Woodcock v Cumbria Primary Care Trust UKEAT/0489/09/RN
Appeal against decision by the ET that the claimant’s dismissal was fair and the respondents had not discriminated against him by reason of his age. Appeal in respect of unfair dismissal succeeded, sex discrimination appeal failed.
The claimant’s post as Chief Executive of an NHS Primary Care Trust was made redundant as a result of reorganisation. The claimant’s notice period was 12 months. Instead of being given his redundancy notice immediately, the claimant continued to work in temporary positions for a year after being told his CE position was redundant, during which time suitable posts within the NHS were considered but not offered to the claimant. Two weeks before the claimant reached his 49th birthday, someone noticed that, unless they serve the redundancy notice on him before he was 49, he would be 50 when his notice period expired, thus entitling him to an enhanced early retirement package which could have cost the NHS up to an extra £500,000. The claimant was subsequently given his notice prior to a formal consultation meeting so that it could be achieved before he was 49. He claimed unfair dismissal and age discrimination. The Employment Tribunal dismissed both claims, holding that 1) the dismissal was fair, notwithstanding non-compliance with the Statutory Disciplinary Procedures because the claimant would have been dismissed anyway, and 2) although the timing of the giving of notice was on the grounds of the claimant’s age, it was justified in all the circumstances including the costs that would have been incurred if the NHS had to fund his early retirement.
The EAT overruled the fair dismissal decision, saying that the dismissal was automatically unfair by reference to s98A(1) and therefore s98A(2) was irrelevant. On the age discrimination issue, the EAT concluded that the ET had not just decided the justification point on cost alone but had applied the ‘cost plus’ test in Cross v British Airways [2005] IRLR 423. Also the ET were entitled to take into account the fact that, if the claimant had been made redundant when his job actually disappeared, he would not have been entitled to the enhanced early retirement, which would have been a windfall for him.
__________________
Appeal No. UKEAT/0489/09/RN
EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
At the Tribunal
On 30 June & 1 July 2010
Judgment handed down on 12 November 2010
Before**
THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT), MS K BILGAN, DR B V FITGERALD MBE LLD FRSA
MR N WOODCOCK (APPELLANT)
**
**
**
**
**
**
**
**
**
CUMBRIA PRIMARY CARE TRUST (RESPONDENT)
Transcript of Proceedings
JUDGMENT
APPEARANCES
For the Appellant:
MR DESHPAL PANESAR (of Counsel)
Instructed by:
Messrs DLA Piper UK LLP Solicitors
Bridgewater House
101 Barbirolli Square
Manchester
M2 3DL
For the Respondent:
MR ANDREW SHORT (One of Her Majesty's Counsel)
Instructed by:
Messrs Capsticks LLP Solicitors
35 Newhall Street
Birmingham
B3 1PB
SUMMARY
AGE DISCRIMINATION
UNFAIR DISMISSAL – 2002 Act
Claimant’s post as Chief Executive of NHS Primary Care Trust disappears in reorganisation – Not selected for successor post – After twelve months working in temporary positions given twelve months’ notice of dismissal – Notice given prior to formal consultation meeting in order to ensure that notice expired prior to his 50th birthday, when he would have been entitled to take early retirement, with consequent substantially increased costs to the Trust – Claims of unfair dismissal and age discrimination - Tribunal holds (a) that dismissal fair, notwithstanding non-compliance with 2002 Act procedures, because Claimant would have been dismissed anyway; and (b) that although the timing of the giving of notice was on the grounds of Claimant’s age it was justified in all the circumstances, including the costs that would have been incurred if the Trust had to fund his early retirement.
HELD:
(1) Appeal allowed on unfair dismissal – If a decision was unfair by reference to s. 98A (1), s. 98A (2) has no application.
(2) Appeal dismissed on age discrimination – Tribunal had not decided the justification issue on the basis only of the cost to the Trust but had applied the “cost plus” test in Cross v British Airways [2005] IRLR 423 – It had been entitled to take into account the fact that it was only because the Claimant had been kept in employment for almost twelve months from when his job disappeared, and had then been given a further twelve months’ notice, that the chance of his reaching the age of 50 arose; and that in those circumstances his becoming entitled to take early retirement would have been a “windfall” – Although the timing of the notice had meant that his first formal consultation meeting was before rather than after notice was given, in the particular circumstances of the case that fact did not prevent the giving of notice being justified.
Doubt expressed as to whether Cross v British Airways was right to hold that “cost alone” could never constitute objective justification.
THE HONOURABLE MR JUSTICE UNDERHILL (PRESIDENT)
INTRODUCTION
1. This is an appeal against the decision of an Employment Tribunal sitting at Carlisle, chaired by Employment Judge Garside, dismissing the Appellant’s claims of unfair dismissal and age discrimination. The Tribunal sat for five days in May 2009. The Judgment and Reasons were sent to the parties on 12 August 2009.
2. Before us, as before the Tribunal, the Appellant was represented by Mr Deshpal Panesar of counsel and the Respondent (to which we will refer as “the Trust”) by Mr Andrew Short QC. We regret the time taken to produce our judgment in this case, which is principally the result of the pressure of other cases.
3. The Trust concedes that the Tribunal’s rejection of the unfair dismissal claim cannot be defended, but that concession is of no substantial benefit to the Appellant: see paras. 22 to 24 below. The claim which matters is the age discrimination claim.
THE FACTS
4. The Appellant was born on 17 June 1958. He has been employed in the NHS since he left university in 1980. He is evidently a very able manager. He first achieved Chief Executive status in 1992. On 16 June 2003 he became Chief Executive of a body described as the “North Cumbria Primary Care Trusts”: this was not a legal entity in its own right but was a single management structure serving three separate PCTs in North Cumbria. His contract of employment included a twelve-month notice period.
