Their ruling echoes the Government move last year to scrap the Default Retirement Age of 65. It allows employers to force staff out at a particular age if they are able to justify it objectively.
It could lead to more companies dismissing staff as they approach ages at which they are eligible for more generous pensions. Experts say workers on long-term sick leave could also lose their jobs.
Lisa Mayhew, a partner at the law firm Berwin Leighton Paisner, said: “Public sector organisations are under pressure to slash their budgets in line with the Government’s public sector cuts. They are also obviously examining whether the cost of an enhanced pension taken from taxpayers’ money can be justified and, for now at least, the courts clearly agree with them that cutting costs can be a legitimate factor in the right circumstances.”
A written judgment stated that Mr Woodcock, now 53, had risen rapidly through the ranks of the NHS and became chief executive of the North Cumbria Primary Care Trusts in 2003. In 2006 his job was due to be abolished as the county’s health boards were streamlined. He failed to be selected to head a replacement organisation.
He was warned that he was at risk of redundancy. Then his bosses realised that if he was not given a dismissal notice before his 49th birthday in June 2007, he would still be on the books when he turned 50 which would “massively increase the cost of his retirement”, putting him in line for a pension windfall worth at least £500,000. His employers skipped a consultation meeting and sent him a dismissal letter.
Mr Woodcock, who received a £220,000 redundancy payment, began a claim for unfair dismissal and age discrimination.
These were both dismissed by an employment tribunal and an employment appeal tribunal. In the Appeal Court, Lord Justice Rimer said: “Mr Woodcock’s long and able service with the NHS did not entitle him to a job for life or 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.”
His barrister claimed that the trust made him redundant in a “naked attempt to save and avoid costs”.
But the judges said Mr Woodcock’s job was due to disappear under the shake-up, so it was legitimate for his bosses to dismiss him.
Daniel Barnett, employment lawyer at Outer Temple Chambers, said: “Some employers will [now] be able to defend certain discrimination claims on the grounds that it is cheaper to discriminate than not to discriminate. The ramifications are wide ranging. For example, it will be easier for employers to refuse to make adjustments for disabled employees because of cost.”