David Davison highlights a recent age discrimination case and warns charities about the potential costs of participating in public sector pensions schemes. 

I have written previously on the risks charities participating in public sector schemes, such as the local government pension scheme, face as a result of making staff redundant after age 50.  The issue is that these schemes confer preferential rights on staff who leave on grounds of ‘operational efficiency’, rights which can often cost organisations hundreds of thousands of pounds. Frequently these costs can more than wipe out any saving to be derived from the redundancy exercise and organisations need to be wary of the implications.

An interesting employment case, Woodcock vs. Cumbria Primary Care Trust, has now thrown some interesting potential discrimination issues in to the mix.

Mr Woodcock, who was almost 49 years old, was the Chief Executive of Cumbria PCT and was being made redundant after a re-organisation. He was entitled to a 12 month contractual notice period. At age 50 he would have benefitted from enhanced pension benefits worth around £500,000 if he was then made redundant. In an effort to avoid this the employer gave him notice prior to starting the redundancy consultation process and Mr Woodcock then brought an age discrimination complaint on the basis that the notice should not have started prior to the start of the consultation.

An employment tribunal and an appeal tribunal both found that the timing of the dismissal was justified even though it was potentially discriminatory and that the employer’s aim of avoiding additional costs was legitimate. The tribunals took the view that had notice not been given when it was Mr Woodcock would have benefitted from a ‘windfall’ and that ultimately, as Mr Woodcock was only interested in a chief executive position and no such roles were available, the timing wouldn’t have made a difference.

The Court of Appeal ultimately upheld the appeal tribunal decision accepting that a ‘cost plus’ approach may, in certain circumstances, involve an artificial assessment of the facts. It contended however that this wasn’t the case here as there were genuine reasons for dismissal and therefore the decision was not based solely on cost.

The Court of Appeal looked to identify if the means to achieving the legitimate aim were proportionate and that cost is only one part of the assessment. So organisations in a similar position need to make sure they take the right professional advice and look at the issue as a whole rather than just the financial aspects.

David Davison is head of public sector, charities and not-for-profit, Spence & Partners