5. As a result of an NHS reorganisation entitled Commissioning a Patient-Led NHS, which was announced in 2005, the number of PCTs in the North West was to be reduced from 42 to 24 by the merger of a number of existing PCTs – a process described as “reconfiguration”. The merger was to take effect from 1 October 2006. There was also to be a new Strategic Health Authority for the entire North West, with effect from 1 July 2006. The North Cumbria PCTs were among those affected by this reconfiguration, since it was proposed to have a single PCT covering the whole of Cumbria. Accordingly the Appellant’s post would disappear.
6. There were, as would be expected, elaborate and formal arrangements put in place for the handling of redundancies among senior management as a result of the reorganisation. The Appellant and the twenty other Chief Executives whose roles had been lost were entitled (indeed required, subject to certain immaterial exceptions) to apply for the Chief Executive role in the twelve new reconfigured PCTs. Responsibility for assisting those who were unsuccessful in that exercise was assigned to the Chief Executive of the new SHA, in conjunction with their current PCT chair.
7. Without prejudice to his application for one of the new posts, the Appellant was, with effect from 6 February 2006, seconded by the Cumbria and Lancashire SHA, which was handling the reorganisation in the relevant respects, to a temporary role taking responsibility for implementing the transition from the old to the new PCTs.
8. The Appellant made the short-list for appointment as one of the new Chief Executives, but he was in the end unsuccessful. Mike Farrar, the Chief Executive of the new North West SHA, who had chaired the interviewing panel, gave him the news informally by phone on 26 July 2006. The two of them met on 9 August: the Appellant was given feedback about his interview, and there was discussion about his future. At para. 22 of the Reasons the Tribunal found as follows:
“Mr Farrar asked Mr Woodcock whether he wanted to leave the NHS or look for suitable alternative employment. Mr Woodcock confirmed that he wanted to use his experience and skills to remain in the NHS. Mr Farrar indicated that it would be easier for him to make an application to become a chief executive after 12 months or so had passed and things had quietened down. It was, therefore, pragmatic for Mr Woodcock to remain seconded to the SHA and not to return to work at the new Cumbria PCT [sc. in some post other than as Chief Executive]. Mr Farrar did not think he had mentioned a specific period before Mr Woodcock should apply for a chief executive’s post. He agreed in oral evidence the reason for advising the delay was that Mr Woodcock had gone through the assessment and interview for a chief executive’s post and had failed. Mr Farrar’s view was that a period of time needed to elapse before a further application was made. He put the chance of success of a new application for a period of three months after the interview as improbable. For a period of three to six months unlikely. Between six to twelve months appointment a possibility.”
That passage is ambiguous to the extent that it begins by saying that Mr Farrar’s advice was not to apply for a new role for twelve months or so but subsequently records his evidence that he identified no particular period and that the prospects would gradually improve over a twelve-month period as indicated. We suspect that the first reference is intended to record the Appellant’s version of what was said. In that case the Tribunal does not explicitly decide between the two accounts, but we note that at para. 66, in the Conclusions section, it says simply that Mr Farrar’s advice was that the Appellant “should not apply for chief executive jobs until he had built up further qualities which he could refer to in his CV”.
9. Mr Farrar wrote to the Appellant two days later, confirming that he had not been selected and informing him that he would be formally placed at risk of redundancy. His transitional role for the SHA would continue for the time being; but Mr Farrar recorded that they had discussed what he might want to do in the longer term and that they were to meet again.
10. Since the SHA was not his employer the Appellant was also – on 4 September – written to by the Chairs of “his” three PCTs confirming that he was at risk of redundancy. He was informed of his right to apply for vacancies throughout the North West through an online clearing house to which he would have special access as an at risk employee. It is important to emphasise that this letter did not itself constitute notice of redundancy: the Appellant was told that should such notice become necessary in due course he would be given formal notice in accordance with his contractual entitlement. This was a departure, in his favour, from the practice recommended by the HR department at the SHA. Part of the formal policy applying to the reorganisation was an “employment guarantee period” running to 30 June 2007 – that is, a policy that no-one’s employment would be terminated as a result of the reorganisation with effect from any earlier date; but the relevant “HR Framework” provided that in the case of employees with a twelve-month notice entitlement, notice ought to be given so as to expire at the end of that period. That could not have been fully achieved in the Appellant’s case, since the selection process was not complete by the end of June 2006[1] ; but it could have been done in September and it was not.
11. On the creation of the new Trusts, with effect from 1 October 2006, the Appellant’s transitional role assisting the SHA came to an end. He continued to discuss his position with Mr Farrar. On Mr Farrar’s suggestion, in the autumn of 2006 he undertook a particular time-limited project for the SHA; and in March 2007 he undertook a separate project for the Bolton, Salford & Trafford Mental Health NHS Trust.
12. Another consequence of the establishment of the new Trusts was that the Appellant’s employment was transferred to the new Cumbria PCT (i.e. the Respondent in these proceedings), and the obligations of the three PCTs for which he had previously been Chief Executive transferred to it. The Chief Executive of that Trust was Sue Page, and the “Human Resources Lead” was Gill Mordain.
13. It was of course in the interest of the Trust, which was paying the Appellant’s salary but getting no benefit from his services, to bring his employment to an end sooner rather than later; and that would have been in line with the HR Framework (see above). It continued to stay its hand for some time because Mr Farrar told Ms Page that he expected the Appellant to find alternative employment. But by early 2007 the HR department of the SHA was suggesting that it was time that notice was indeed given. On 30 March Ms Mordain wrote to the Appellant, on Ms Page’s instructions, asking him to attend a meeting on 10 April “to discuss your employment status”: the meeting was plainly intended to be a redundancy consultation meeting prior to a decision whether to give the Appellant notice of dismissal. On 30 March 2007 – i.e. the same day as the Trust sent its letter: it is not clear whether the timing is coincidental - the Appellant met Mr Farrar again. His note of the meeting reads:
“1. MF opened the meeting by saying that he understood that I was being served with my formal redundancy notice and that I had 12 months notice in my contract. He then asked me whether I wished to take redundancy as other colleagues had done already or was seeking continuing employment.
