An employer who short circuits their redundancy procedure in order to dismiss an employee before they reach an age at which they become entitled to an enhanced redundancy payment, may be guilty of age discrimination. In Cook v Gentoo Group Ltd, the Employment Appeal Tribunal (EAT) held that in these circumstances tribunals have to decide if the dismissal was a proportionate means of achieving a legitimate aim.
Basic facts
At a meeting of the executive team in April 2019, it was decided that the organisation should be restructured and Mr Cook’s post should be made redundant. Although the board would normally be involved in a decision to restructure, it was decided at a meeting of the Appointments and Remuneration Committee, on 2 May, to cut out that stage as the next meeting was not until 22 May. The point of this was to ensure that Mr Cook would be made redundant before he reached the age of 55, when he became entitled to an immediate payment of his retirement pension.
Mr Cook was told at the first “consultation” meeting on 3 May of his impending redundancy. A few days later, he was signed off sick with stress which meant that he was unable to attend further meetings on 8 and 13 May. He was dismissed without notice on 16 May.
Mr Cook brought claims for unfair dismissal and direct age discrimination.
Relevant law
It is unlawful for an employer to treat a worker less favourably because of age than they treat or would treat others not of the same age.
Unlike other protected characteristics, however, direct age discrimination can be justified if it is a proportionate means of achieving a legitimate aim which must be a social policy objective relating to employment, the labour market or vocational training.
Tribunal decision
The tribunal upheld his claim for unfair dismissal. It considered that the speed at which the employer had conducted the redundancy process was unfair and that they had committed a major error by failing to make any conscious effort to seek suitable alternative employment for him.
Although the tribunal found that Mr Cook’s employment would not have terminated until after he reached the age of 55, had a fair procedure been followed, it held that the decision to make him redundant was not direct age discrimination. Firstly, he had not identified the appropriate comparators; and secondly, even if he had, the tribunal said that it would have found that his dismissal was a proportionate means of achieving a legitimate aim.
Mr Cook appealed, arguing that it was wrong to hold that his dismissal was a proportionate means of achieving a legitimate aim.
EAT decision
Finding in Mr Cook’s favour, the EAT held that the tribunal had not identified a legitimate aim, nor had it explained why the treatment he had been subjected to was proportionate.
The EAT surmised that the tribunal identified the legitimate aim was the saving of costs. In other words, the additional payment that the employer would have been required to make into the pension fund, plus the fact that the employer’s regulator had disapproved of the practice of windfall pension enhancements (known as the “costs plus” argument).
It also noted that the tribunal would have found the detriment to Mr Cook was proportionate to that aim, taking into account the fact that he had already received £47,000 by way of a redundancy payment and notice pay.
However, as the explanation provided by the tribunal was not part of its reasoning at the time (a mistake that was fundamental to the entire claim), the EAT concluded that the matter should be remitted to a differently constituted employment tribunal for reconsideration.
Comment
On the issue as to whether a costs plus justification defence can be made out, the EAT considered that the employment tribunal had failed to properly analyse the case against the decision in Woodcock v Cumbria Primary Care Trust (LELR 268). Specifically, the tribunal should have assessed whether Mr Cook would have been dismissed after the age of 55 if a proper procedure had been followed.