Woodcock v Cumbria Primary Care Trust

This appeal, by Nigel Woodcock, is against an order of the Employment Appeal Tribunal (‘EAT’) dated 12 November 2010 dismissing his appeal against a judgment of the Carlisle Employment Tribunal (‘ET’) dated 12 August 2009 dismissing his claim for age discrimination. The EAT panel comprised Underhill J (the President), Ms K. Bilgan and Dr B.V. Fitzgerald MBE, LLD, FRSA. The ET panel comprised Employment Judge Garside, Mr S.R. Abbas and Mr M. Jackson. Elias LJ, on the papers on 17 January 2011, granted permission to appeal on four grounds and refused permission on a fifth. Smith LJ, on a renewed oral application on 15 March 2011, granted permission on the fifth ground.

The respondent is Mr Woodcock’s former employer, the Cumbria Primary Care Trust (‘the Trust’). On 23 May 2007, when Mr Woodcock was just short of his 49^th birthday (17 June), the Trust gave him 12 months’ notice of dismissal on redundancy grounds. It gave such notice without first engaging in any consultation with him. The ET found that, in so giving the notice (and subject to the Trust’s claimed justification for such treatment), the Trust’s treatment of Mr Woodcock wasdiscriminatory on the grounds of age. That was because, whereas a like dismissal notice given to an appropriate comparator would have followed consultation, the Trust’s notice to Mr Woodcock, in not doing likewise, was timed so as to ensure that it was given before his 49^th birthday. If it had been given after that birthday, it would not have expired until after Mr Woodcock was 50. In such event, upon attaining 50 and being still in the Trust’s employment, he would have been entitled to take an early retirement at an enhanced pension. The timing of the notice deprived him of that benefit. That benefit could, however, only have been enjoyed by the incurring by the Trust of substantial additional cost; and the Trust’s aim in its timing of the notice was to achieve a dismissal on redundancy grounds that would save such additional cost.

The central issue in the proceedings was whether the Trust’s discriminatory treatment of Mr Woodcock was justifiable as being, in the words of the relevant regulation, ‘a proportionate means of achieving a legitimate aim’. If it was, then Mr Woodcock suffered no age discrimination. The ET held that it was and the EAT agreed. Mr Woodcock has challenged that conclusion before this court. The arguments in the appeal turned largely on the role that considerations of ‘cost’ may play in the justification of treatment that would otherwise amount to discrimination on age grounds. The treatment found to have occurred in this case was in the nature of direct discrimination. Whilst such discrimination, unlike indirect discrimination, is not ordinarily justifiable, in the case of age discrimination it can be (to put it perhaps a little more accurately, direct treatment that is justified will not be discriminatory at all).

The applicable provisions are in the Employment Equality (Age) Regulations 2006 (SI 2006/1031). Regulation 3, headed ‘Discrimination on grounds of age’, provides:

Part 2 of the Regulations, headed ‘Discrimination in Employment and Vocational Training’, is the relevant Part for present purposes. Regulation 7 provides, so far as material:

The Regulations gave domestic effect to Council Directive 2000/78/EC. The source of the provision in regulation 3 under which, in short, direct age discrimination may be justified is Article 6, which provides as follows:

I gratefully take the essential facts primarily from the succinct summary in the judgment of the EAT, delivered by Underhill J, although I have in part supplemented them from the ET’s written reasons (which were sent with the judgment to the parties on 12 August 2009) and from the documents.

Mr Woodcock was born on 17 June 1958. He left university in 1980 and became employed by the NHS. He is an able manager and in 1992 achieved the status of Chief Executive. On 16 June 2003 he became the Chief Executive of the North Cumbria Primary Care Trusts. That was not a separate legal entity but was a single management structure serving three PCTs in North Cumbria. His employment contract included a 12-month dismissal notice period.

An NHS re-organisation entitled Commissioning a Patient-led NHS was announced in 2005. This led to a reduction of the number of PCTs in the North West from 42 to 24 by the merger, or reconfiguration, of several existing PCTs due to take effect as from 1 October 2006. As from 1 July 2006, there was to be a new Strategic Health Authority for the entire North West (‘the NW SHA’); and it was proposed to have a single PCT covering the whole of Cumbria. Mr Woodcock’s post as Chief Executive of the North Cumbria PCTs was destined to disappear in the re-organisation.

Elaborate arrangements were put in place for the handling of potential consequential redundancies among senior management. Mr Woodcock and 20 other Chief Executives whose roles had been lost were entitled (in fact, subject to immaterial exceptions, they were required) to apply for a Chief Executive role in the 12 new reconfigured PCTs. Responsibility for assisting those who were unsuccessful was assigned to the Chief Executive of the NW SHA in conjunction with their current PCT chairman.

With effect from 6 February 2006, Mr Woodcock was seconded to the Cumbria and Lancashire Strategic Health Authority (‘the C&L SHA’), which was handling the re-organisation in relevant respects. His secondment was to a temporary role, with responsibility for implementing the transition from the old to the new PCTs: it did not change his substantive position as Chief Executive of the North Cumbria PCTs and was without prejudice to his application for a Chief Executive role in one of the new PCTs.

