Age discrimination legislation is a mere five years and five months old; it is still very much in its formative years. Woodcock v Cumbria PCT provides guidance on this fledgling area of law – in particular, in relation to the use of cost as a justification for age discrimination.
Age discrimination legislation first came into force on 1 December 2006. Since then, treating pension scheme members differently on grounds of age has been unlawful, unless it can be “ justified” (i.e. shown to be a proportionate means of achieving a legitimate aim) or it is authorised by an exemption in the legislation.
In Woodcock, the Court of Appeal considered the extent to which cost could “ justify” age discrimination. The facts of Woodcock concerned an employer that had accelerated the dismissal of a redundant employee to avoid him qualifying for an enhanced pension on reaching age 50 which would have cost at least £500,000 to fund.
Many people expected the Court of Appeal to say that cost alone can justify treating members of different ages differently. It did not. Instead the Court of Appeal endorsed the so-called “cost plus” approach to justification. In other words, it confirmed that:
- saving cost cannot justify an age discriminatory practice on its own; but
- it may be possible to justify a practice largely on the grounds that it saves cost, provided that it helps to achieve some other legitimate aim as well.
On the facts, the Court of Appeal said that Mr Woodcock’s accelerated dismissal was not just aimed at saving cost. There was evidence that Mr Woodcock could have been made redundant earlier and that the employer had already delayed terminating his employment but did not want to delay past the point where he would reach age 50. The Court of Appeal accepted that this was justified and therefore lawful.
The Court of Appeal was at pains to emphasise the “very particular” circumstances of the Woodcock case – in particular, that the receipt of an enhanced pension on reaching age 50 would have been “a pure windfall” for the employee in question as he would ordinarily have been dismissed earlier.
These circumstances are unlikely to arise often. Pension scheme trustees should continue to treat with great caution any proposal they receive which could be age discriminatory and which their scheme’s employer seems to be making just to save cost.