A primary care trust chief executive dismissed one month before qualifying for an enhanced pension package worth up to £1m has lost a discrimination case.

Nigel Woodcock, former chief executive of NHS North Cumbria, took his case to the employment appeal tribunal in June. He argued the only reason his employment was terminated a month before his 49th birthday was to deny him early retirement and cut his pension entitlements by up to £1m.

However, the tribunal ruled last week that it was entirely “legitimate” for Mr Woodcock’s employers to save taxpayers’ money by dispensing with his services as cheaply as possible.

Tribunal president Mr Justice Underhill described him as “a very able manager” but noted his position as chief executive of North Cumbria PCT had ceased to exist after major NHS restructuring that took place in 2006.

Mr Woodcock, 52, was dismissed in May 2007, following the regional merging of PCTs that led to the creation of NHS Cumbria. Had he still been employed in June 2008 - when he celebrated his 50th birthday - he would have been due an enhanced early retirement package worth £500,000-£1m, the tribunal heard.

However, as he was handed his notice in May 2007, it meant that after serving out his 12 month notice period his employment ended a month short of his 50th birthday - ruling out early retirement benefits.

Mr Woodcock’s lawyers attacked the move as age discrimination but Mr Justice Underhill said: “It is an entirely legitimate aim for an employer to dismiss an employee who has become redundant.”

He added: “It was justifiable for the trust to accelerate the final giving of notice if doing so would prevent it incurring a disproportionate liability in pension costs.”

Rachel Dineley, employment partner and head of the diversity and discrimination unit at law firm Beachcroft LLP, said the tribunal decision would give employers “much needed comfort” as to whether they can objectively justify age discrimination when cost is a key issue.