The Employment Appeal Tribunal (EAT) has returned a case to a tribunal for a re-hearing to consider whether redundancy dismissal, where the timing meant an employer avoided significant pension costs, could amount to age discrimination.
In the case of Sturmey v Weymouth and Portland Borough Council, it is being considered whether a genuine redundancy dismissal can amount to age discrimination due to its timing, and whether bringing the date of a redundancy forward meant significant pension costs were avoided could be justified.
Sturmey was dismissed on the grounds of redundancy as part of a organisation restructure, which took effect just a few days before her 55th birthday. If she had been aged 55 or over she would have been entitled to an immediate pension.
Sturmey, therefore, argued that the timing of her dismissal amounted to unlawful age discrimination.
Andrew Crudge, associate and employment expert at law firm Thomas Eggar, said: “This case gives some further guidance on the extent to which an employer may be able to bring forward a redundancy dismissal in order to avoid significant pension costs.
“When considering whether the employer’s actions amounted to age discrimination, the employment tribunal relied heavily on the earlier Court of Appeal decision in Woodcock v Cumbria Primary Care Trust.
This case involved similar facts. In this case, the employer avoided significant pension costs by bringing forward a dismissal date. In that instance, the Court of Appeal determined that the employer could objectively justify the decision to bring forward the dismissal to avoid those costs, so this did not amount to discrimination. The employment tribunal followed the Woodcock decision and found that Sturmey had not been discriminated against on that basis.
“It seems likely, therefore, that it will generally be very risky for an employer to bring forward a dismissal date in order to avoid a large pension payment. There is a significant likelihood that this would amount to unlawful age discrimination.
“So this EAT decision is a useful reminder to employers that they should not rely too heavily on the Woodcock case,” said Crudge. ”Bringing forward a dismissal in order to avoid pension costs is only likely to be permissible in the most exceptional circumstances.”
Andrew Brown, senior associate at Anderson Strathern, added: “This is a case that considered whether it is unlawful to accelerate a redundancy process to avoid a claimant being entitled to immediate access to their pension.
“Pension costs in a redundancy situation are a significant consideration for many employers, mainly in the public sector. They can be overlooked and employers can face a surprise and significant bill.
“In this case, however, it was taken into account by the employer, which sought to avoid those costs by timing the dismissal accordingly. Unfortunately for the employer, the EAT has indicated that such decisions may not be justified.”