Age-related redundancy was justified on money-saving grounds

The Employment Appeal Tribunal (EAT) has handed down its decision in a ruling on whether employers can objectively justify age discrimination in a redundancy situation.  Mr 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 50^th birthday, when he would have benefited from an enhanced pension.

Rachel Dineley, Employment Partner and Head of the Diversity and Discrimination Unit at law firm Beachcroft LLP said:

“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.  The Woodcock decision contrasts with an earlier decision (also from the President of the EAT) in which the discriminatory treatment of a prospectively redundant employee was not lawful.  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.”

Mr 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 that Mr Woodcock 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.