Council worker unfairly dismissed to avoid pension costs

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A worker suffered age discrimination and was unfairly dismissed from his role in a leisure centre because his local authority employer wanted to avoid incurring his pension costs after he turned 50, an employment tribunal has found.

Christopher Walsh, now 51, was made redundant by Tewkesbury Borough Council in September 2009.

This week, Bristol employment tribunal upheld Walsh’s claims of unfair dismissal against the council, and found that it had refused to extend Walsh’s employment under vital transitional provisions during a management restructure because it did not want to incur his £90,000 pension costs when he turned 50 in December 2009.

The tribunal was told that Walsh was initially to be made redundant in March 2010, when the five centres he managed transferred out of council control.

Walsh’s role was separately put at risk of redundancy from September 2009 in a management restructure, and a colleague was appointed to take a lead role in transferring the centres. However, Walsh provided support because of his expertise in this area. It was also suggested that Mr Walsh should be retained during the transitional period to take over the transfer work until its completion.

In a subsequent meeting between the council’s interim chief executive and an HR consultant supervising the management restructure, the HR consultant was asked to consider whether or not there was a need for Walsh’s post to be extended. However, he instead requested a pension calculation for Walsh. Walsh was later informed that he would not be retained due to his pension costs.

The council denied Walsh’s claims that his pension costs had not been a relevant factor in its decision not to retain him during the transitional period. It also claimed any age discrimination was justified. The employment tribunal rejected both defences. Mr Walsh is seeking in excess of £250,000 compensation.

This case is particularly significant for public sector employers, which might have employees who are entitled to pension windfalls under the local government pension scheme.

XpertHR senior employment law editor Stephen Simpson said that the case should act as a warning to other public sector employers: “This decision, while not binding on other courts and tribunals, is a good example of the problems that public sector employers face when they have to make collective redundancies among their workforce, some of whom may be close to qualifying for a pension.

“While the tribunal is not saying that these older employees cannot be made redundant when their roles genuinely no longer exist, the timing of their redundancies must not be engineered to avoid them receiving an age-related payment such as a pension; for example, by making them redundant a few months earlier than necessary.

Employers must also still go through a proper redundancy procedure, for example by consulting fully with employees at risk of redundancy and finding alternative work for them if it is available.”

The same issue is due to be decided by the Court of Appeal in Woodcock v Cumbria Primary Care Trust (and has also been considered in Mayor and Burgesses of the London Borough of Tower Hamlets v Wooster EAT).

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