2. I said that I wanted to keep my options open as I felt that I was too young to finish working and that I had a lot of experience and ability still to contribute, that I had continued to be professional in my overall outlook and positive in my attitude eg response to requests to undertake important work such as currently with Bev Humphrey at Bolton, Salford & Trafford MH Trust. However, I was fully aware that if no suitable opportunities came up in 12 months time that I was on my own and redundant.
3. I said that I was thoroughly enjoying my role in Bolton et al and realised that there was an NHS outside Cumbria! MF responded by saying that he agreed that I had been positive and professional and had a recognised proven track record in mental health eg North Lakeland role.
4. We agreed to meet again in 2-3 months time ie end of May/early June to review progress on interim work.”
14. The Appellant was unavailable for the date suggested by Ms Mordain, but he replied suggesting a meeting later that week or the next. Unfortunately, the dates in question were not possible for the Trust, and when Ms Mordain and her team proposed further dates they were in turn not possible for the Appellant’s representative. In the end, a date was fixed for 6 June 2007.
15. What happened next is central to this appeal. Someone at the Trust appreciated that the Appellant was due to turn 49 on 17 June, i.e. only eleven days after the date now fixed for the meeting; that if he were not given notice of dismissal until after 17 June he would still, in view of his twelve months’ notice entitlement, be in employment on his 50th birthday on 17 June 2008; and that in those circumstances he would, at least on the face of it, be entitled to take early retirement, on what were described as “enhanced” terms - in essence 6½ added years, and no actuarial reduction for early receipt. That would massively increase the cost of his redundancy to the Trust. The Tribunal recorded at para. 30 of the Reasons that it heard varying evidence as to the cost of funding an early retirement pension for the Appellant but that it was between £500,000 and £1,000,000[2]. Ms Page decided that that risk was unacceptable and that notice should be given in advance of the meeting on 6 June. She appears to have been influenced in that view by a perception that the delay in fixing a date for that meeting had been due to the Appellant stringing the Trust along, but she accepted in her evidence before the Tribunal that that perception was unjustified.
16. The Tribunal’s findings about Ms Page’s thinking at this time appear at para. 33 of the Reasons, which reads as follows:
“It was Ms Page’s decision to send the dismissal letter to Mr Woodcock. Her evidence is that at the time she considered that all avenues to obtain redeployment for Mr Woodcock had failed. She accepted that there was no consultation with Mr Woodcock or in fact any discussion with him about his future in the NHS. Her decision was that the respondent’s position had to be protected. If there had been consultation Mr Woodcock would have celebrated his birthday and by the time the 12 months’ notice period would have been served he would have been 50 years old and thus entitled to an enhanced payment. She had a duty to look after the financial side of the Trust which was tax payer’s money. She accepted that she had no meeting with Mr Woodcock or any conversation with him at all. At the time she considered that he was delaying the arrangement of the meeting. During cross examination she accepted that that was an assumption on her part and which was not correct.”
The Tribunal also set out, at para. 34, a transcript (taken by one of the lay members, who has shorthand) of Ms Page’s answers in cross-examination on this issue. We need not reproduce it in full. Ms Page did not accept the suggestion that the substantive decision that the Appellant had to be dismissed had anything to do with his age, but she did accept that his age affected the timing of the decision. Referring to late May 2007, she said:
“I became very aware at that point of his age and of the significance because of the time delay of a significant delay and the fact that contributions to salary in April were going to cost the NHS half a million pounds. We discussed options. I understood the importance of not getting to a meeting until 6th June.”
There then followed this exchange:
“Mr Panesar: This was not just a major factor in the decision to issue notice to Mr Woodcock without having a meeting with him it was the factor.
Ms Page: Along with the fact that we had exhausted all opportunities he was effectively to be made redundant.
Mr Panesar: Two factors on the table and the dominant factor was his age.
Ms Page: At that point it was, but prior to that it was not a consideration.”
17. Pursuant to that decision, on 23 May 2007 Ms Mordain wrote to the Appellant giving twelve months’ notice of dismissal as from that date “unless either ourselves or the SHA are able to secure you suitable alternative employment”. The letter affirmed the Trust’s intention to “continue to consult with you to effectively assist you in finding you suitable alternative employment”, and that for that purpose the meeting fixed for 6 June would go ahead.
18. We cannot forbear from observing that although the Tribunal’s findings as to the Trust’s – essentially Ms Page’s - reasons for sending the letter of dismissal when she did are clear and are not challenged, those reasons do not appear to have been very fully thought through. We can understand the concern about postponing the giving of notice until after the Appellant’s 49th birthday. But we do not see why the consultation meeting could not have gone ahead on 6 June and notice been given – assuming the consultation had not changed the Trust’s mind - in the ten days between then and 17 June; and counsel were not able to suggest any reason. However it was not suggested by Mr Panesar that this point, which was raised by us in the course of argument rather than by either of the parties, was relevant to any of the issues on this appeal.
