COST OF DISCRIMINATION

Woodcock v Cumbria Primary Care Trust

Although it is well-established that consideration of costs alone cannot justify discrimination, the Employment Appeal Tribunal (EAT) has cast doubt on that orthodoxy in Woodcock v Cumbria Primary Care Trust, saying there was no reason why consideration of costs in and of themselves could not constitute justification.

Basic facts

Mr Woodcock was appointed chief executive of the North Cumbria Primary Care Trusts (PCTs) in June 2003. In 2005 it was decided that the number of PCTs in the north west should be reduced and Mr Woodcock’s post disappeared.

He was seconded in February 2006 to the Cumbria and Lancashire Special Health Authority (SHA) to a temporary role implementing the new arrangement. He continued his transitional role at the SHA until 1 October, when his employment was transferred to the new Cumbria PCT.

He was not, however, appointed to one of the new chief executive roles and continued in a number of temporary roles after that date. In March 2007, his new employer asked him to attend a meeting to discuss his “employment status”, which was eventually fixed for 6 June.

At some point before the meeting, the Trust realised that if it did not give Mr Woodcock 12 months notice of dismissal before 17 June, he would still be in employment on his 50th birthday (17 June 2008), allowing him to claim early retirement on enhanced terms. This could cost anything between £500,000 and £1,000,000.

It therefore wrote to him on 23 May giving 12 months’ notice of dismissal. The meeting went ahead on 6 June but Mr Woodcock said that consultation was meaningless when he had already been given notice. He asked the Trust to withdraw the notice but it refused and Mr Woodcock claimed age discrimination among other things.

Tribunal decision

The tribunal agreed that he had suffered direct discrimination in that he was dismissed without “proper consultation” because of his “impending forty ninth birthday”. However, it said that the discrimination was objectively justified because the Trust’s aim was to avoid the additional cost it would have incurred had he reached age 50 before the end of his notice period.

It then dealt with the decision in Cross v British Airways which said that cost alone cannot be a legitimate aim for justifying discrimination but it can be put into the balance with other justifications.

The tribunal concluded that as the discriminatory act in this case was the failure to have a consultation meeting and as that would not have made any difference to whether he was dismissed or not, the discriminatory act was proportionate in the circumstances.

EAT decision

And the EAT agreed, saying the tribunal had correctly applied the “costs plus” test in Cross. Although the Trust was motivated by the potential costs consequences of allowing Mr Woodcock to remain in employment until his 50th birthday, “it would be artificial to regard that factor in isolation” as the only reason for his dismissal.

As a matter of principle and common sense the EAT then went on to say that “considerations of cost must be admissible in considering whether a provision criterion or practice which has a discriminatory impact may nevertheless be justified.”

It could not see any principled basis for a rule that considerations of cost could never by themselves constitute sufficient justification. Having such a rule, it said, just tended to involve both the parties and tribunals in “artificial game-playing” which was likely to produce arbitrary and complicated reasoning, not least because deciding where “cost” stopped and other factors started was far from straightforward.