Can cost alone ever justify age discrimination?

Mr Woodcock was the Chief Executive of North Cumbria Primary Care Trusts.  In 2006, this post was removed as part of a re-organisation of the NHS which reduced the number of Primary Care Trusts.  Mr Woodcock applied for the role of Chief Executive in one of the newly configured Primary Care Trusts but was unsuccessful.  Following one formal consultation meeting, he was issued with a notice of dismissal on 23rd May 2007. 

The timing of this notice was significant.  Mr Woodcock had a contractual notice period of 12 months and was eligible to take early retirement with an enhanced pension entitlement if he remained in employment on his 50th birthday (17th June 2008) and the cost of this enhanced pension was substantial.  His notice was  issued to ensure that his dismissal took effect prior to his 50th birthday and him becoming eligible to receive increased pension provision. 

Mr Woodcock claimed that his dismissal was unfair and discriminatory on the grounds of age.  The Employment Tribunal and the Employment Appeal Tribunal agreed that the timing of the notice of dismissal constituted an act of direct age discrimination but held that this was not unlawful discrimination as it had been objectively justified.  Age is the only protected characteristic which allows direct discrimination to be objectively justified as being a proportionate means of achieving a legitimate aim.

The decision was appealed and the Court of Appeal considered the key question to be whether a defence of objective justification had been made out.  Mr Woodcock argued that saving costs or avoiding expense cannot ever justify discrimination.  The Court of Appeal agreed that cost alone can never amount to a legitimate aim and there always needs to be an additional factor.  This is known as the “costs plus” argument. 

Here, on the unusual circumstances of the case, there was a “plus” factor which was the Trust’s aim to give effect to its genuine decision to dismiss him on the grounds of redundancy.  This was a decision which should have been effected much earlier when it became apparent that Mr Woodcock’s role had disappeared and there was no possibility of a suitable alternative role but, for various reasons, had not been.  Had the timing of the notice been later, Mr Woodcock would have received a “pure windfall”.

This case makes it clear that the sole aim of reducing costs or managing expenditure will never justify discrimination: there always needs to be something more.  The difficulty for employers is establishing exactly what that something more is.

For more information please contact Martin Sinclair or Nicola Gray or call 01224 632464.