Redundancy supported “legitimate aim” in Woodcock
A health trust did not breach age-discrimination laws when it made its chief executive redundant shortly before his 50th birthday, ensuring a saving of more than £500,000 in pension costs.
In Woodcock v Cumbria Primary Care Trust [2012] EWCA Civ 330, the Court of Appeal looked at whether costs savings can justify a potential act of discrimination. At stake was whether the trust’s discriminatory treatment of its employee was justifiable as being “a proportionate means of achieving a legitimate business aim”.
Nigel Woodcock was made redundant without the trust going through the full consultation process, although he was given a year’s notice. This was to make sure he left his job before he became eligible for enhanced pension payments—triggered when he reached his 50th birthday. Instead, he left his job with a redundancy package of £220,000.
Lord Justice Rimer considered the “costs plus” rule, but said there was “some degree of artificiality” about it. He said that dismissal solely to save costs would not justify discriminatory treatment on the grounds of age. However, he accepted the dismissal was “genuinely” for the purpose of redundancy, and that it was legitimate for the trust to try to reduce its costs—in fact it would have been “irresponsible” for the trust not to do so.
Michael Bradshaw, partner at Charles Russell, says: “The court considered the relevant question to be whether there is a legitimate aim and, if so, whether the treatment is proportionate. This does not specifically address the issue of whether cost reasons alone can justify discriminatory treatment, but instead appears to shift the focus to proportionality.”
Rachel Dineley, partner at DAC Beachcroft, says the decision “does not provide a formula for determining what is proportionate”, but “is good news for employers”.
“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.”
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