Tag: age discrimination

COVID-19 Layoff or Pretext for Age Discrimination?

The recent, unprecedented changes to our country and its workforce due to the COVID-19 pandemic have upended the lives of millions. The economic fallout continues and in many instances, employers simply have no choice but to lay off large swaths of their employees due to the lack of business/revenue. And these employers have legitimate reasons for doing so and view this as a heart-wrenching but necessary step.

At the same time, a small subset of employers may decide that, even though mass layoffs are not necessary, they will still lay off certain, older employees. In this scenario, there is no legitimate business need driving the termination but an opportunity to let go of older employees who often have higher salaries. Or the employer is concerned that older employees may trigger additional costs in terms of insurance or paid time off because of their susceptibility to COVID-19. Similarly, the employer may hold stereotypical views that older employees are less likely to function well in a virtual/remote work setting that requires technological skills.

As such, the employer’s claim that it had to lay off the older employee due to the pandemic could be a pretext for age discrimination. The question is, how do courts make this call? The answer to this question centers on how an employee can prove that the employer’s purported reasons were just a mask for illegal behavior.

Signs That The Layoff May Be Age Discrimination

Each case will be reviewed based on its own facts and merits, so no “one size fits all” approach can apply when analyzing age discrimination and pretext claims. In the context of COVID-19 layoffs, there are some red flags that may suggest that the employer is targeting an employee(s) because of their age rather than a legitimate business need to reduce the workforce. These red flags include:

  • The company institutes a relatively small-scale layoff, which includes a number of more experienced, older, and higher paid employees
  • Younger, less experienced, and less expensive employees are retained and in some cases take over the work of the departed, older workers
  • Comments by decision-makers reference (or had referenced) the experience level, age, higher salaries, nearness to retirement, etc. of the older employees
  • The employer hires new, younger employees within a relatively short period of time after the older employees are let go

Many companies will be required to provide laid off employees with specific, written information about the employees it chose to lay off, including their job titles and ages. This is helpful information to assess whether age discrimination may have motivated the termination decision. But often it will be necessary to dig deeper into the employer’s data about the laid off employees to see if a correlation between the termination decision and their ages emerges.

Legal Standards For Age Discrimination And Pretext Claims

The key federal law that prohibits age discrimination in employment is aptly named the Age Discrimination in Employment Act (ADEA). It prevents an employer from discharging or otherwise “[discriminating] against any individual… because of such individual’s age.” 29 U.S.C. § 623(a).

To win, a plaintiff “must prove by a preponderance of the evidence that age was the ‘but-for’ cause of the challenged employer decision.” Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 177-178 (2009). Circumstantial evidence, as opposed to direct evidence of discrimination (which is less frequently available to plaintiffs), is analyzed under a three-part test created by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).  Note that the Supreme Court clarified that federal employees have a less onerous legal burden to prove in age discrimination claims as compared to private sector employees. Babb v. Wilkie, No. 18-882 (2020).

The McDonnell Douglas framework for an ADEA claim for layoff due to age discrimination is as follows:

STEP 1/prima facie case (burden on plaintiff)

  • They belong to a protected class (older than 40 years old)
  • They were qualified for the job and performing in accordance with the expectations of their employer
  • Employer terminated their employment
  • The employer replaced plaintiff with an individual who was comparably qualified to the plaintiff, but substantially younger, or that they were laid off under circumstances that give rise to an inference of age discrimination

STEP 2 (burden on defendant)

  • Employer must produce evidence that its actions were the result of legitimate and non-discriminatory reasons

STEP 3 (burden on plaintiff)

  • Employee must prove that the non-discriminatory reason(s) offered by the employer in Step 2 were not true reasons, but were a pretext for discrimination based on age.

The Supreme Court held that “it is permissible for the trier of fact to infer the ultimate fact of discrimination from the falsity of the employer’s explanation.” Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 146-7 (2000). Also, Reeves allows the trier of fact to consider the evidence used to establish a prima facie case of discrimination (first prong of McDonnell Douglas) when they are deciding the final prong of McDonnell Douglas framework. How the employer treats similarly situated (but younger) employees plays a key role in age discrimination cases.

How Can Older Employees Protect Their Rights?

