The Employment Appeal Tribunal ("EAT") has held that a local authority discriminated against a 49 year old employee on the grounds of age when it failed to redeploy him, and this was motivated by a desire to avoid his entitlement to an early retirement pension.
The case is a warning to employers who are considering dismissing an employee to prevent their entitlement to an age-related benefit, such as a pension. However, as the employer failed to offer a defence of justification to the claim of age discrimination, this case did not decide whether dismissing an employee in order to minimise pension liabilities can ever be justified as a proportionate means of achieving a legitimate aim.
In the case of London Borough of Tower Hamlets v Wooster, Mr Wooster was made redundant as a result of restructuring of Tower Hamlets (the "Council") housing department. Although employed by the Council since 1973, Mr Wooster had been on secondment to social landlord East End Homes (EEH) since 2003. On 9 October 2006, Mr Wooster was notified that his secondment was coming to an end and that unless alternative employment within the Council could be found, he would be dismissed for redundancy. At the same time, he was offered an advantageous voluntary redundancy package, which he was encouraged to apply for.
No permanent role was found for Mr Wooster, and as a result his employment with the Council was terminated with effect from 29 December 2006. EEH still had work for Mr Wooster and offered to keep him (on full salary) until July 2007 which would have taken Mr Wooster past his 50th birthday, thereby entitling him to take early retirement under the Local Government Pension Scheme. However the Council declined the offer from EEH of additional employment for Mr Wooster, stating in an e-mail to their CEO "if you are going to pay his salary then you can pay his bloody pension when he is 50. If he goes now we do save the pension". Mr Wooster therefore took voluntary redundancy.
On 16 March 2007, Mr Wooster commenced proceedings against the Council and claimed for both unfair dismissal and unlawful (direct) age discrimination under the Employment Equality (Age) Regulations 2006.
The Employment Tribunal (ET) found that although the initial redundancy situation had arisen in good faith, the fact that Mr Wooster was to reach the early retirement age of 50 was the 'tipping point' which led the Council to dismiss him rather than to extend his secondment or to make further efforts to redeploy him. He was therefore treated less favourably than a hypothetical comparator who was not aged 49. As the Council put forward no arguments on justification, the ET found that Mr Wooster had suffered direct discrimination on grounds of age. The claim for unfair dismissal was also upheld.
The Council appealed to the EAT against the decision that the dismissal of the Claimant constituted age discrimination.
The EAT upheld the ET's decision and dismissed the appeal by the Council. Although the EAT accepted the Council's submission that it could not accept EEH's offer to keep Mr Wooster on until he was 50 simply in order to enable him to take early retirement, the Employment Tribunal had not based its decision on the refusal to sanction an extension to the secondment to EEH. Instead, it had taken into account the Council's refusal of EEH's offer as evidence of the Council's motivation to end Mr Wooster's employment before he was 50 by failing to redeploy him and by dismissing him when they did. For example, it would not have been unlawful for the Council to have temporarily extended Mr Wooster's employment to facilitate his redeployment. The Council's actions therefore constituted less favourable treatment on the grounds of age, as an employee who was not 49 years old would not have been treated in the same way.