Bloxham v Freshfields
In this high profile case a former partner claimed age discrimination against City law firm Freshfields in relation to changes to their retirement arrangements. The firm did not operate a pension scheme as such for retired partners but divided up profits between active and retired partners. Over the years, as the firm had expanded, the number of retired partners increased as did the relative financial burden on active partners. The firm implemented changes to reduce the proportion of profits allocated to retired partners and Mr Bloxham argued that they were discriminatory on grounds of age.
The tribunal held that certain of these changes amounted to direct discriminatory treatment on the grounds of age. However, Freshfields succeeded in establishing that the discriminatory treatment was justified as being a proportionate means of achieving a legitimate aim.
Freshfields' legitimate aim, according to the tribunal, was to find alternative arrangements for retired partners that were financially sustainable and that reduced the intergenerational unfairness (to younger partners) of the existing scheme. The tribunal held that the action taken was proportionate, in particular because the reforms aimed to address a recognised disadvantage to younger partners and, at the end of the lengthy consultation amongst partners (and even at the end of the tribunal hearing), it was concluded that no less discriminatory alternative means had been put forward that would achieve that aim. In implementing the reforms Freshfields had taken advice from Deloittes, had considered numerous alternative proposals and had conducted a lengthy consultation exercise involving all partners who then had the opportunity to vote on the changes.
Impact on employers
- This is only a tribunal decision and is not binding upon other employment tribunals.
- The decision may provide a useful insight into the way in which tribunals will approach the question of justification in future claims of age discrimination, however, it should be noted that Mr Bloxham was a partner and not an employee.
- A notable feature of this case which aided Freshfields in establishing a justification defence was the volume of written evidence documenting the aims of the changes to retirement ages and the efforts made to find the best solution to the firm's problem. Where employers change the terms of benefits schemes in a way that could be detrimental to some employees and give rise to discrimination claims, the changes should be well thought out and consulted upon in order to give the employer a chance of showing justification.