For employees in the private sector, a charge of age discrimination must be filed with the Equal Employment Opportunity Commission (EEOC) within 180 days of the discriminatory act (that is the notice of the layoff). The 180 calendar day filing deadline is extended to 300 calendar days if a state or local agency enforces a state or local law that prohibits employment discrimination on the same basis.

For age discrimination, however, the filing deadline is only extended to 300 days if there is a state law prohibiting age discrimination in employment and a state agency or authority enforcing that law. The deadline is not extended if only a local law prohibits age discrimination.

Note: federal employees have a different charge filing process. Visit www.eeoc.gov for more information.

 

© 2020 Zuckerman Law

ARTICLE BY Eric Bachman of Zuckerman Law.
For more on discrimination in hiring and firing, see the National Law Review Labor & Employment law section.

“OK, Boomer!”: Not Okay In the Office

As recently highlighted by the New York Times, a new phrase emblematic of the real or perceived “War Between the Generations” has gone viral: “OK, Boomer!”  The phrase, popularized on the Internet and, in particular, Twitter by Generation Z and Millennials, has been used to dismiss baby boomers’ thoughts and opinions, sometimes viewed by younger generations as paternalistic or just out of step.

And, the phrase isn’t just living in Twitter feeds and the comments sections of opinion pieces.  There is “OK, Boomer!” merchandise and, just last week, a 25 year-old member of the New Zealand Parliament used the phrase to dismiss a fellow lawmaker’s perceived heckling during a debate about climate change.

While many may find “OK, Boomer!” a harmless way to point out generational differences, the phrase’s popularity could lead to problems once it creeps into the workplace.  Age (over 40) is a protected category under both California law (i.e., the Fair Employment and Housing Act) and federal law (i.e., the Age Discrimination in Employment Act).  Whether the speaker is well-intentioned or not, dismissive attitudes about older workers could form the basis of claims for discrimination and/or harassment.  And, as one radio host recently opined, the phrase “OK, Boomer!” may be regarded by some as an outright slur.

Generation Z and Millennial employees understand that using derogatory or dismissive comments related to gender, race, religion, national origin, disability and sexual orientation are inappropriate.  Yet, for some reason, some may not have made the leap with regard to insidious/disparaging comments about a co-worker’s age.  Given the prevalence of age discrimination lawsuits, employers should take heed and consider reminding their workforce about the impropriety of this and other age-related phrases, and train their employees to leave the generation wars at the door.

© 2019 Proskauer Rose LLP.

For more on employment discrimination see the National Law Review Labor & Employment law page.

SCOTUS Case Watch 2019-2020: Welcome to the New Term

The Supreme Court of the United States kicked off its 2019-2010 term on October 7, 2019, with several noteworthy cases on its docket. This term, some of the issues before the Court will likely have great historical significance for the LGBTQ community. Among these controversies are whether the prohibition against discrimination because of sex under Title VII of the Civil Rights Act of 1964 encompasses discrimination because of sexual orientation. In addition, the Court is slated to consider Title VII’s protections of transgender individuals, if any. Here’s a rundown of the employment law related cases that Supreme Court watchers can expect this term.

Title VII and Sexual Orientation

In Bostock v. Clayton County, Georgia, No. 17-1618 and Altitude Express Inc. v. Zarda, No. 17-1623 the Court will consider whether discrimination against an employee because of sexual orientation constitutes prohibited employment discrimination “because of . . . sex” within the meaning of Title VII. Oral argument for these consolidated cases is scheduled for October 8, 2019.

Transgender Employees

In R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission, No. 18-107, the Court agreed to decide whether Title VII prohibits discrimination against transgender individuals based on (1) their status as transgender or (2) sex stereotyping under Price Waterhouse v. Hopkins. Oral argument for this case is scheduled for October 8, 2019.

Age Discrimination

In Babb v. Wilkie, No. 18-882 the Court will consider a provision in the Age Discrimination in Employment Act of 1967 regarding federal-sector coverage. The provision at issue requires employers taking personnel actions affecting agency employees aged 40 years or older to free from “discrimination based on age.” The issue is whether the federal-sector provision requires a plaintiff to prove that age was a but-for cause of a challenged personnel action. A date has not yet been set for oral arguments in this case.