19. The meeting of 6 June duly took place. The Appellant and his representative, Mr Keegan, said that any consultation about whether he should be dismissed was meaningless in circumstances where notice of dismissal had already been given. They asked for the notice to be withdrawn. The Trust agreed to consider whether to do so, but in the event it decided to maintain its position: owing to an administrative error, that decision was not communicated to the Appellant until 29 September. The debate about whether the notice should be withdrawn meant that although there was discussion at the meeting about the possibility of suitable alternative employment it did not get very far. The stance taken by the Appellant and Mr Keegan was understandable, but it might also be thought to be somewhat theoretical, since if an alternative to dismissal emerged during consultation there would be no problem about the notice being withdrawn: there were, after all, twelve months to play with[3].
20. Once it was confirmed that the dismissal letter of 23 May stood, the Appellant appealed in accordance with the Trust’s procedures. The appeal was unsuccessful.
21. In accordance with the redundancy payment terms applying to his employment the Appellant received a payment of £220,000.
THE UNFAIR DISMISSAL APPEAL
22. It will be apparent from the facts as we have set them out above that the Trust did not follow the disciplinary and dismissal procedure prescribed by Schedule 1 of the Employment Act 2002. Even if Ms Mordain’s letter of 10 April 2007 could be read as a “step 1 letter”, which may be debatable, no “step 2 meeting” had taken place prior to the giving of the notice of dismissal. At para. 71 of the Reasons the Tribunal records that the Trust conceded in the course of the hearing that there had indeed been a breach of the statutory procedures. Once that concession was made the Tribunal was obliged to make a finding of so-called “automatic” unfair dismissal pursuant to section 98A (1) of the Employment Rights Act 1996. It did not do so. At paras. 75-76 of the Reasons it said this:
“75 … The meeting on 6 June 2009 did discuss alternative employment as can be seen from the notes ... Mr Woodcock was still looking for a senior position and his preferred option was a senior executive post. There were no posts with the respondent, the chief executive post and director posts had been filled. There were no other posts available. Mr Woodcock had a year’s notice. It is indicative of the situation that he did not apply for any other post during his notice period.
76. We are satisfied that as at 6 June 2009 the application of any procedure statutory or otherwise would have made no difference to Mr Woodcock’s situation. He would have been dismissed for redundancy. Applying section 98A (2) of the Employment Rights Act the dismissal was fair. In any event his redundancy payment would cancel out any compensatory award as the application of a procedure would have made no difference. Mr Woodcock would be dismissed for redundancy.”
23. The reasoning in para. 76 is, with all respect to the Tribunal, plainly wrong. It proceeds on the basis that the effect of sub-section (2) of section 98A is to disapply sub-section (1) where the failure to apply the statutory procedure would have made no difference to the outcome. But it is clear on the face of the statute – see the words “subject to sub-section (1)” – and is in any event established in the case-law (see, e.g., Alexander v. Brigden Enterprises Ltd that section 98A (2) has no application in a case of “automatic” unfair dismissal under sub-section (1). As already noted, the Trust does not seek to defend the Tribunal’s decision in this regard, and it is clear that we must allow the appeal on this point (which is pleaded as ground 3 of the Notice of Appeal) and substitute a finding that the Appellant was unfairly dismissed.
24. This conclusion, however, is of no substantial value to the Appellant. He does not seek reinstatement or re-engagement. The Tribunal said at para. 58 of the Reasons that his entitlement both to a basic and to a compensatory award were in practice extinguished by the redundancy payment which he has received. There is no challenge to that conclusion, and the Appellant does not seek to have the case remitted to the Tribunal for an assessment of remedy.
AGE DISCRIMINATION
25. Reg. 7 (2) of the Employment Equality (Age) Regulations 2006 provides (so far as relevant) that:
“(2) It is unlawful for an employer, in relation to a person whom he employs at an establishment in Great Britain, to discriminate against that person—
(a)-(c) …
(d) by dismissing him, or subjecting him to any other detriment.”
Discrimination is defined at reg. 3 as follows:
“(1) For the purposes of these Regulations, a person ('A') discriminates against another person ('B') if-
(a) on grounds of B's age, A treats B less favourably than he treats or would treat other persons, or
(b) A applies to B a provision, criterion or practice which he applies or would apply equally to persons not of the same age group as B, but-
(i) which puts or would put persons of the same age group as B at a particular disadvantage when compared with other persons, and
(ii) which puts B at that disadvantage,
and A cannot show the treatment or, as the case may be, provision, criterion or practice to be a proportionate means of achieving a legitimate aim.
(2) A comparison of B's case with that of another person under paragraph (1) must be such that the relevant circumstances in the one case are the same, or not materially different, in the other …”
We adopt the usual shorthand of referring to discrimination within the meaning of limbs (a) and (b) of reg. 3 (1) respectively as “direct” and “indirect” discrimination, and to the requirement of the final part of the definition as “justification”. The language of reg. 3 is derived directly from art. 2 of the EU Equality Directive (2000/78/EC).
26. We should set the Tribunal’s reasoning out in full:
“77 We should deal with the events that occurred before May 2007. We can identify no discrimination in what happened leading up to the final decision to dismiss. Restructurings of the Primary Care Trusts was done on a national basis and had no relevance to age. The appointment procedure for chief executives in the restructured primary care trusts was transparent and we can detect no age discrimination at all in the process. Unfortunately Mr Woodcock was not at his best at the interview. The discussions with Mr Farrar do not indicate any discrimination. The failure of the respondent to carry out any meaningful consultation in the ten months’ period from the at risk letters had no connection with Mr Woodcock’s age. Ms Mordain wanted the respondent to engage with Mr Woodcock but others delayed. It is the final decision to issue the notice we consider to be discriminatory.
