Woodcock: press reporting of employment law issues reaches a new low

Yesterday brought a judgment from the Court of Appeal in Woodcock v Cumbria Primary Care Trust, a case that we employment lawyers had been waiting for for a while. Mr Woodcock had been sacked by an NHS trust where he had been chief executive, just before the time when his pension benefits would have gone up significantly had he stayed in post. He sued for age discrimination, and we all wanted to know what the court would make of it.

Not because we cared about Mr Woodcock. Or the NHS trust for that matter. We are only lawyers after all, it’s not like we’re real people, with feelings. By the time most employment law cases get to the Court of Appeal (this probably applies in other fields too) it’s generally just about some esoteric principle, some ambiguity in the legislation, some nuanced interpretation. It is frankly not the stuff of newspaper headlines. There are exceptions, of course. Everyone cared about Sharon Shoesmith’s case, for example, although for all the wrong reasons.

No, what we employment lawyers were interested in was what has become known as the “costs plus” rule, which in short determines the extent to which employers can raise economic arguments when trying to justify what would otherwise be unlawful discrimination.

Background law

The case was about age discrimination. Any less favourable treatment of an employee by an employer because of age will amount to unlawful direct discrimination, unless the treatment is objectively justified. To be justified the employer’s actions must meet a “legitimate aim” and be a “proportionate” means of meeting that aim.

Objective justification doesn’t even arise as a defence in most discrimination cases. An employer can’t get away with arguing, for example, that it appointed a man because women take maternity leave and are therefore more expensive to hire in the long run. That is direct discrimination, and economic arguments such as that will not excuse it. Generally justification only arises in indirect discrimination cases. The exception is age discrimination, where both direct and indirect discrimination can be justified. One of the most controversial issues in age discrimination law over the last year has been the extent to which employers can justify compulsory retirement ages, although most employers I think it is fair to say seem to be abandoning them.

This case was not about retirement, it was about redundancy.

The facts

In brief, Mr Woodcock was CEO of an NHS Trust. Due to a reorganisation and merger of several trusts, his job was potentially redundant. He applied for new CEO roles within the reorganised Trusts, but without success. He was seconded to a temporary role to give him some more time in case a permanent job came up. Then, just before his 49th birthday, the trust cancelled a scheduled meeting with him and abruptly gave him his 12 months notice, saying they would carry on looking for alternative roles in the mean time. Why they hadn’t already done this was never quite explained. The trust’s HR department’s practise for senior roles was to give notice at the start of the process, before looking at alternative roles. Mr Woodcock’s redundancy had therefore already been strung out for a year more than it should have been.

The reason for the sudden giving of notice was that if Mr Woodcock was still in post at age 50 he would be entitled, on dismissal, to early retirement benefits under the NHS pension scheme. This would have cost the Trust much more money. About half a million pounds more. As it was he still got a redundancy payoff of over £200,000.

He sued for age discrimination. The tribunal found that the reason for cutting the consultation short and dismissing him when they did was his age. As a result he would be entitled to the extra half million in compensation, unless the Trust could show their actions were justified. The tribunal held they were. Mr Woodcock appealed to the EAT and then the Court of Appeal. Both agreed with the tribunal.

For a summary of the decision from 11KBW, see their blog post, Can cost justify age discrimination?

And this is how it was reported.

The Telegraph

The Telegraph website came out with this article.
20120322-220226.jpg

20120322-220250.jpg

It is hard to find a paragraph of this report that is not hugely inaccurate, either in terms of the actual judgment in the case, or it’s likely effect. I should say now that the likely effect of the case on age discrimination or other areas of employment law is close to nil.

I’ll pick a few choice excerpts:

The decision “will pave the way for public and private sector employers to legitimately dismiss staff based on age – even though the practice is unlawful”.

This is wrong on a number of levels. First, Mr W was not dismissed based on age. He was dismissed for redundancy, after it became apparent that there was no suitable role for him. The employer merely called a halt to any further delay (which had already been substantial) because Mr W’s age meant that further delay would be costly. One specific finding of the courts in this case was that the employer had been more than generous in stringing out Mr W’s redundancy process and he had no real “legitimate expectation” of remaining in post until he was 50, given there was no role for him.