Employee Benefits

In Intel Corp. Investment Policy Committee v. Sulyma, No. 18-1116 the Supreme Court agreed to settle an issue concerning the statute of limitation in Section 413(2) of the Employee Retirement Income Security Act. The three-year limitations period runs from “the earliest date on which the plaintiff had actual knowledge of the breach or violation.” The question for the Court is whether this limitations period bars suit when the defendants in a case had disclosed all relevant information to the plaintiff more than three years before the plaintiff filed a complaint, but the plaintiff chose not to read or could not recall having read the information. Oral arguments, in this case, are scheduled for December 4, 2019.

We will report in further details on these cases once the Supreme Court issues its rulings.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

Misidentification of Employer in Discrimination Charge Not Enough for Dismissal

The U.S. Court of Appeals for the Seventh Circuit recently gave an employee a pass in his age discrimination suit against his former employer, where he inaccurately identified his former employer in the charging document. Significantly, the Seventh Circuit forgave the technical defect in the plaintiff’s charge, where the plaintiff had acted diligently and the failure to provide notice to the employer rested almost entirely with the Equal Employment Opportunity Commission (EEOC).

Reversing the district court’s dismissal of the complaint for the plaintiff’s “minor error in stating the name of the employer,” the Seventh Circuit explained that “it is particularly inappropriate to undermine the effectiveness of [the Age Discrimination in Employment Act (ADEA)] by dismissing claims merely because the victim of the alleged discrimination failed to comply with the intricate technicalities of the statute.”

In Trujillo v. Rockledge Furniture LLC, d/b/a Ashley Furniture Homestore, the Seventh Circuit overturned a decision by the U.S. District Court for the Northern District of Illinois granting the defendant employer’s motion to dismiss. The plaintiff filed a charge of discrimination in May 2016, asserting age discrimination and retaliation. The plaintiff supplied the EEOC with the correct address and telephone number of his work location, but misidentified his employer as “Ashley Furniture Homestore.” His employer’s trade name was actually “Ashley Furniture HomeStore – Rockledge.”

Inexplicably, the EEOC did not contact the employer at the address or telephone number provided, but instead forwarded the charge to a Texas entity that operated Ashley Furniture stores in that state. When the EEOC informed the plaintiff’s counsel that the Texas entity had no record of his employment, the plaintiff’s counsel sent the EEOC a paystub listing the entity name and address for the defendant. However, the EEOC still did not contact the defendant. Instead it issued a right to sue letter, and the plaintiff brought suit in April 2017.

Given the plaintiff’s failure to precisely identify the defendant in his charge, the defendant moved to dismiss, arguing a failure to properly exhaust his administrative remedies. The district court granted the motion.

On appeal, the Seventh Circuit reversed for two reasons. First, it found that the plaintiff’s trivial naming error, akin to a misspelling, should not defeat his ability to pursue his claim. Second, and most significantly, the Seventh Circuit explained that, given the information provided to the EEOC, the plaintiff should not have been barred from pursuing his claims as a result of the EEOC’s failure to locate the correct employer.

Notably, the EEOC filed an amicus brief in support of plaintiff’s appeal, admitting its error and arguing that the focus should be on the information provided to the EEOC, not what the EEOC did with that information. The court agreed, stating that the information provided by the plaintiff should have been sufficient for the EEOC to investigate the plaintiff’s allegations and to attempt to eliminate the alleged unlawful practices – which is the purpose of the charge-filing requirement. According to the Seventh Circuit, penalizing the charging party plaintiff for the EEOC’s mistake would frustrate the purpose of charge filing.

The practical effect of this decision is that it narrows the grounds on which employers may obtain dismissal of discrimination suits based upon the plaintiff’s failure to exhaust administrative remedies. While the employer had no notice of the charge, and thus had no opportunity to attempt pre-litigation conciliation, the court gave plaintiff the benefit of the doubt – likely due in no small part to the EEOC admitting it dropped the ball.

Nevertheless, as we highlighted in our blog last week, where appropriate, employers facing discrimination litigation would still be wise to raise the exhaustion defense at the pleading stage, so as not to waive it. Facts may come to light that would permit an exhaustion defense later in the case.

© 2019 BARNES & THORNBURG LLP
More on employment discrimination issues on the National Law Review Labor & Employment page.