78 We accept that by May 2007 no one had been able to come up with alternative employment arrangement for Mr Woodcock. It is clear that he could not be chief executive of the respondent as that post was filled. He had not applied for and therefore was not eligible for any directors post. They had all been filled. The only alternative would have been a lesser job within the organisation. Mr Woodcock’s evidence is clear that he would not have accepted such job. He was looking for alternative employment in other Primary Care Trusts within the North West region. There were none available in May 2007. Those that had become available he had not applied for. He had a twelve months notice period built into his contract of employment. Notice should have been given to expire on 30 June 2007. The decision by Ms Page to issue a dismissal notice on 23 May 2007 was because of Mr Woodcock’s age. Ms Page admitted such in cross examination, that at that stage, age was a significant factor in the dismissal of Mr Woodcock. It is clear that if Mr Woodcock had been 48 on 17 June 2007 there would have been no problem because he could not have achieved with his 12 months notice period his fiftieth birthday. The significant factor was that he was to reach the age of forty nine on 17 June 2007. Any notice on or after that date would make him fifty years old on the expiry of his notice. He would then be entitled to enhanced pension and redundancy payments.
79 We have not been referred to any particular comparator. No doubt there are some. A hypothetical comparator can be constructed. It will be an employee of the respondent employed as chief executive (or higher management) whose job had been made redundant and who had not found alternative employment and is dismissed without consultation having taken place and subject to a one year notice period.
80 What was the discrimination act? It was, in our opinion, the act of dismissal without proper consultation by the respondent. Why was Mr Woodcock dismissed? We conclude he was dismissed because of his specific age, that is his impending forty ninth birthday. The comparator who was forty eight on 17 June 2007 or who had attained his forty ninth birthday on 17 June 2006 would not be dismissed because of their age. The decision to dismiss Mr Woodcock was his age. He was directly discriminated because of his age.
81 Is the discrimination act justified? We have to decide whether there was a legitimate aim. The aim was to bring about Mr Woodcock’s dismissal for redundancy and to avoid the additional costs to the respondent of his attaining the age of fifty before the end of his notice period and thus being entitled to enhanced payment. If triggered the enhanced payment would amount to a considerable sum of money.
82 The avoidance of cost is not in itself a legitimate aim, Cross v. British Airways Plc. A discriminatory act to avoid an employee receiving a windfall can be a legitimate aim: Loxley v. BAE Systems. The aim of the respondent was to bring an end to Mr Woodcock’s employment because he was redundant and alternative employment had not been offered.
83 We find that the dismissal of Mr Woodcock prior to consultation being carried out was a legitimate aim. Was it, however, proportionate. We are satisfied that Mr Woodcock wanted a chief executive job and did not consider any other job suitable. He had been aware of the possibility of a redundancy dismissal for ten months. He would have been given notice to expire on 30 June 2007. That is he should have been given notice at the latest in May 2006. By the respondent delaying giving him notice he achieved an extra years employment which otherwise in his position did not [sic]. He was paid a large redundancy payment to which he was entitled through his position and work with the NHS.
84 The reasonable need of the respondent was to bring about the end of Mr Woodcock’s employment without incurring cost to the taxpayer. Mr Woodcock was redundant, there was no job for him. The discriminatory effect on Mr Woodcock was that he did not have a consultation meeting. At the stage the respondent eventually applied its mind to Mr Woodcock’s continued employment consultation would have achieved nothing. It was a chief executive job Mr Woodcock wanted. There was none. We find it was a proportionate [sic]. The discriminatory act is justified under the Regulations.” [4]
27. Although the reasoning in that passage is tolerably clear, it will be helpful if we summarise its essential elements:
(1) The act which the Tribunal found to be prima facie discriminatory - that is, discriminatory unless justified – was not the Appellant’s dismissal as such but its timing, and more particularly the giving of notice prior to the planned consultation meeting. That is the effect of paras. 78 and 80.
(2) That act was held to be done on the grounds of his age because the decision as to timing was taken in order to avoid the Appellant reaching pensionable age: again, that is clear from paras. 78 and 80. (Such motivation falls within the scope of the term “on grounds of age”: see London Borough of Tower Hamlets v. Wooster [2009] IRLR 980, at para. 47 (p. 988).)
(3) The avoidance of the additional costs liability which it would incur if the Appellant reached pensionable age constituted the Trust’s “aim” in serving notice at the date that it did. That is explicitly stated in para. 81 and is in any event self-evident on the Tribunal’s findings of primary fact. It may look as though the aim is being differently formulated in the final sentence of para. 82; but in context it is clear that that sentence is directed to the question of the legitimacy of the aim – see below. (The exercises of defining the aim and assessing its legitimacy may in practice overlap and tribunals should not get too bogged down in elaborate analysis of the statutory formula: cf. our observations on a similar point in Pulham v. London Borough of Barking and Dagenham [2010] ICR 333, para. 15 (pp. 343G–344A).)
(4) That aim was legitimate. The Tribunal evidently intended to give its reasons for that conclusion in para. 82, but the reasoning is rather compressed. As we understand it, however, what it was saying was that it is legitimate to seek to avoid incurring costs unnecessarily and that there was no need to postpone giving notice of dismissal beyond the Appellant’s 49th birthday because he was clearly redundant and no alternative job had been found: in those circumstances the chance of taking early retirement in the final weeks of his notice period would be a “windfall for him”. The reference to Loxley is to the decision of this Tribunal inLoxley v. BAE Systems Land Systems (Munitions & Ordnance) Ltd [2008] ICR 1348. The “windfall” there discussed was of a very specific nature (see the exposition in Kraft Foods Ltd. v. Hastie (UKEAT/0024/10) [2010] EqLR 18); but the Tribunal was evidently taking the decision as authority for the proposition that it is in principle justifiable to deprive a person of a benefit on the grounds of his age if that benefit was one which he had no legitimate right to expect. It may be worth spelling out the metaphor inherent in the term “windfall”: it refers to fruit which has fallen by itself and which the picker has not had to go to the effort of reaching or climbing for. It thus most directly applies to any unearned benefit, i.e. one for which the recipient has not had to work; but it can be applied more generally to a benefit which he had no legitimate entitlement to expect.