Mr Woodcock made the short-list for appointment as a new Chief Executive but was unsuccessful. Mr Farrar, the Chief Executive of the new NW SHA, who had chaired the interviewing panel, broke the news to him informally on 26 July 2006. They met again on 9 August 2006, when Mr Farrar gave him some feedback about his interview and they had a discussion about his future. The EAT quoted what the ET said about this and so shall I:

The EAT noted an apparent ambiguity between Mr Farrar’s advice referred to in the fifth sentence and that contained in last three sentences. It inferred that the fifth sentence may just have been a summary of Mr Woodcock’s evidence to the ET as to what Mr Farrar had said. The ET’s only express finding on any difference between the respective accounts was in paragraph 66, where it found that Mr Farrar’s advice to Mr Woodcock at various meetings ‘was that he should not apply for chief executive jobs until he had built up further qualities which he could refer to in his CV.’

Mr Farrar wrote to Mr Woodcock on 11 August 2006, confirming that he had not been selected and informing him that he was formally placed at risk of redundancy and that a letter would follow from his employer PCTs. His transitional role for the C&L SHA would continue for the time being. Mr Farrar recorded that he had discussed what Mr Woodcock might want to do in the longer term and that they were to meet again.

On 4 September 2006 the chairmen of the three North Cumbria PCTs of which Mr Woodcock was the Chief Executive wrote to him confirming that he would ‘now be placed formally at risk of redundancy’. That letter did not constitute notice of redundancy but told Mr Woodcock that, should such notice become necessary, he would be given formal notice in accordance with his contractual entitlement. This reflected a departure, favourable to Mr Woodcock, from the practice recommended by the NW SHA’s human resources department. That practice reflected a policy that included a guarantee that, as a result of the re-organisation, no-one’s employment would be terminated earlier than 30 June 2007; it also provided that, in the case of employees (like Mr Woodcock) with a 12-month notice entitlement, any such notice ought to be given so as to expire at the end of that employment guarantee period. No such notice, however, had been given to Mr Woodcock. The letter of 4 September told him that his ‘extended employment guarantee period remains until 30 June 2007’.

The new PCTs were created with effect from 1 October 2006, whereupon Mr Woodcock’s transitional role of assisting the C&L SHA came to an end. His employment, and the employer obligations of the three PCTs of which he had been Chief Executive, transferred to the new Cumbria Primary Care Trust (i.e. the respondent, ‘the Trust’). The Trust’s Chief Executive was Sue Page. Gill Mordain was its ‘Human Resources Lead’.

Mr Woodcock continued to discuss his position with Mr Farrar. Their discussions were informal ones: they were not redundancy consultations. On Mr Farrar’s suggestion, in the autumn of 2006 Mr Woodcock undertook a time-limited project for the NW SHA. In March 2007, he undertook a separate project for the Bolton, Salford & Trafford Mental Health NHS Trust. The Trust continued in the meantime to pay his salary but was obtaining no benefit from his services. Whilst it had an interest in bringing his employment to an end sooner rather than later, it had held its hand because Mr Farrar had told Ms Page that he expected Mr Woodcock to find alternative employment. By early 2007, however, the HR department of the NW SHA was suggesting that it was time that notice was given to him. In due course, it was. The appeal is concerned with the subsequent events in 2007 relating to it, as follows.

By March 2007 Ms Mordain had realised the importance to the Trust of giving a dismissal notice to Mr Woodcock before his 49^th birthday in June 2007. On 14 March 2007, she sent this email to Ms Page:

On 30 March 2007, on Ms Page’s instructions, Ms Mordain wrote to Mr Woodcock asking him to attend a meeting on 10 April 2007 ‘to discuss your employment status’ and informing him of his right to be accompanied by a trade union representative. The letter explained that his role as Chief Executive of the North Cumbria PCTs had ceased to be required. The meeting was intended to be a redundancy consultation meeting prior to a decision as to whether to give him a notice of dismissal. On the same day, Mr Woodcock and Mr Farrar had another meeting. Mr Woodcock’s note of it reads:

Mr Woodcock was unavailable for the meeting on 10 April 2007 that Ms Mordain had suggested. The earliest subsequent date convenient to both sides was 6 June 2007, for which the meeting was fixed. The Trust had not, in the meantime, forgotten the point to which Ms Mordain had alluded in her email of 14 March to Ms Page. Mr Woodcock would be 49 on 17 June, 11 days after the forthcoming meeting. If he were not given notice until after 17 June, he would, given his entitlement to 12 months’ notice, still be in the Trust’s employment on his 50^th birthday on 17 June 2008. In such circumstances he would be entitled to take early retirement on so-called ‘enhanced terms’ – in essence, 6½ added years and no actuarial reduction for early receipt. That would massively increase the cost of his retirement, the cost of funding an early retirement pension being said by Ms Page to be at least £500,000.

