In this week’s alert we review a case where an employee was dismissed by reason of redundancy, says Joanne Holborn of Baines Wilson LLP.
The employee challenged the Tribunal’s decision that his redundancy did not amount to age discrimination after the Tribunal held that the employer had legitimately rushed his redundancy process in order to prevent him receiving an enhanced pension package.
Cook v Gentoo Group Ltd
Mr Cook had been employed by Gentoo since 1 March 1992, he was most recently employed as the Head of Compliance. In October 2017, Gentoo (a social housing landlord with charitable status) was subjected to a Homes and Communities Agency report which reported that Gentoo was ‘non-compliant’ in respect of governance. As a result of this Gentoo decided to undertake a restructure.
The slides from an executive meeting on 24 April 2019, showed that Mr Cook’s role was to be ‘deleted’. Such decisions would usually require board approval however on 2 May 2019, a decision was taken to fast-track Cook’s redundancy process to avoid him becoming entitled to an enhanced pension. If Mr Cook was made redundant after the age of 55, Gentoo would have been required to make a payment of approximately £80,000 into Cook’s Local Government Pension Scheme. Mr Cook turned 55 on 11 August 2019.
On 3 May 2019, Gentoo held an initial ‘consultation’ meeting with Mr Cook in which he was told he was going to be made redundant. Subsequently, on 7 May 2019, Cook was signed off work sick with stress related problems. A further ‘consultation’ meeting was scheduled for 8 May 2019 though Mr Cook did not attend, the meeting was rescheduled until 13 May 2019 and again Mr Cook did not attend.
Mr Cook was dismissed without notice on 16 May 2019 by reason of redundancy. Mr Cook brought a claim for unfair dismissal and discrimination based on age.
The Tribunal found that the process was unfair as Mr Cook did not receive his notice or payment in lieu, even though he had not helped himself by refusing to attend meetings in relation to his redundancy. The Tribunal noted that Gentoo had made ‘no conscientious attempt … to seek suitable alternative employment for the claimant’, which was considered to be a major error.
However, the Tribunal dismissed Mr Cook’s claim for age discrimination. The Tribunal found that had a fair process been followed there was a 100% chance that Mr Cook would have been dismissed. Had a fair process been followed, Mr Cook’s employment would have terminated after he reached the age of 55 (accounting for notice periods and the time it would have taken to carry out a fair consultation process) and would have entitled Mr Cook to the enhanced pension package.
The Tribunal held that Mr Cook’s comparators for redundancy were inappropriate and ‘in the alternative had we found that there were actual comparators, we would have found the detriment to be a proportionate means of achieving a legitimate aim’. However, the Tribunal did not identify the legitimate aim or why the treatment of Mr Cook was a proportionate means of achieving a legitimate aim.
Age is a protected characteristic for the purposes of the Equality Act 2010 and treating someone less favourably because of their age is prohibited, unless the treatment is a proportionate means of achieving a legitimate aim.
Mr Cook appealed against the Tribunal’s decision to the Employment Appeal Tribunal (EAT) and the Tribunal was asked to provide its reasons for rejecting Mr Cook’s age discrimination claim. The Tribunal set out that the ‘aim of saving costs which would have been incurred in making the additional payment into the pension fund to meet the additional entitlement of the claimant and the disapproval of the regulator for making such generous redundancy arrangements’ meant that the detrimental treatment was proportionate. Further the Tribunal noted there had been prior disapproval of the Regulator of Social Housing for Gentoo’s practice of windfall pension enhancements. On the basis that there had been previous issues with pension enhancements within Gentoo (a public sector employer) the Tribunal felt that Cook’s redundancy process was proportionate to ensure that the enhanced redundancy entitlement would not come from the public purse.
Decision
The EAT raised concerns with this response in that the Tribunal ‘would’ have concluded that the legitimate aim was costs related rather than it was the legitimate aim relied upon. The EAT expected an explanation as to how the Tribunal panel reached their decision but this was not provided.
Further the EAT concluded that the Tribunal gave no consideration to the fact Gentoo departed from their usual policies and did not consider why the regulator had criticised previous severance payments and whether the particulars were comparable to Mr Cook’s situation.
Further, the Tribunal did not consider the discriminatory impact on Mr Cook for loosing his right to the application of Gentoo’s procedures and the infringement of his protection against unfair dismissal. The Tribunal failed to consider the discriminatory impact on Mr Cook losing his enhancement package and did not balance the gravity of the discrimination against the aim of Gentoo in relation to whether the early dismissal was an appropriate and reasonable means of achieving that aim.
The EAT therefore decided that the case should be remitted to a different Employment Tribunal as the errors made by the first Tribunal were fundamental.
Comment
Age is the only type of direct discrimination which is capable of objective justification. Generally, less favourable treatment will not constitute direct age discrimination if it is ‘objectively and reasonably justified by a legitimate aim including legitimate employment policy, labour market and vocational training objectives, and if the means of achieving that aim are appropriate and necessary’.
This case highlights that in a redundancy situation, which may involve age discrimination, an employer must have a clear legitimate aim in or to justify any discriminatory treatment. If an employer is contemplating redundancy which may lead to a claim of discrimination, the employer needs to be certain that any potentially discriminatory action is being carried out for a legitimate aim which a Tribunal will consider to be reasonable.
If you have any questions in relation to dismissals, redundancy or any other HR queries, please contact our employment team on 01228 552600 or 01524 548494.
