Age Discrimination, Pension Scheme Membership and Redundancy
A recent Employment Appeal Tribunal decision acts as a reminder for employers to consider pension scheme implications at the earliest possible stage when planning redundancies.
What Was the Background to the Case?
In the case of Cook v Gentoo Group Ltd, the claimant was made redundant just short of his 55th birthday. He was a member of the LGPS pension scheme (Scheme). According to the rules of the Scheme, when a member has reached the age of 55 and is either made redundant or is terminated on the grounds of business efficiency, they are entitled to immediate payment of their retirement pension without actuarial reduction. In practical terms, this can trigger a significant cost to the employer.
In Mr Cook's case, the employer curtailed the redundancy procedure in order to ensure he was made redundant before reaching the age of 55. After an initial consultation at the beginning of May 2019, Mr Cook went off sick. He did not attend subsequent consultation meetings and was dismissed on 16 May 2019.
Had the redundancy procedure not been curtailed, Mr Cook would have been made redundant after his 55th birthday. The employer would have been obliged to make a payment of around £80,000 into the Scheme.
Mr Cook claimed that he had been unfairly dismissed, and that the curtailment of the redundancy process constituted direct age discrimination.
What Did the Tribunal Decide?
The Tribunal agreed Mr Cook had been unfairly dismissed, It found that the speed of the curtailed redundancy consultation procedure was unfair, and that there had been no real attempt to identify suitable alternative employment as part of the process. The Tribunal also found that if the employer had run a fair process, Mr Cook would have still been made redundant, but this would have been after his 55th birthday.
However, the Tribunal dismissed Mr Cook's claim that the curtailment of the redundancy procedure was directly age discriminatory. It found that Mr Cook had identified inappropriate comparators, and that in any event it would have found any age discrimination to be justified as a proportionate means of achieving a legitimate aim.
Mr Cook appealed to the Employment Appeal Tribunal (EAT).
What Did the EAT Decide?
The EAT upheld Mr Cook's appeal. The Tribunal had not considered why the detrimental treatment was a proportionate means of achieving a legitimate aim. The Tribunal had an opportunity to explain its reasoning before the EAT reached its decision. At that stage, the Tribunal identified the employer's aim as being to save the costs that would have been incurred by paying into the pension. It also said the detriment caused to Mr Cook would have been proportionate in light of other payments he had received, such as redundancy and notice pay amounting to £47,000.
The EAT was not convinced that this was part of the Tribunal's reasoning at the time of the original decision. It has remitted the claim to a new Tribunal for reconsideration.
What Can Employers Learn from This Decision?
This case offers public sector employers a reminder of the importance of accounting for pension costs at the earliest stage of planning redundancies or restructures. If a fair process will mean the employer needs to make a costly payment into the LGPS, this needs to be considered at the outset and factored into the business plan.