Ms Page concluded that the risk of incurring this liability was unacceptable and that notice of dismissal should be given to Mr Woodcock in advance of the meeting fixed for 6 June. The ET made these findings as to Ms Page’s reasoning at the time and set out the following exchange in her cross-examination by Mr Panesar, counsel for Mr Woodcock:

Following that decision, Ms Mordain wrote on 23 May 2007 to Mr Woodcock informing him that his position was redundant and giving him 12 months’ notice of dismissal. The material parts of the letter read:

It is agreed that it was inaccurate for Ms Mordain to have called the Farrar meetings ‘consultation meetings’. As for the timing of the notice, the EAT observed:

The meeting of 6 June 2007 took place. Mr Woodcock attended it with Mr Keegan. It was chaired by Mrs Chadwick (chairman of the Trust), who opened it by explaining that its purpose was to start the formal process of consultation with Mr Woodcock as to his risk status and potential dismissal on redundancy grounds. The line adopted by Mr Woodcock and Mr Keegan was that any consultation was meaningless in circumstances in which a dismissal notice had already been given. They asked for its withdrawal. Mr Keegan’s stance, as recorded in the minutes, was that following its withdrawal there should be a formal process of consultation ending on 3 July 2007, following which the Trust could serve a fresh dismissal notice. The Trust agreed to consider withdrawing the notice but in the event it decided against doing so. Because of an unfortunate administrative error, its decision in that respect was not sent to Mr Woodcock until 29 September 2007 and it was received by him in October. The debate at the June meeting about whether the dismissal notice should be withdrawn meant that the discussion about the possibility of suitable alternative employment did not get very far. The EAT observed that:

On 19 July 2007 Mr Keegan wrote to Mrs Chadwick in reference to the meeting of 6 June. The letter read, so far as material as follows:

Once it was confirmed that the dismissal notice was to stand, Mr Woodcock appealed against his dismissal, but he was unsuccessful. There was no finding by the ET that when he was told that the dismissal notice was to stand, either he or Mr Keegan made any suggestion that the consultation process should continue pending its expiry. There was, however, no reason in principle why it could not. The dismissal notice had contemplated that consultation could take place during its running and, at October 2007, it was still not due to expire for another eight months. Mr Gilroy told us, on instructions, that Mr Keegan did in fact pursue with the Trust the question of alternative employment, although we do not know what that amounted to. Upon his departure from the Trust in May 2008, Mr Woodcock received a payment of £220,000 in accordance with the contractual redundancy payment terms applying to his employment.

Mr Woodcock’s subsequent claims to the ET were for compensation for unfair dismissal and for discrimination on the grounds of age. The ET found the dismissal to have been fair and dismissed the unfair dismissal claim. It found that the Trust had prima facie discriminated against Mr Woodcock on grounds of age but also found such treatment to have been justified. It therefore also dismissed the age discrimination claim.

Mr Woodcock appealed against both dismissals. The EAT allowed his appeal against the dismissal of his unfair dismissal claim. The reason for that was that, as had been conceded before the ET, the Trust had not followed the (now repealed) formal dismissal procedure prescribed by Schedule 2 to the Employment Act 2002. It followed that the ET was bound to make a finding of so-called ‘automatic’ unfair dismissal pursuant to section 98A(1) of the Employment Rights Act 1996. The Trust did not even seek to defend the ET’s decision on the unfair dismissal claim. Mr Woodcock’s victory under this head was, however, valueless, since his entitlement to a basic and compensatory award was extinguished by his redundancy payment.

The real issue before the ET, the EAT and now this court was Mr Woodcock’s age discrimination claim. Was the Trust’s treatment of Mr Woodcock in giving the dismissal notice when it did, and in advance of any formal consultation with him, ‘a proportionate means of achieving a legitimate aim’ for the purposes of regulation 3 of the 2006 Regulations? If yes, Mr Woodcock suffered no discriminatory treatment on the grounds of age. If no, he did.

The ET’s conclusion on this claim was set out in paragraphs 77 to 84 of its reasons. It needs to be set out in full:

The EAT’s reasoning for dismissing the appeal was full and instructive and so I shall explain and cite from it reasonably fully. There were five grounds of appeal, of which grounds 3 and 4 related to the unfair dismissal appeal, to which it is unnecessary to refer.

The EAT first summarised its interpretation of the ET’s reasoning as follows. It was not the dismissal decision itself that was discriminatory, but its timing: in particular, the giving of it prior to the planned consultation meeting on 6 June 2007. The timing was decided upon in order to ensure that Mr Woodcock did not reach pensionable age whilst still in the Trust’s employment. Had he achieved such age, the Trust would have incurred an additional costs liability and the Trust’s aim in giving the notice when it did was to avoid that liability. That aim was legitimate. The EAT (in paragraph 27) understood the ET’s reasons to have been that:

Ground 1 of the appeal to the EAT was that the EAT’s decision in Cross v. British Airways plc [2005] IRLR 423 was authority for the proposition that cost alone cannot be a legitimate aim for the justification of discrimination, whereas the Trust had relied by way of justification solely on the costs consequences of permitting Mr Woodcock to remain in its employment until he was 50. The EAT noted that the orthodox interpretation of Cross was that, whilst cost alone cannot justify a discriminatory act, cost plus some other factor (the ‘cost plus’ approach) may do so. The EAT expressed an obiter view that a rule that rejected a ‘cost alone’ justification but accepted a ‘cost plus’ justification could tend to involve both parties and tribunals in ‘artificial game-playing – “find the other factor” – of a kind which is likely to produce arbitrary and complicated reasoning’. It said:

Having offered that view, the EAT did not apply it. It expressed its reluctance to depart from the established position in the EAT as accepted by two previous Presidents (Burton J and Elias J, as he then was) and concluded that it anyway did not need to decide whether to do so since its view was that the ET had in fact adopted the ‘cost plus’ approach. The EAT said:

Ground 2 was, according to the notice of appeal to the EAT, focused on the proportionality of the Trust’s treatment. It was to the effect that, even if cost considerations were in principle admissible by way of justification, they cannot justify the deprivation of an employee’s right to be consulted about a proposed dismissal for redundancy. Whilst the EAT saw the general merit of that proposition, the facts of the case put the ‘loss of consultation’ point in a different context, for the following reasons: (1) Mr Woodcock had already had a far longer period before notice was given than he was reasonably entitled to expect – an extension of almost a year; (2) whilst during that period he had had no formal consultation, he ‘had had the substance of a consultation process, as regards the crucial question of alternative employment’, having had the benefit of his discussions with Mr Farrar, who was better placed to give him information as to his options than anyone at the level of the Trust; and Mr Woodcock also knew the score (see his note of the meeting of 30 March 2007, quoted in [19] above); (3) it was only a chapter of accidents that deferred the timing of the consultation meeting to a point so close to the danger zone. If the meeting had taken place when first proposed, there would have been no question of any notice being given after his 49^th birthday. This was not a case of the employer artificially accelerating the procedure: it had been slowed down through no-one’s fault or design; (4) the ET had found that, as at 23 May 2007, there was no suitable alternative employment for Mr Woodcock (see paragraphs 75 and 78 of its reasons); the meeting of 6 June 2007 would not have prevented his dismissal; (5) the dismissal notice anyway did not bring the consultation process to an end. The duty to consider alternative employment continued during the period of notice (Mugford v. Midland Bank plc [1997] ICR 399) and 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 … Consultation is concerned with substance and not only with taking the right steps in a ritual dance’.

The EAT’s view was, therefore, that:

The EAT dealt next with two arguments arising in the same context. The first was that the Trust could not advance a case of justification when Ms Page’s belief that Mr Woodcock had been deliberately dragging out the consultation process was erroneous. The EAT rejected that, holding that the relevant question was whether the Trust’s actions were objectively justified.

The second argument was that it was not because of inertia that Mr Woodcock had not obtained or applied for alternative employment by the date of the dismissal notice: he had been following Mr Farrar’s advice to lie low for a while, whilst also taking on the short-term projects. Mr Farrar’s evidence was not, however, that he had told Mr Woodcock not to look for alternative employment for either 12 months or indeed any length of time, and the EAT referred to the passage from the ET’s reasons that I have quoted at [12] above. The ET was in any event well aware of the point and it did not regard it as undermining its conclusion on the justification issue. The EAT agreed. Whatever Mr Farrar’s advice had been, Mr Woodcock could have had no complaint if he had received a notice of dismissal, after due consultation, by, at the latest, the end of March 2007, and his own note of 30 March 2007 showed that he acknowledged that.

Ground 5 of the appeal was that some of the ET’s findings, being those in paragraphs 75 and 78, and recapitulated in paragraphs 83 and 84, were perverse: namely, (a) that consultation would have achieved nothing, (b) that there was no suitable alternative employment for Mr Woodcock, and (c) that it was only a Chief Executive’s post that he was interested in. Finding (c) was the crucial one, since there was no challenge to the finding that there were no available Chief Executive jobs. In fact, the ET’s finding at paragraph 78 was that Mr Woodcock would not have accepted a job below the level of Chief Executive or Director (being the level next below that of Chief Executive). The EAT recorded in paragraph 43 that ultimately Mr Panesar felt unable to challenge that finding by the ET, and the EAT rejected the perversity challenge.

The Trust’s treatment of Mr Woodcock generally

Mr Gilroy QC, leading Mr Panesar, devoted a material part of his submissions to a generalised criticism of the Trust’s conduct in relation to Mr Woodcock, whom he promoted as a longstanding, able and loyal employee of the Trust (and his predecessor employers) who deserved better treatment than he was given. There were times in the course of his submissions when he came close to embracing the line that by 2007 Mr Woodcock had earned something in the nature of an accrued right to remain in the Trust’s employment until he was 50, so that he could benefit from the enhanced pension benefits to which he would then become entitled and for the enjoyment of which he had acquired a legitimate expectation that the Trust was required to respect.

I do not question Mr Woodcock’s merits as an able and loyal employee, who had given long and valuable service to the NHS. His case must, however, be viewed in a proper perspective, which I do not regard Mr Gilroy’s submissions as having properly recognised; and that perspective provides an important backdrop to the assessment of the age discrimination case to which the next section of this judgment is specifically devoted.

Mr Woodcock’s long and able service with the NHS did not entitle him to a job for life, or even to the expectation of a job for life. Employment in a particular post will commonly carry with it the risk of redundancy and Mr Woodcock enjoyed no special immunity from the risk that applied to his. He knew by February 2006, when he stopped working as Chief Executive of the North Cumbria PCTs, that his post would disappear in October 2006 and that he would either have to find alternative employment with the Trust or face being made redundant. He was, with others in a like position, the beneficiary of an abundance of collective consultation concerned with the processes for applying for posts in the new PCTs. He applied in 2006 for appointment to one of the new Chief Executive posts. He underwent a transparent selection process but had the misfortune to learn in July 2006 that he had been unsuccessful. He knew that, despite this, he had guaranteed employment until 30 June 2007; and that, as he was entitled to 12 months’ notice, he could expect a dismissal notice expiring shortly after that date. In fact he was not given such a notice but Mr Farrar wrote to him on 11 August 2006 informing him that he was formally at risk of redundancy and warning him that a letter would follow from his employer PCTs. That letter followed on 4 September 2006. It informed him that he would ‘now be placed formally at risk of redundancy’ but that his ‘extended employment guarantee period remains until 30 June 2007’.