28. The challenge to the Tribunal’s reasoning is pleaded in the Notice of Appeal under three heads – at grounds 1, 2 and 5. We take them in turn.
GROUND 1
29. Under this ground the Appellant contends that it was wrong in principle for the Tribunal, in considering the issue of justification, to take any account of the factor of cost: see step (3) in its reasoning as analysed at para. 27 above. Mr. Panesar relied on the decision of this Tribunal, Burton P. presiding, in Cross v. British Airways plc [2005] IRLR 423, which he said was authority for the proposition that “cost alone cannot be a legitimate aim for the justification of discrimination”; and he submitted that in the present case the Trust could and did rely only on the costs consequences of the Appellant being permitted to remain in employment until his 50th birthday.
30. In his judgment in Cross Burton P. sought to reconcile two lines of authority. The first consisted of a series of decisions of the European Court of Justice which repeat, in substantially identical language, that an employer can not justify the particular discrimination complained of “solely on the ground that avoidance of such discrimination would involve increased costs” (see Hill and Stapleton v. Revenue Commissioners [1999] ICR 48, at para. 40 (p. 70); Kutz-Bauer v. Freie und Hansestadt Hamburg [2003] IRLR 368, at para. 61 (p. 373); and Steinicke v. Bundesanstalt fur Arbeit [2003] IRLR 892, at para. 68 (p. 897). The second was the long series of both European and domestic authorities (e.g. Jenkins v. Kingsgate Ltd [1982] ICR 592; Bilka-Kaufhaus v. Weber von Hartz [1987] ICR 110; and Rainey v. Greater Glasgow Health Board which have treated it as self-evident that “economic” considerations are admissible in considering the issue of justification. The analysis was complicated by the fact that the appellants in Cross sought to rely also on a distinct (though to some extent overlapping) line of cases in the ECJ deriving ultimately from De Weerd (n?e Roks) v Bestuur de Bedrijfsvereniging voor de Gezondheid [1994] ECR 1-571 concerned with the extent to which “budgetary considerations” can be relied by way of justification of legislation having a discriminatory impact as between men and women.
31. Burton P.’s starting-point was his observation at para. 63 (p. 435) that:
“It seems to us, as a matter of obvious common sense (and in accordance with the principle of the concept of proportionality), and by way of example drawn from these cases, that, albeit that, in the weighing exercise, costs justifications may often be valued less, particularly if the discrimination is substantial, obvious and even deliberate, economic justification such as the saving, or the non-expenditure, of costs (which must, for example, include the avoidance of loss) must be considered. It would, in our judgment, need clear reasoning and binding authority to prevent that occurring.”
He proceeded to review the ECJ authorities and expressed the conclusion of the Tribunal at para. 72 (p. 436), where he said:
“... An employer seeking to justify a discriminatory PCP cannot rely solely on considerations of cost. He can however put cost into the balance, together with other justifications if there are any.”
That conclusion is often summarised by saying that “cost alone” can never justify a measure or a state of affairs with a discriminatory impact but that “cost plus some other factor” may do so.
32. The “cost plus” approach propounded in Cross represents the current orthodoxy. It was accepted by Elias P. in his judgment in Redcar and Cleveland Borough Council v. Bainbridge [2008] ICR 249n, at para. 92 (p. 267H).[5] It was accurately summarised in the Tribunal’s self-direction on the law, at para. 65 of the Reasons. But Mr Short submitted, as one alternative basis of his case, that the cost plus approach was wrong, and we have to say that we do not find it convincing. For reasons which will appear, we need not reach a concluded view, but we will briefly indicate our thinking in case the matter falls for decision elsewhere. We respectfully agree with Burton P’s observation quoted at para. 31 above that, as a matter both of principle and of common sense, considerations of cost must be admissible in considering whether a provision criterion or practice which has a discriminatory impact may nevertheless be justified; and we see no reason to take a different view in the context of the justification of (what would otherwise be) direct age discrimination[6] . But we find it hard to see the principled basis for a rule that such considerations can never by themselves constitute sufficient justification or why they need the admixture of some other element in order to be legitimised. The adoption of such a rule, it seems to us, tends to involve parties and tribunals in artificial game-playing – “find the other factor” – of a kind which is likely to produce arbitrary and complicated reasoning: deciding where “cost” stops and other factors start is not straightforward (cf. the observations of Elias P. in Bainbridge, at para. 91 (p. 267)). If the matter were free from authority it would seem to us that an employer should be entitled to seek to justify a measure, or a state of affairs, producing a discriminatory impact – or, in the case of age discrimination, an act done on discriminatory grounds – on the basis that the cost of avoiding that impact, or rectifying it, would be disproportionately high. That would not mean that employers would be able always or easily to avoid liability for indirect discrimination simply by pointing to the cost of avoiding or correcting it. There is an almost infinite variety of cases of “prima facie discrimination”. In many cases the discriminatory impact in question may be such that the employer must avoid or correct it whatever the cost. But there may equally be cases where the impact is trivial and the cost of avoiding or correcting it enormous; and in such cases we cannot see why the principle of proportionality should not be applied in the ordinary way. We are not convinced that the single phrase in Hill and Stapleton on which this doctrinal structure is built - “solely because [avoiding discrimination] would involve increased costs”[7] – is only explicable in the way that it was understood in Cross. As Mr Short submitted, it need mean no more than that it was not enough for an employer to say that avoiding discrimination would involve increased expenditure: he must show that the extent to which it would do so would indeed be disproportionate to the benefit in terms of eliminating the discriminatory impact.