Wal-Mart to Pay $150,000 to Settle EEOC Age and Disability Discrimination Suit

U.S. Equal Employment Opportunity Commission Seal

Keller Store Manager Was Harassed and Fired Because of His Age and Denied Accommodation for His Diabetes, Federal Agency Charged

Wal-Mart Stores of Texas, L.L.C. (Wal-Mart) has agreed to pay $150,000 and provide other significant relief to settle an age and disability discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission (EEOC), the agency announced today. The EEOC charged in its suit that Wal-Mart discriminated against the manager of the Keller, Texas Walmart store by subjecting him to harassment, discriminatory treatment, and discharge because of his age. The EEOC also charged that Wal-Mart refused to provide a reasonable accommodation for the man’s disability as federal law requires.

According to the EEOC’s suit, David Moorman was ridiculed with frequent taunts from his direct supervisor, including “old man” and “old food guy.” The EEOC further alleged that Wal-Mart ultimately fired Moorman because of his age. Such alleged conduct violates the Age Discrimination in Employment Act (ADEA), which prohibits discrimination on the basis of age 40 or older, including age-based harassment.

The EEOC’s suit also alleged that Wal-Mart unlawfully refused Moorman’s request for a reasonable accommodation for his diabetes. Following his diagnosis and on the advice of his doctor, Moorman requested reassignment to a store co-manager or assistant manager position. According to the suit, Wal-Mart refused to engage in the interactive process of discussing Moorman’s requested accommodation, eventually rejecting his request. Under the Americans with Disabilities Act (ADA), Wal-Mart had an obligation to reasonably accommodate Moorman’s disability.

The EEOC filed suit on March 12, 2014, (Case No. 3:14-cv-00908 in U.S. District Court for the Northern District of Texas, Dallas Division) after first attempting to reach a pre-litigation settlement through its conciliation process.

“Mr. Moorman was subjected to taunts and bullying from his supervisor that made his working conditions intolerable,” said EEOC Senior Trial Attorney Joel Clark. “The EEOC remains committed to prosecuting the rights of workers through litigation in federal court.”

Under the terms of the two-year consent decree settling the case, Wal-Mart will pay $150,000 in relief to Moorman. In addition, Wal-Mart agreed to provide training for employees on the ADA and the ADEA. The training will include an instruction on the kind of conduct that may constitute unlawful discrimination or harassment, as well as an instruction on Wal-Mart’s procedures for handling requests for reasonable accommodations under the ADA. Wal-Mart will also report to the EEOC regarding its compliance with the consent decree and post a notice to employees about the settlement.

“The EEOC is pleased that Wal-Mart recognized the value of resolving this case without any further court action,” said EEOC Dallas District Director Janet Elizondo.

ARTICLE BY

U.S. Equal Employment Opportunity Commission
OF
U.S. Equal Employment Opportunity Commission

Ninth Circuit Holds Statistics Alone Can Establish Prima Facie Case of Age Discrimination in a RIF

The National Law Review recently published an article about Age Discrimination written by Michael T. Chin of Schiff Hardin LLP:

On May 29, 2012, the Ninth Circuit Court of Appeals issued a decision clarifying the standard for plaintiffs to establish a prima facie disparate treatment discrimination claim. In Schechner v. KPIX-TV, No. 11-15294, 2012 U.S. App. LEXIS 10766 (9th Cir. May 29, 2012), the court held that a plaintiff’s initial burden of proof is relatively low and can be met by the introduction of statistics showing an adverse impact on a protected category — in this case, older workers. While the plaintiffs met their initial burden here, the Ninth Circuit nevertheless affirmed the district court’s grant of summary judgment in the employer’s favor on plaintiffs’ age discrimination claims under the California Fair Employment and Housing Act (“FEHA”).

In March 2008, like many employers at the time and even now, defendant KPIX-TV (“KPIX”) was faced with the task of having to reduce its annual budget. As part of its cost-cutting measures, KPIX implemented a reduction in force (“RIF”), resulting in the termination of five members of the “on-air” news team, including both plaintiffs. Each member of the RIF group was male and over the age of forty. Plaintiffs filed suit, claiming that their terminations were the product of age and gender discrimination in violation of the FEHA. Plaintiffs submitted reports by an expert statistician who concluded that the age disparity between the RIF group and the group of individuals that KPIX decided to retain was “statistically significant” and age “correlated closely” with the decision to terminate.