The Trust became Mr Woodcock’s new employer in October 2006. He had no meetings with the Trust about alternative employment, but he did have meetings with Mr Farrar, who was probably better placed than anyone in the Trust to assist him in this respect. That was not a formal consultation process but was in practice probably more valuable than any consultation that Mr Woodcock might have had with the Trust. By March 2007, however, no suitable alternative employment had been found. Mr Woodcock acknowledged in his own note of his meeting with Mr Farrar on 30 March that ‘if no suitable opportunities came up in 12 months time I was on my own and redundant’. He was, therefore, under no illusion that his job with the Trust was for life – or even until he was 50. He foresaw being ‘on his own’ whilst still 49.

The Trust gave Mr Woodcock his 12 months’ dismissal notice on 23 May 2007. Importantly, the notice only provided for the termination of employment on 22 May 2008 unless either the Trust or the NW SHA could secure suitable alternative employment for him; and it informed him that the Trust ‘will continue to consult with you to effectively assist you in finding you suitable alternative employment’. The first such consultation step was the meeting already fixed for 6 June 2007. Instead, however, of treating it as the opportunity to open a consultation programme with the Trust, which could, if necessary, continue over the following 11 months, Mr Woodcock adopted the stance that consultation against the background of an already served dismissal notice was inappropriate: he wanted the notice withdrawn so that a short period of consultation could take place, with liberty for the Trust to serve a fresh notice on or after about 4 July 2007.

That was, with respect, unconstructive and pointless. There was no reason why the notice needed to be withdrawn before consultation could take place. The 12 months’ notice it had given meant that there was an unusually long period in which consultation could take place. It is well recognised that consultation over a proposed dismissal on redundancy grounds can continue until the employment is terminated. In Mugford v. Midland Bank plc [1997] IRLR 208, His Honour Judge Clark, giving the judgment of the EAT, said this:

There was an unfortunate delay in the communication to Mr Woodcock (in October 2007) of the Trust’s decision that it was not going to withdraw the notice. There was no finding by the ET that any steps were thereafter taken by either side to consult, although I have noted what Mr Gilroy told us as to Mr Keegan’s efforts. What the ET did find was that Mr Woodcock did not apply for any other job during the notice period. More importantly, it found, in paragraph 84, that Mr Woodcock was redundant and that there was no job for him. Although he was given his dismissal notice prior to any consultation meeting, the ET also there found that consultation would have achieved nothing. That was because it was a Chief Executive job that he wanted, whereas there was no such job was available.

Ground 5 of Mr Woodcock’s grounds of appeal asserts that those findings in paragraph 84 were perverse. I shall digress to deal with that ground now, because its outcome is informative as to the general considerations I am now discussing as well as to the disposition of Mr Woodcock’s appeal generally.

The basis of the perversity case is that it is said that it was clear that Mr Woodcock wanted to stay in the NHS and that, had even a cursory consultation taken place and he had been informed that he had a choice between taking a non-Chief Executive role and being dismissed, he would have made the choice to remain in the NHS. It is said that the evidence showed that there were plenty of jobs in the NHS for a person of Mr Woodcock’s skills. Whilst the ET found that consultation would have achieved nothing, because Mr Woodcock was only interested in Chief Executive jobs and would not have done anything else, it is said that no reasonable tribunal properly directing itself to the law could properly have arrived at that conclusion. It is said that at no time did Mr Farrar or anyone from the Trust tell Mr Woodcock prior to the dismissal notice or the meeting of 6 June 2007 that he was going to be dismissed if he did not take a non-Chief Executive job.

There are, I consider, major difficulties with that line of argument. Mr Woodcock’s own note of 30 March 2006 (see [19] above) shows that he knew the vulnerability of his position. The dismissal notice, when served, told him that he would only be dismissed ‘unless either ourselves or the SHA are able to secure you suitable alternative employment. In that regard we will continue to consult with you to effectively assist you in finding you suitable alternative employment’. He was therefore squarely told the score and knew that, if he wanted to stop the axe falling on 23 May 2008, he had to consider all the options open to him at the Trust, including setting his sights lower than obtaining a Chief Executive or director post; and, in that connection, he was told that the Trust would continue to consult with him. The meeting of 6 June 2007 was the first opportunity for that, when he preferred instead to take the legalistic stance that there could be no consultation without the prior withdrawal of the notice. I have referred to the interest that he subsequently showed in relation to consultation. He also chose to apply for no jobs that came available in the Trust. The thrust of the points made in support of the perversity argument appears to me to go not to the mounting of any arguable challenge to the soundness of the ET’s findings so much as to a demonstration that Mr Woodcock may not have looked after his own interests as well as he might now wish he had done.

I regard this ground of appeal as manifesting a triumph of hope over reality. A central factual issue before the ET was what jobs Mr Woodcock was interested in and whether he was interested in any jobs below the level of Chief Executive. That issue was one upon which he gave oral evidence, upon which he was cross-examined and upon which the ET made its findings. We have not been provided with any notes of his oral evidence, or even with his witness statements. I wholly fail to understand how in those circumstances this court can be expected to question the ET’s findings of fact about the only type of post that Mr Woodcock was looking for and as to the value (if any) of any consultation.