33. Despite those reservations, we should be slow to depart from the established position in this Tribunal, accepted by two previous Presidents; and in the event we do not need to decide whether we should do so, since we do not accept Mr Panesar’s submission that the Tribunal failed to apply the “cost plus” approach. This was not, on the Tribunal’s findings and reasoning, a case where the only justification advanced for the Trust’s decision to give notice before the meeting of 6 June was the perceived cost of deferring it; and indeed this seems to be the point that Ms Page was trying to make in the exchange noted at para. 16 above. It is an entirely legitimate aim for an employer to dismiss an employee who has become redundant. The Appellant, whose job had in practice disappeared in early 2006, and who had known since July that year that he had not been selected for a successor post, can have had no legitimate expectation that notice would not even have been given by May 2007. In those circumstances the chance of getting within striking distance of his 50th birthday while still in employment was indeed a windfall. The prevention of that windfall benefit, and the avoidance of the corresponding loss to the Trust, was a legitimate aim going beyond the mere wish to reduce costs. Thus, although in the events which happened it was the fear of the potential costs consequences of the Appellant remaining in employment on his 50th birthday which motivated the actual choice of date, it would be artificial to regard that factor in isolation. In our view it would be wrong if an employer who had, as a matter of pure discretion exercised in the employee’s interests, allowed an employee to remain in employment until close to an “age-critical” date were then held to have unlawfully discriminated against him by taking into account the imminence of that date in deciding when to bring the employment to an end.
GROUND 2
34. The essence of ground 2 is that even if costs considerations are in principle admissible by way of justification it is nevertheless impossible to justify depriving an employee, whatever the costs involved, of the right to be consulted about his proposed dismissal for redundancy, which is an essential procedural safeguard.
35. As a general rule, the point made by the Appellant under ground 2 must be right. An employer is certainly not obliged by the age discrimination legislation to defer steps which he would otherwise be entitled to take, simply so as to allow an employee to attain an age-related milestone (cf. Wooster (above), at para. 40 (p. 987)); but nor is he entitled to cut procedural corners, at least where the procedures are designed for the protection of the employee, in order to achieve dismissal before such a milestone is reached. The fact is that the cards can fall unluckily, in terms of the timing of birthdays, for either employer or employee.
36. However, the present case had some features which put the question of the “loss of consultation” in a different context. The Tribunal clearly attached importance to the following points, which overlap with those already made in relation to ground 1:
(1) The Appellant had already had a far longer period before notice was given than he was legitimately entitled to expect. The relevant HR policy, as he will have been aware, provided for an employment guarantee period expiring on 30 June 2007 (see para. 10 above). He had already had almost a year’s de facto extension of that period, i.e. a period when he had been formally notified that he was at risk of redundancy but had received no notice of dismissal.
(2) Although during that period the Appellant had had no formal consultation with the Trust (or its three-headed predecessor), he had had discussions with Mr Farrar – see paras. 8-9, 11 and 13 above. Mr Farrar had formal responsibility, as Chief Executive of the SHA, for giving him information about his options (see para. 6); and he was indeed better placed to do so than anyone at Trust level. Thus the Appellant had had the substance of a consultation process, as regards the crucial question of alternative employment, if not the form. He was well aware of his position: see the note which he made of his meeting on 30 March 2007 (para. 13 above).
(3) Even with the Appellant having had the benefit of that uncovenanted extension, it was only because of a chapter of accidents that the consultation meeting had been pushed so close to the danger zone: see para. 14 above. If the meeting had occurred when first proposed there would have been no question of any notice being given after his 49th birthday. So far from this being a case (up to that point) of the employer artificially accelerating the procedure, it had in fact been, albeit through no-one’s fault or design, slowed down.
(4) On the Tribunal’s findings there was, as at 23 May, no suitable alternative employment available for the Appellant: see paras. 75 and 78 of the Reasons set out at paras. 22 and 26 above. The meeting on 6 June whose outcome the Appellant says was pre-empted by the giving of notice would not in fact have prevented his dismissal.
(5) The giving of notice did not bring the consultation to an end. The Appellant had a twelve months’ notice period. In such a case the duty to consider alternative employment up to the expiry of the notice period (see Mugford v. Midland Bank plc [1999] ICR 399) was more than a formality, as the Trust recognised; and if there was indeed still a chance of alternative employment the notice period gave plenty of opportunity for it to be explored. In this particular context the issue of a notice of dismissal in advance of the formal consultation meeting has much less significance than it might have in other circumstances, particularly given the amount of informal discussion and consideration of the Appellant’s future that had already taken place with Mr Farrar – see above. Consultation is concerned with substance and not only with taking the right steps in a ritual dance.
37. In our view the Tribunal was entitled to find in those very particular circumstances that it was justifiable for the Trust to accelerate the final giving of notice if doing so would prevent it incurring a disproportionate liability in pension costs. The Trust had only become vulnerable to that potential liability because the redundancy process had been extended, to the Appellant’s benefit, for far longer than he had been entitled to expect; to put it another way, the Appellant had no legitimate expectation at the time that the redundancy situation arose that he might still be in employment on his 50th birthday if alternative employment had not been found. The detriment to the Appellant of being deprived of a consultation meeting before, rather than shortly after, notice had been given could in the circumstances reasonably be judged by the Tribunal to be insignificant.
38. We should briefly address two other arguments which arose in this context.
39. First, Mr Panesar submitted that the Trust could not advance a case of justification in circumstances where it was admitted that Ms Page had been influenced by her erroneous belief that the Appellant had been deliberately dragging out the consultation process: see para. 15 above. We do not accept this. The Tribunal was concerned with whether it was objectively justified to advance the date of notice in the way that the Trust did. It is irrelevant to that exercise that Ms Page’s subjective motivation, while in fact largely corresponding to the justification advanced, may have been to some extent been contaminated by a misunderstanding of one aspect of the facts. The justification would have been equally good, or bad, if she had accepted that the delays were nobody’s fault: the fact remained that the (from her point of view) dangerous date was fast approaching.
