Ann Southcott said the dismissal had been "grossly unfair"
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A 67-year-old hospital worker from Cornwall has won her job back in a "landmark" age discrimination claim.
Clerical worker Ann Southcott was dismissed from Royal Cornwall Hospital in Truro in 2006, one day before age discrimination rules came into force.
Mrs Southcott's union said the hospital trust had agreed to allow her to return and award her back pay from October. The trust settled out of court.
Mrs Southcott said she was delighted with the result.
She was dismissed aged 66, on 30 September, the day before the Employment Equality (Age) Regulations were introduced.
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I hope this decision will give new heart to other people who have lost their jobs because of their age
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She was told she would receive 11 weeks' pay rather than the 11 months' pay she would have been entitled to if she had been dismissed one day later - on 1 October.
Mrs Southcott said: "I'm delighted with this result as I was clearly discriminated against on the grounds of my age, which was grossly unfair.
"I cannot afford to give up work at this time, and why should I when I was doing a job I loved?"
Unison, the health workers' union, had planned to take the case to an employment tribunal. It said the "landmark victory" was a "fair and just outcome".
A spokesman said: "I hope this decision will give new heart to other people who have lost their jobs because of their age."
A number of employees aged over 65 will also return to work
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A new policy on age discrimination had been agreed with the Royal Cornwall Hospital Trust, he added.
Mrs Southcott will return to work in the therapies department at the hospital. The trust also agreed to provide any necessary training to enable her to carry out her duties.
They will review her employment on or after 1 April 2008 in line with service developments.
Trust chief executive John Watkinson said a small number of employees aged over 65 who had been dismissed last year would be returning to work.