As to those findings, the ET found, in paragraph 73, that by the end of May 2007 ‘it was clear to everyone, as it must have been clear to Mr Woodcock, that the chances of obtaining further employment in the senior position he wanted were remote’. The ET further found, in paragraph 75, that:

There is no principled basis upon which this court can re-open the findings of the ET in paragraph 84 that consultation with Mr Woodcock would have achieved nothing. Jobs beyond the Trust were not in its gift and there were no jobs available in the Trust of the sort that, as the ET found, Mr Woodcock wanted. This ground of appeal might have been arguable if Mr Woodcock had been able to show that he gave apparently credible and unchallenged evidence to the ET that, at and following May 2007, he was prepared to consider applying for a range of Trust jobs below the level of director. We have been shown no such evidence. To establish perversity in respect of the ET’s findings, Mr Woodcock must make out an overwhelming case that the ET reached conclusions that no reasonable tribunal, on a proper appreciation of the evidence and the law, would have reached (see Yeboah v. Crofton [2002] IRLR 634, at [93], per Mummery LJ). Mr Woodcock does not even get close to making such a case. I would dismiss ground 5 of his appeal.

Against this background - and leaving aside the issue of age discrimination - I find it difficult to identify any general unfairness in the Trust’s conduct towards Mr Woodcock. Whilst the Trust’s dismissal notice preceded the holding of any formal consultation between itself and Mr Woodcock, on the facts found by the ET this visited no practical disadvantage upon him. He had in practice had the benefit of valuable, although informal, consultation with Mr Farrar; and, if he wanted it, the dismissal notice offered him the opportunity of some 50 weeks of further consultation with the Trust following the meeting of 6 June 2007. He had also had the benefit of an unusually generous period in which to identify alternative work between first becoming aware of the proposed re-organisation of the PCTs and the expiry of his termination notice – in all, some 30 months; and his employment also continued for some 22 months after he had learnt that his application for appointment as Chief Executive of a new PCT had failed. Not many employees who are made redundant have that sort of time with which to play.

Considerations of age discrimination apart, I would therefore conclude that, contrary to the thrust of a material part of Mr Gilroy’s submissions, the Trust treated Mr Woodcock with a proper degree of fairness. The only reason that his unfair dismissal claim succeeded was because of the Trust’s failure to go through the, now repealed, formal ritual prescribed by Schedule 2 to the Employment Act 2002.

Age discrimination

I turn to age discrimination, to which the remaining four grounds of appeal are directed. The legal proposition upon which the first two grounds depend is that the orthodox position shown by the authorities, in particular Cross and others v. British Airways plc [2005] IRLR 423, is that considerations based on cost alone, or on economic or financial factors alone, cannot justify treatment that isdiscriminatory on the grounds of age. Regulation 3 of the 2006 Regulations shows that in order for justification to be established the alleged wrongdoer must show that his treatment complained of was ‘a proportionate means of achieving a legitimate aim’. That requires the showing of two things: (1) that the treatment was directed at achieving ‘a legitimate aim’; and (2), if so directed, that it was a proportionate means of doing so. Mr Gilroy’s submission was that the Trust failed to negotiate the first gateway because it claimed to justify its treatment solely on cost grounds. If wrong on that, he submitted that the Trust also failed to negotiate the second one.

I turn to the authorities. Cross was the reserved judgment of the EAT delivered by Burton J (the then President) and discussed a number of issues, including whether a provision, criterion or practice indirectly discriminatory on the grounds of sex was justifiable, the ET having held that it was. The rival arguments were (1) by Mr Allen QC, that the saving or avoidance of costs cannot be relied upon as justification; and (2) by Mr Underhill QC (as he then was), (a) that if necessary, cost considerations alone can be a sufficient justification (for which, as President of the EAT, he offered obiter judicial support in his judgment in this case), but (b) that he was content to support the ET’s conclusion on the basis that it had correctly applied a ‘cost plus’ approach.

In his very full judgment, Burton J referred to, amongst others, various decisions of the Court of Justice to which Mr Gilroy and Mr Short referred us, namely: Hill and Stapleton v. Revenue Commissioners and Department of Finance C-243/95; [1998] IRLR 466; Kütz-Bauer v. Freie und Hansestadt Hamburg C-187/00; [2003] IRLR 368; Steinicke v. Bundensantalt für Arbeit C-77/02; [2003] IRLR 892; and Schönheit v. Stadt Frankfurt am Main and Becker v. Land Hessen C-4/02 and C-5/02; [2004] IRLR 983. In paragraph 62 of his judgment, he also referred to four earlier decisions (two of the Court of Justice, one of the House of Lords and one of the Court of Appeal) which had been cited as showing that ‘economic considerations, either the same as or analogous to costs, have been permitted or envisaged as justification’. Those four cases were respectively: Jenkins v. Kingsgate Ltd [1981] IRLR 228; Bilka-Kaufhaus v. Weber von Hartz [1986] IRLR 317; Rainey v. Greater Glasgow Health Board [1987] IRLR 26; and Allonby v. Accrington & Rossendale College [2001] IRLR 364. Burton J followed his reference to them with these observations:

Burton J then embarked on a review of the subsequent European authorities that were said to outlaw reliance on cost or economic considerations as justification. In paragraph [70] he identified the jurisprudence as having two strands to it. One strand was directed to showing that member states, with a ‘notionally bottomless purse’ cannot be permitted to justify on the grounds of cost a social policy which is obviously discriminatory. This found its origin in De Weerd, Nee Roks v. Bestuur van de Bedrijfsvereniging voor de Gezondheid C-342/92; [1994] ECR 1-571 and was endorsed in paragraph 60 of the court’s judgment in Kütz-Bauer, in paragraph 67 of its judgment in Steinicke and in paragraph 85 of its judgment in Schönheit. The other strand related to the basis upon which an employer might seek to justify any claimed discrimination. The origin of that was Hill and Stapleton, which Burton J explained as follows:

Burton J’s conclusion on the issue before him was as follows:

Burton J therefore there recognised the existence of the two strands of the European jurisprudence and interpreted the principle applicable to justification by employers as being what is known as the ‘cost plus’ approach. That approach was followed by the EAT in Redcar & Cleveland Borough Council v. Bainbridge and others [2007] IRLR 91, in a judgment delivered by the then President, Elias J, as he then was (see paragraphs 90 to 93).

Mr Gilroy asserted, that the ‘cost plus’ principle endorsed in Cross and followed in Redcar & Cleveland remains the correct principle. He cited the decision of the Court of Justice in Fuchs and Kohler v. Land Hessen C-159/10 and C-160/10; [2011] All ER (D) 97, one post-dating the decision of the EAT in the present case, as recent support for it. He referred us to the following paragraphs:

Mr Gilroy’s submission came down to the short one that, as ‘cost plus’ is the golden rule, the problem in the way of the Trust’s claimed justification is that it cannot identify any ‘plus’. Its aim in giving the dismissal notice when and how it did was a naked attempt to save and avoid costs that it would otherwise incur. The authorities, said Mr Gilroy, show that mere cost saving or avoidance cannot be promoted as justification for what would otherwise be discriminatory treatment on age grounds. Mere cost saving or avoidance cannot therefore be a ‘legitimate aim’ for the purposes of regulation 3(1). If, contrary to that submission it could be, the treatment applied in this case did not amount to a proportionate means of achieving such aim.

Mr Short QC, in his submissions in response, invited us to accept (a) the two strands of the European jurisprudence to which I have referred; and he said that the cited passages in Fuchs relate to the first strand, not to the second one concerning the basis upon which employers may justify; (b) that, on a correct understanding of the principles, there is no ‘bright line’ preventing reliance upon cost based justification in the absence of a ‘plus’ factor; (c) that if, however, ‘cost plus’ is the correct approach, it should be given a broad interpretation; (d) that the ET and EAT were entitled to find that this was a ‘cost plus’ case; and (d) that they were also entitled to find that the treatment complained of was legitimate and proportionate. As regards the Fuchs case, he submitted that the more relevant paragraph is paragraph 52, in which the court referred to paragraph 46 of its judgment in R (on the application of the Incorporated Trustees of the National Council on Ageing (Age Concern England) v. Secretary of State for Business, Enterprise and Regulatory Reform [2009] IRLR 373, which I shall cite together with paragraph 47:

In this case the Trust’s discriminatory treatment that the ET held had to be justified was the giving of the dismissal notice on 23 May 2007 without prior consultation (paragraph 80 of its findings). The discrimination lay in the fact that, by contrast, a dismissal notice given to, say, a 46 year old employee would have been preceded by consultation.

It is apparent from Article 6(1) of the Directive and from its domestic implementation in regulation 3(1) that it is possible for an employer to justify treatment that, absent justification, would amount to direct age discrimination. It can do so, in the language of the latter, if the treatment is ‘a proportionate means of achieving a legitimate aim’. Mr Gilroy’s submission is that the saving or avoidance of costs alone cannot be a legitimate aim. It can only be so if it is linked to a non-cost factor. Thus a consideration that, by itself, is inadmissible as justification becomes admissible if so linked; and, in such a case, it can play a part in the proportionality assessment.

There is, it seems to me, some degree of artificiality about such an approach to the question of justification. As Elias J observed in the Redcar & Cleveland case, [2007] IRLR 91, at paragraph 91, ‘Almost every decision taken by an employer is going to have regard to costs.’ Regulation 3(1), however, says nothing of the extent to which considerations of cost may feature in the justification exercise. It provides merely that what would otherwise be discriminatory treatment may be justified if it was ‘a proportionate means of achieving a legitimate aim’. The relevant question must therefore be whether the treatment complained of was such a means. Accepting, as I make clear I do, that the guidance of the Court of Justice is that an employer cannot justify discriminatory treatment ‘solely’ because the elimination of such treatment would involve increased costs, that guidance cannot mean more than that the saving or avoidance of costs will not, without more, amount to the achieving of a ‘legitimate aim’. That is entirely unsurprising. To adopt a simple example given by Mr Short, it is hardly open to an employer to claim to be entitled to justify the discriminatory payment to A of less than B simply because it would cost more to pay A the same as B. Such treatment of A could not, without more, be a ‘legitimate aim’.