Second, the court has not given employers the go ahead to dismiss older workers “even though the practice is unlawful”. The court is interpreting the legislation enacted by Parliament to decide what is lawful. It’s not just a semantic point. Some of the comments from readers on the Telegraph website were directed at the judges, who if the story is to be believed, apparently perceived themselves to be above the law. Nothing could be further from the truth here.

The judgment “will allow employers to ignore regulations and get rid of older workers, experts said”.

This is just a development of the same point as above, but this time apparently supported by experts. I have no idea what these people (there is apparently more than one, judging from the use of the plural) are expert in, but it is not employment law.

“Companies will also find it easier to dismiss workers on long term sick leave and to refuse to make adjustments for disabled employees wishing to work at their firm”

This is quite literally just made up. The judgment doesn’t make it easier to do anything, because it in fact just confirms the previous case law. Moreover, it has no relevance whatsoever to the law of reasonable adjustments in disability cases. And in fact, cost is already one of the factors that tribunals take into account when deciding if an adjustment is reasonable – a pretty major factor in cases such as Cordell v Foreign and Commonwealth Office where it was in fact the only factor. See this report from law firm Reed Smith which summarises Cordell. In fact Cordell suggests employers in disability reasonable adjustments cases already have greater freedom to rely on costs in support of their arguments than employers in cases such as Woodcock.

The article goes on, with nearly every sentence a distortion of both the facts of the case and the findings of the court. The experts are back – “lawyers” this time, we are told – suggesting that employment rights are being wound back “several decades”. How is that then? Age discrimination laws were only brought into force in October 2006, so even abandoning them completely (which is a long way from what has happened here) would only wind us back five and a half years. And the law of unfair dismissal is still left fully intact.

“Several employers will look to use today’s judgement to consider how to retire older workers in future so as to escape huge pension costs, experts said.”

I’m starting to worry about these experts. “Several” employers, you say? Hardly an epidemic. And whilst those employers (advised, no doubt, by these experts) may “look” to “consider” how to escape huge pension costs, they will look in vain.

I haven’t the energy to fisk the entire article even though it’s quite short. The truth is it was never really seriously in issue whether cost could be used as a factor in the justification process. It can, and always has been. Attempts to rule it out in the past have failed. The actual point of law most people hoped the court would resolve was whether an employer can rely on cost alone to justify an otherwise discriminatory act, or must find some other factor alongside cost (hence, “cost-plus”). Many, one might even say most, decisions a business takes are in some way related to making, saving or spending money, so it’s hardly surprising that cost finds its way one way or another into the arguments. The court even recognised, at para 66, that cost-plus was a somewhat artificial exercise anyway. It’s usually fairly easy to dress cost up as efficiency or something like that. In this case, preventing an “undeserved windfall” was one possible cost-plus aim. And Mr Justice Underhill, in the EAT, had previously doubted cost plus was really necessary. Surely if the cost arguments in favour or a particular course of action are overwhelming, that should be sufficient, he suggested, although this was not a central part of his decision so not binding on future cases. In the end, the Court of Appeal didn’t really look at the cost-plus question properly either, for the same reason as the EAT: it didn’t really need to in order to reach a decision. In this respect, many lawyers have found the decision unsatisfactory. Barrister Sean Jones, for example, while not challenging the correctness of the decision on its facts, criticised the judicial reasoning as lacking any clear exposition of legal principle. Or at least that’s what I think he meant:

20120323-223832.jpg

In any case, finding the legitimate aim is not the hard part. The real job in arguing a case of objective justification is showing that you have acted “proportionately”. Here the tribunal has to draw a balance between the interests of the employer and employee. This is where the chief battleground lies. It’s a very fact specific assessment. And it quite emphatically does not mean employers have carte blanche to manage older workers out of the workforce on cost grounds, or sack them to avoid a pension.

The last part of the article is given over to several quotes from Daniel Barnett. It is not clear if he is one of the “experts” referred to earlier in the piece. (I should add that he is an expert, which makes what apparently came from his mouth or pen all the more surprising). Suffice it to say I don’t entirely agree with the quotes that are attributed to him. And in all fairness to Daniel, he did send a tweet the next day agreeing with others that the case really does nothing and just leaves a bad principle intact. Perhaps the journalist has taken his words out of context. It wouldn’t be the first time that complaint has been made.

