News
Cost As A Justification of Age Discrimination
16 November 2010
In considering the basis on which employers can justify age discrimination it has been widely accepted that "cost alone" is not a sufficient reason.
That view has now been challenged by the Employment Appeal Tribunal, which has upheld a tribunal decision that a redundancy dismissal timed to avoid costly early retirement rights being triggered at age 50, although unfair, did not amount to age discrimination as it was objectively justified.
Mr Woodcock was Chief Executive of North Cumbria Primary Care Trusts. As a result of an NHS reorganisation which radically slimmed down the number of PCTs in the area, and following an extended period of consultation and efforts at redeployment he was made redundant, with notice to terminate his employment being given so as to expire one month before his 50th birthday, when he would have benefited from an enhanced pension.
The EAT held that the tribunal had correctly applied the "cost plus" approach to justification set by "current orthodoxy" and carefully avoided departing from it. It did suggest, however, that an employer can have a legitimate interest in considering cost alone, on the basis that if the cost of avoiding or rectifying a discriminatory impact would be disproportionately high, there would be scope for considering the proportionality of the measures in the normal way. The EAT also noted that the "cost plus" approach tended to involve tribunals and parties into artificial game-playing" - "find the other factor" - of a kind likely to produce arbitrary and complicated reasoning.
Rachel Dineley of Beachcroft LLP has commented:
"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."
The EAT decision in the case (Woodcock v Primary Care Trust) can be downloaded here.