The Employment Appeal Tribunal (EAT) has held in Cook v Gentoo Group Ltd that a tribunal erred in finding that an employer's curtailment of a redundancy dismissal process was a proportionate means of achieving a legitimate aim.
The claimant was dismissed by reason of redundancy. The tribunal found that the respondent's curtailment of the redundancy process to avoid the claimant obtaining an enhanced pension when he reached 55 years of age did not constitute direct age discrimination, although it upheld the claim of unfair dismissal. The speed with which the process had been conducted was unfair and there had been "no conscientious attempt by the respondent to seek suitable alternative employment for the claimant" which was described as a "major error". The tribunal held that the actual comparators identified by the claimant were inappropriate and did not go on to consider a hypothetical comparator. It held in the alternative that "we would have found the detriment to be a proportionate means of achieving a legitimate aim".
The claimant appealed arguing that the tribunal had erred in holding that dismissing the claimant unfairly was a proportionate means of achieving a legitimate aim. The legitimate aim identified by the respondent was "saving costs which would have been incurred in making the additional payment into the pension fund" with the "plus" element being the prior disapproval of the Regulator of Social Housing of the practice of windfall pension enhancements.
The EAT asked a differently constituted tribunal to consider whether or not the employer has a defence of justification for the direct age discrimination. Amongst other things it found that there had been no consideration of any "social policy objectives", and no consideration of the circumstances in which the Regulator had criticised previous severance payments and whether they were comparable to the enhancement of the claimant's pension or whether the regulator would consider that failing to comply with the respondent's usual policies itself constituted poor performance. It also found that the tribunal had failed to carefully balance the gravity of the discriminatory effect of the dismissal in breach of the respondent's procedures on the claimant against the legitimate aim of the respondent and to consider whether early dismissal was appropriate and reasonably necessary to achieve that aim.
Take note: Although the dismissal of an employee using a curtailed procedure in order to avoid paying an enhanced pension entitlement has been found to be justified in Woodcock v Cumbria Primary Care Trust this was in very specific circumstances and employers should be wary of dismissing workers in order to avoid incurring additional pension liability. It was held in Woodcock that cost alone cannot be a justification for discriminating and, unlike in Cook, the employer in Woodcock, had it complied with its procedures, could have dismissed the employee before he reached the age when he would have obtained enhanced pension benefits. Cook emphasises the importance of carefully identifying a valid legitimate aim in order to have a defence to a decision to dismiss an employee by reason of redundancy to avoid paying an enhanced pension entitlement.