Daniel also tweeted that the Telegraph had rewritten the article and that he thought it was much better. The new article is here (although for what I can see the old one still remains here).

I still think the re-write is both inaccurate and unduly alarmist though. I, and most people I have consulted in the last 2 days, consider the likely effect of this judgment on future cases to be next to nothing. Time will tell.

I should mention that while I was writing this, Darren Newman has created an entire blog dedicated to press misreporting of employment law stories. I agree with everything he says on this, and probably every other issue, ever. Read it.

About these ads

About Mrs Markleham

Employment lawyer, discrimination lawyer, mildly peevish old woman.
This entry was posted in Age discrimination, Press hyperbole, Retirement and tagged , , , . Bookmark the permalink.

6 Responses to Woodcock: press reporting of employment law issues reaches a new low

  1. Pingback: Age Discrimination – counting the cost | A Range of Reasonable Responses

  2. An excellent post, with which I entirely agree.

    And to my embarrassment, the two quotes from me are entirely accurate. They come from a press briefing prepared on Tuesday (two days before the decision was handed down), which I authorised to be released when I heard that the Trust had won (I was not in Chambers). Unfortunately, of course, the decision was unexpectedly bland and did not say – as many including myself had anticipated – that the ‘costs plus’ rule was bad in law and that saving cost, itself, could be a legitimate aim.

    I would add that the final comment in the original Telegraph article, in which the journalist states ‘Barnett also says’ and then talks about LIFO (but not quoting me) bears no resemblance to what I said.

    I remain largely unconvinced by the Court of Appeal’s analysis. It is sadly a missed opportunity, and indeed I think they have been led astray by false reasoning. At para 66, they give the example of an employer who should not be able to justify the discriminatory payment to A of less than B simply because it would cost more to pay A the same as B. Of course. That’s obvious. But it’s not on the grounds that keeping the wage bill as low as possible cannot be a ‘legitimate aim’. Surely that must be the epitome of a legitimate aim for a business, whose purpose is to maximise profit. The point is that simply paying A less than B to achieve that aim, assuming it is on grounds of age, is not a proportionate means of achieving that aim because the discriminatory impact on A is disproportionate compared with the benefit accruing to the employer.

    One day, hopefully soon, the dogmatic adherence to the ‘costs plus’ rule will be looked on as a dodgy episode in discrimination law. But that day has not yet come.

    • Daniel, that really is priceless. You may be an employment law expert, but Nostradamus you are not.

      However, on your final two paragraphs, I am entirely in agreement. Proportionality should be the focus, not some specious argument about whether cost saving amounts to a legitimate aim.

  3. @anyapalmer says:

    Telegraph reporting of employment law matters is consistently abysmal. They have repeatedly claimed that employment tribunal cases rose 56% in 2010, and repeatedly failed to mention that those figures are distorted by a small number of very large multiple claims and that the number of individual claims is not increasing at all – see this analysis from the CAB.

    Just today they make another claim which I cannot believe is true: that “Women working part time now earn 4.8% more than men in the same jobs” http://tgr.ph/H3r4GH. Whilst it is perfectly possible that women who work part time earn more on average than men who work part time (a statistic which is fairly meaningless as it depends on the average pay earned by all women working part time in all jobs compared to the average pay earned by all men working part time in all jobs) it is difficult to see how women could be earning 4.8% more than men in the *same* jobs without there being a clear breach of equal pay legislation. I have tweeted the journalist responsible (@martinbeckford, Home Affairs Editor) and asked for a link to the evidence, but I’ll be very surprised if this claim stands up.

  4. Although not as egregious as some, a Saturday piece in the Telegraph contained the following:
    “In April … a new set of rules is coming in, designed to ease the burdens of recruitment … Among the changes, the qualifying period for workers claiming ‘unfair dismissal’ will be extended from one to two years, while the smallest firms will be able to lawfully dismiss staff with a pay-off in return for them never bringing a tribunal claim”. Second part of sentence obviously wrong (they’re consulting and no more) and, if read and acted upon by an employer, potentially very damaging.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s