40. Secondly, he emphasised that it was not simply as a result of inertia that the Appellant had not obtained, or indeed applied for, permanent alternative employment by the date that notice was given: he had been following Mr Farrar’s advice to lie fallow for a while, while of course taking on useful short-term work which increased his experience. That may well be so, though Mr Farrar’s evidence was that he had not said that the Appellant should not look for alternative employment at all for twelve months, or indeed for any other specific length of time – see para. 8 above. But the Tribunal was well aware of that point, which had been fully argued before it, and it plainly did not regard it as determinative on the issue of justification or, more specifically, as undermining the factors identified in para. 36 above. We see no reason why it should have done. Whatever the precise terms of Mr Farrar’s advice, the Appellant could have had no complaint if he had received notice of dismissal (after due consultation) by, at latest, the end of March, and his own note of 30 March (see para. 13 above) suggests that he acknowledged that. Whenever it was given, he would still have had a further twelve months to find alternative employment.
GROUND 5
41. Under ground 5 the Appellant contends that some of the crucial factual findings which underpin the Tribunal’s finding on justification were perverse. The findings in question are those made at paras. 75 and 78 of the Reasons and recapitulated at paras. 83 and 84. They are pleaded as being threefold – namely (a) that consultation would have achieved nothing; (b) that there was no suitable alternative employment for the Appellant; and (c) that it was only a Chief Executive post that he was interested in. However, they are all in truth aspects of the same point. It is finding (c) that is crucial: since there is no challenge to the Tribunal’s finding that there were in fact no available Chief Executive posts, there would (or might) only have been suitable alternative employment for the Appellant – and consultation would (or might) have achieved something – if he was prepared to consider employment at a lower level than Chief Executive. In fact, however, even this is not quite right. The Tribunal’s finding at para. 78 is that the Appellant would not have accepted a job below the level of Chief Executive or Director (being, as we understand it, the level next below Chief Executive): that is what the phrase “lesser job” in the fifth sentence refers to - see the two previous sentences. The Appellant’s case therefore must be that the Tribunal was not entitled to find that he would not have accepted a job below Director level.
42. The Appellant’s case in support of that contention is that the evidence before the Tribunal clearly established that it was his goal as to stay in the NHS until his retirement; that he had not, as at June 2007, considered posts other than at Chief Executive level only because of the advice received from Mr Farrar recorded at para. 8 above, which led him to believe that if he waited for twelve months or so he was likely to obtain such a post; and that if he had been told that there were no Chief Executive posts available he would have been prepared to take a lesser position. We were referred to notes of evidence given by the Appellant himself (in re-examination) about his wish to stay in the NHS and by Ms Mordain and Mr Farrar in cross-examination which support the submission that the evidence was that the alternative of his accepting a lesser position was never discussed with him.
43. The Appellant’s difficulty is that the finding challenged in para. 78 is a finding of fact which can only be challenged on the basis that it was not open to the Tribunal on the evidence before it – in other words, on perversity grounds. We were referred to Yeboah v Crofton [2002] IRLR 634 and other well-known authorities on the test of perversity, but we need not rehearse them here. The relevant sentence reads: “Mr Woodcock’s evidence is clear that he would not have accepted such [a] job” – that is, a job below the level of Chief Executive or Director. We asked both counsel what they understood the source of that statement to have been. Neither could recall oral evidence being given by the Appellant in those precise terms[8] . Mr Panesar thought that the Tribunal must have based its conclusion either on something said in the course of the oral evidence or on the inferences to be drawn from the documents. Mr Short said that it was his recollection that the Appellant had said that he was not prepared to accept a position at Director level with the Respondent Trust (i.e. not explicitly that he would not have accepted a post at Director, or indeed a lower level in another Trust[9] . It would have been better if the Tribunal had been more explicit. But there is no “Meek challenge”, nor has the Appellant sought to put in a note of the entirety of his evidence with a view to establishing that he said nothing that the Tribunal could properly have understood in the way quoted. Mr Short forcefully submitted that it was not open to us to make a finding of perversity on the basis simply of two or three passages from the oral evidence selected by the Appellant. We asked Mr Panesar in terms whether he was in those circumstances in a position to challenge the finding which we have quoted in para. 78. He frankly accepted that he was not, but he submitted that the finding must nevertheless be seen in the context of the other points which he was making – in effect, the Appellant’s desire to stay in the NHS and the advice which he had received from Mr Farrar. With respect, we cannot see how that helps. Those two factors were no doubt points which the Tribunal could have borne in mind in deciding whether the Appellant would have accepted a post below Chief Executive, or Director level. But they could not possibly be regarded as decisive. However much the Appellant wanted to stay in the NHS, there will have been a level below which he would not have been prepared to go: the only question is what that level was. (We would add that the finding that he would not have accepted a job below Director level is not inherently implausible: a man who has been a Chief Executive for many years might take one step down, but he is less likely to be prepared to take two.) As for Mr Farrar’s advice, that may help to explain why the Appellant had not applied for any roles in the immediate aftermath of his non-selection in mid-2006; but it does not address the question of what level of job he would have been prepared to take if that advice had not been given.
CONCLUSION
44. For those reasons we dismiss the appeal against the Tribunal’s decision on the age discrimination claim.
**Notes
**1. At least, that is, if it were regarded, as appears to have been the case, as wrong to serve notice of dismissal on someone who might yet be appointed to one of the successor posts.
Published: 14/11/2010 17:10