The Ninth Circuit held that “statistical evidence that shows a stark pattern of age discrimination” is sufficient to establish a prima facie case, even though “it does not address the employer’s proffered non-discriminatory reasons for the discharge.”Id. at *14-15. The Ninth Circuit proceeded to consider the legitimate, non-discriminatory reasons for the RIF offered by KPIX. Here, KPIX presented evidence of reasons for layoff decisions unrelated to age, such as that news anchors generally would not be subject to termination because they were the “face” of the station, that specialty reporters would not be subject to termination because they were being promoted to push the brand of the station, and that general assignment reporters would be subject to termination based on their respective dates of contract expiration. The Ninth Circuit concluded that KPIX had established non-discriminatory reasons for its RIF decisions, and that the plaintiffs were unable to show pretext.

This case highlights the importance of establishing a set of reasoned, job-related factors to be considered in deciding which employees to include in a RIF. Numbers suggesting an adverse impact on protected classes can be problematic, but not necessarily fatal.

© 2012 Schiff Hardin LLP

Clash of the Generations – Age Discrimination in the United Kingdom in 2012

The National Law Review recently featured an article by Katie L. Clark of  McDermott Will & Emery regarding Age Discrimination:

In Europe, many employers are currently caught in the middle of a conflict between older and younger employees.  Many older employees want to work longer (whether by choice or necessity), while younger employees feel that an aging workforce is hampering their career progression.  Both feel that that their age is being used against them.  In the United Kingdom, the repeal of default retirement ages in April 2011 has only aggravated the problem.

UK employers may lawfully use age directly or indirectly in decision-making if “justified.”  But where is the line drawn?

Two recent English Supreme Court cases provide some much-needed clarification for employers, particularly with regard to possible justifications for direct age discrimination.

Justifying Age Discrimination

Both direct and indirect age discrimination may be justified, that is, found to be lawful, if the employer can demonstrate that the discriminatory measure is “a proportionate means of achieving a legitimate aim”.  The Supreme Court in the United Kingdom has now ruled that the “legitimate aims” that can justify direct age discrimination are narrower than those that can justify indirect age discrimination.

Legitimate Aims

Indirect age discrimination covers situations in which a workplace provision, criterion or practice puts people in a particular age group (young or old) at a disadvantage.  A requirement of obtaining a degree to gain a promotion, for example, puts older people at a disadvantage because of lesser university access for prior generations.  Keeping such a policy in place will be lawful if justified by individual reasons that are particular to that employer, such as cost reductions or improving competiveness.  This gives employers flexibility to adopt legitimate measures that are appropriate to their individual business needs.

By contrast, the Supreme Court has now stated that direct age discrimination—treating an individual less favourably on grounds of his or her age or age group—may only be justified if an employer is implementing a legitimate public interest.  The Supreme Court, in examining European case law, has identified two legitimate public interests that potentially justify direct age discrimination:

  • Inter-generational fairness—i.e., measures that promote the recruitment and retention of, and the sharing of limited opportunities between, different generations
  • Dignity—i.e., avoiding the need to dismiss older workers on the grounds of incapacity or under-performance, which may be humiliating for the employee or lead to disputes

Absent a legitimate aim that falls within one of those two categories, it is highly unlikely that an employer would be able to justify direct age discrimination, such as a mandatory retirement age forcing an individual out.

Even if an employer can point to a potentially legitimate public interest, it must establish that it is in fact pursuing the relevant interest.  For example, improving the recruitment of young people is potentially a legitimate public aim, but it will not justify discriminating against older employees if the employer, in fact, has no difficulty in recruiting younger employees.

Proportionate Means

Once a legitimate aim has been established for direct or indirect discrimination, an employer will need to demonstrate that the measure adopted is proportionate.  The Supreme Court has confirmed that to be proportionate, a measure must be both an appropriate means of achieving the legitimate aim and (reasonably) necessary in order to do so.

A measure will not be appropriate if it does not achieve the proposed aim, while a measure that goes further than is reasonably necessary to achieve the proposed aim will be disproportionate and impermissible.

It may be more difficult to show proportionality if the stated aim is to preserve the dignity of employees.  Arguably, a retirement age of 65 insinuates that once employees turn 65, they are no longer able to do the jobs that they have been doing up to their 65th birthdays.  If anything, this practice reinforces rather than dispels discriminatory stereotypes, which will make it difficult to justify.

What Does This Mean for Employers?

Direct discrimination claims are harder to defend than indirect discrimination claims.  Managers need to understand that using mandatory retirement ages, while still possible, may lead to tough challenges.

