taking into account the circumstances and bearing in mind that consultation would achieve nothing (because there was no suitable alternative job) the PCT’s action was a proportionate means of achieving a legitimate aim. By 2007, when the redundancy position was clear, Mr Woodcock had "no right, entitlement or expectation to the enjoyment of the enhanced benefits that he would have enjoyed" had he remained in the PCT’s employment until he was 50. Had he done so, he would have been the beneficiary of a pure windfall.
It is clear that courts will allow employers to justify age discrimination. Notwithstanding the Woodcock decision, employers will still need to act with care when trying to objectively justify acts of discrimination on the grounds of cost. In a separate decision in London Borough of Tower Hamlets v Wooster 2009, the EAT upheld the Employment Tribunal’s decision that an employee had been directly discriminated against because of his age when he was made redundant before reaching his 50th birthday to avoid the cost of his enhanced early retirement pension.