If the Trust’s treatment of Mr Woodcock is correctly characterised as no more than treatment aimed at saving or avoiding costs, I would accept that it was not a means of achieving a ‘legitimate aim’ and that it was therefore incapable of justification. It would fall foul of the limitations upon justification explained in cases such as Hill and Stapleton. On the unusual facts of this case, I would not, however, regard that as a correct characterisation. The dismissal notice of 23 May 2007 was not served with the aim, pure and simple, of dismissing Mr Woodcock before his 49^th birthday in order to save the Trust the expense it would incur if was still in its employ at 50. It was served, and genuinely served, with the aim of giving effect to the Trust’s genuine decision to terminate his employment on the grounds of his redundancy. The EAT had no doubt that the dismissal of an employee on such grounds is a legitimate aim - ‘It is an entirely legitimate aim for an employer to dismiss an employee who has become redundant’. I agree; and it cannot in my view cease to be a ‘legitimate aim’ simply because, if there is no dismissal, the employer will continue to incur costs that such dismissal is directed at saving.

I also agree with both the ET and the EAT that it was a legitimate part of that aim for the Trust to ensure that, in giving effect to it, the dismissal also saved the Trust the additional element of costs that, had it not timed the dismissal as it did, it would be likely to have incurred. In considering the timing of the steps it needed to take towards dismissing Mr Woodcock for redundancy it was obviously legitimate for the Trust to have that consideration in mind, as it clearly did as early as March 2007. It would, in my view, have been irresponsible of the Trust not to have done so. Mr Woodcock had, by 2007, no right, entitlement or expectation to the enjoyment of the enhanced benefits that he would have enjoyed had he remained in the Trust’s employment until he was 50. Had he in fact so remained so as to enjoy them, he would have been the beneficiary of a pure windfall. He could and would not have had any reasonable hope or chance of doing so if (a) he had been given notice to expire at the end of (or shortly after) June 2007, as ought to have happened in accordance with the guidance of the NW SHA; (b) he had been able to attend the meeting on 10 April 2007, as the Trust had originally intended, and he had been given notice at or after that meeting; (c) it had been possible to arrange a subsequent meeting before June 2007, and he had been given notice after it; or (d) he had been given notice on or shortly after the meeting that was eventually fixed for 6 June 2007. If any of these things had happened, he could have had no possible grounds for complaint on age discrimination grounds.

The only difficulty generated by the case is that, on the ET’s findings, the dismissal was tainted with discriminatory treatment on the grounds of age. That was because the difficulties in arranging an earlier consultation meeting with Mr Woodcock resulted in the Trust taking the view in May 2007 that, because his 49^th birthday was fast approaching, it needed to cut a procedural consultation corner in order to ensure that the notice expired before his 50^th birthday. (In fact it was wrong about this: it could have given its dismissal notice immediately after the meeting of 6 June 2007; had it done so, it is difficult to see what complaint Mr Woodcock could have had).

In my view that consideration goes, however, only to the proportionality of the treatment adopted by the Trust. That required the striking of an objective balance between the discriminatory effect of the treatment of Mr Woodcock and the needs of the Trust. The ET found that, in the circumstances, the treatment was proportionate (paragraphs 83 and 84 of its reasons). It was ground 2 of Mr Woodcock’s appeal to the EAT that focused exclusively on proportionality, and it relied upon the fact that the Trust’s procedure deprived him of his right to consultation in advance of the dismissal notice. Underhill J explained why, in what he described (and I agree) as the ‘very particular’ circumstances of the case, the EAT agreed that that consideration did not undermine the proportionality of the Trust’s treatment. I have explained the EAT’s reasoning at [35] and [36] above.

Mr Gilroy submitted that the Trust’s action in removing Mr Woodcock’s right of consultation so as to save costs was so patently a disproportionate action that the Trust cannot get home on the proportionality element of the exercise. I am not persuaded by that. Both the ET and EAT explained why, in the very particular circumstances to which Underhill J referred, the Trust’s treatment was proportionate to the effect upon Mr Woodcock. The issue for us is whether, in making the proportionality assessment that it did, the ET erred in law. I agree with the EAT that it did not. On the contrary, I regard its decision as a well judged one. Ultimately, the essence of the case is (a) that the Trust was fully entitled, and had effectively resolved, to terminate Mr Woodcock’s employment prior to his 50^th birthday; (b) the implementation of that intention was delayed through no fault of its own but through a chapter of accidents; and (c) whilst the consultation ‘corner cutting’ in theory deprived Mr Woodcock of an opportunity, in fact it deprived him of nothing of value, because, as the ET found, consultation would have achieved nothing.

Mr Gilroy also submitted, as ground 4 of the appeal, that the decisions below were flawed or perverse in failing to take into account Ms Page’s admittedly erroneous assumption that Mr Woodcock had been purposely trying to delay the commencement of the consultation process. The EAT dismissed this ground on the basis that the question for the ET was whether the Trust’s treatment of Mr Woodcock was objectively justified. The EAT said:

Mr Gilroy said that if, as the EAT held, it was legitimate in assessing the proportionality of the Trust’s treatment to take account of the various factual matters which the EAT enlisted in support of the Trust’s proportionality case (see [35] above), it must be legitimate also to have regard to Ms Page’s understanding now in point. There may be something in that, but it does not take Mr Woodcock anywhere. There was no suggestion that, had Ms Page not been labouring under this misunderstanding, the course of events would or might have been any different. I agree with the EAT’s disposal of this point.

In my judgment, all Mr Woodcock’s grounds of appeal fail. I would dismiss the appeal.

I agree.

I also agree.