The Supreme Court has provided clarification for employers on how to justify direct age discrimination, but not a definitive one-size-fits-all answer.  The identification of legitimate aims is only half the problem, and questions of proportionality will continue to be difficult to answer.

Consequently, if imposing, continuing, or relying upon age-related criteria such as mandatory retirement ages is important to you as an employer, now is a good time to talk to us about the legitimate aim that will be relied upon and how this can be demonstrated for the particular workplace as a matter of fact.

© 2012 McDermott Will & Emery

UK Court Decision on Objective Justification for Age Discrimination Claims

Long awaited judgment from the Court of Appeal focuses on the merits of the ‘cost-alone’ argument.

The UK Court of Appeal released the much anticipated decision in Woodcock v. Cumbria Primary Care Trust. The decision centred on objective justification. Unlike other forms of discrimination in the UK, direct age discrimination can be objectively justified.

The objective justification test has two key elements: (i) does the employer have a legitimate aim and (ii) are the means chosen a proportionate way of achieving that aim, bearing in mind the discrimination to which it gives rise?

Whilst various factors can be used to justify age discrimination, the status quo position is that ‘cost alone’ cannot be used to justify otherwise discriminatory conduct and that more is required. This has become known as the ‘cost-plus’approach. ‘Cost’ is anything that has a purely financial consideration, i.e. the motivation is purely to save costs.

The Court of Appeal in Woodcock looked at the possibility of an employer justifying discrimination on a ‘cost-alone’ basis.

Background

Mr Woodcock’s employer (the Trust) was going through a reorganisation which would result in the reduction of chief executives required in the Trust. He was made aware that his role was ‘at risk of redundancy’ in early 2006 and he therefore applied for one of the remaining chief executive roles left in the new structure. Following a selection process, Mr Woodcock was informed in July 2006 that he was not successful in his application. He then entered into informal discussions about finding alternative employment in the Trust, although no formal consultation began.

In 2007, the Trust realised that Mr Woodcock would receive a significant pension windfall if he were still employed by the Trust on his 50th birthday. The windfall amounted to approximately £500,000. Given this potential windfall, the Trust elected to give Mr Woodcock notice of termination on the grounds of redundancy before entering into a consultation process during Mr Woodcock’s 12-month notice period. No suitable alternative roles were found and Mr Woodcock’s employment terminated in May 2007. He received his contractual redundancy pay of £220,000 (well above the cap for unfair dismissal of approximately £70,000).

Mr Woodcock was clearly discriminated against on the grounds of age. He received his dismissal notice prior to consultation because of the pension windfall he would have received at his attainment of age 50. If he had been a year younger, a consultation process would have been followed first. In order to follow a fair process in the UK, an employer should consult with an employee before deciding whether he or she is redundant.

Age Discrimination Justified?

At first glance, it is hard to see how this case turns on anything other than the Trust’s financial considerations.

The lower courts, however, found that the discriminatory treatment was objectively justified using the ‘cost-plus’ approach—the ‘plus’ being the genuine redundancy situation and avoiding the potential windfall.

Although possible to pigeonhole these facts into the ‘cost-plus’ test, the lower courts agreed that it was slightly artificial. One of the questions the Court of Appeal considered was whether age discrimination could be objectively justified on a ‘cost-alone’ basis.

Court of Appeal Decision

Although the Court of Appeal agreed that the current ‘cost-plus’ approach results in a degree of artificiality, it accepted that the current guidance from the European Court of Justice is clear, i.e. an employer cannot justify discriminatory treatment ‘solely’ because of cost.

The Court of Appeal, however, agreed with the lower courts and held that the age discrimination in this case was objectively justified on a ‘cost-plus’ analysis because (i) the dismissal notice was served with the aim of giving effect to the Trust’s genuine decision to terminate Mr Woodcock’s employment on the grounds of his redundancy and (ii) 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 potential pension fund windfall.

Conclusion

It appears as though the ‘cost-plus’ approach is here to stay. The good news is that the courts appear able to find their way around the problem of having to follow the ‘cost-plus’ approach in most cases.

Despite the courts’ current flexibility, employers should remain hesitant to commit to a ‘cost-alone’ approach and should continue to look for the ‘further factor’.

Copyright © 2012 by Morgan, Lewis & Bockius LLP