Legal opinion is mixed as to whether a landmark court case will open the floodgates for employers to dismiss staff based on their age in order to escape large pension pay-outs – without being subject to discrimination claims.
The Court of Appeal ruled yesterday that Cumbria Primary Care Trust was within its rights to make chief executive, Nigel Woodcock, redundant in order to avoid a £1 million pay-out.
Woodcock was told in 2007 that he would be dismissed when he hit 49, at which time he was entitled to a pension of £200,000. If the Trust had allowed him to work until he was 50, his pension pot would have increased in value to between £500,000 and £1 million.
But the Court said that the situation was justifiable because his employers were not only trying to save money, but his post was already due to be scrapped because of a wider Trust reorganisation in the Cumbria region.
Woodcock had already been warned in 2006 that he was at risk of redundancy because his role was set to be abolished in the wake of a rationalisation of Cumbria’s health boards.
But when the Trust discovered his pension situation, it skipped a consultation meeting with him and proceeded to send him a dismissal letter. Woodcock, who received a £220,000 redundancy pay-out, subsequently began a claim for unfair dismissal and age discrimination.
Opening floodgates – or not?
Three years later, however, the Court of Appeal has ruled that his employer did not act unfairly – despite agreeing that Woodcock’s treatment effectively amounted to unlawful age discrimination.
Lord Justice Rimer said: “Mr Woodcock’s long and able service with the NHS did not entitle him to a job-for-life or the expectation of a job-for-life. Employment in a particular post will commonly carry with it the risk of redundancy and Mr Woodcock enjoyed no special immunity from the risk that applied to his.”
Audrey Williams, head of discrimination at law firm, Eversheds, described the decision was “significant”, but warned that it “should not be interpreted as opening the doors to exploitation by employers, seeking to justify discriminatory measures or conduct for cost reasons”.
The Court of Appeal had, in effect, simply reiterated the need for employers to “demonstrate proportionate means of achieving a legitimate aim” and demonstrated that “ordinary principles of common sense and proportionality are relevant to that issue”, she added.
“It is clear that courts will continue to scrutinise the circumstances of, and reasons for, employers’ decisions as closely as ever – if not more so, where cost is being put forward to justify a decision or approach,” Williams said.
But Daniel Barnett, an employment lawyer at Outer Temple Chambers, disagreed. He told the Daily Telegraph that some employers would now be able to “defend certain discrimination claims on the grounds that it is cheaper to discriminate than not to discriminate”.
“The ramifications are wide-ranging. For example, it will be easier for employers to refuse to make adjustments for disabled employees because of cost,” Barnett added.
