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

Nigel Woodcock, former chief executiveof 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 this 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”, who had held down top jobs within the NHS since 1992, but noted his position as chief executive of North Cumbria PCT had ceased to exist following the major NHS restructuring that took place in 2006. Mr Woodcock, 52, was dismissed in May 2007, following the regional merging of PCTs that lead 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 between £500,000 and £1m, the tribunal heard.

However, he was handed his notice in May 2007. This meant, even after serving out his 12-month notice period, his employment came to an end 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.

“Mr Woodcock, whose job had in practice disappeared in early 2006, and who had known since July that year that he had not been selected for a successor post, can have no legitimate expectation that notice would not even have been given by May 2007.

“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 could justify age discrimination when cost was a key issue. 

She said: “In this case the steps taken by the employer to avoid the employee securing a ‘windfall’ were justified. The approach is consistent with other appeal cases where tapering or the capping of redundancy payments has been found to be legitimate.”