The employment tribunal has rejected a high profile age discrimination claim brought by an ex-partner against Freshfields.
The claim related to changes made by the firm to its arrangements for making payments from its profits to ex-partners as a form of pension. The reason for the change was to adopt a financially sustainable model which was fairer to younger partners. Transitional provisions were put in place with the aim of ameliorating the effect of the change on those nearing retirement whose benefits would be less under the new scheme; those partners were permitted to retire under the old scheme by a specified date. Under the old scheme those aged 55 could retire with their full entitlement but those aged 50-54 suffered a discount of between 40% and 20% depending on age. Peter Bloxham was 54 at the specified date and therefore suffered a 20% discount when he chose to retire under the old scheme. The discount was held to be discriminatory because it applied purely because of age.
The tribunal found that the firm's reasons for changing the scheme and putting in place transitional provisions, including the retention of the 20% discount, were legitimate. It was important to consider the context of the discriminatory treatment, given that in age cases treatment of one age group will often have a direct impact on how other age groups are treated. The tribunal noted that the removal of the discount would have lead to a substantial reduction in the benefits of others, and that there was no appropriate group to take the hit. The most obvious group would have been those aged 55 and over; because of the numbers, this would have involved a substantial reduction in their rights. The tribunal therefore considered that the reasons for not altering the 20% discount were legitimate.
The tribunal also concluded that the firm had comfortably shown that the means to achieve its aims were justified. Relevant factors were that the reform involved balancing conflicting interests between different age groups and that, in the context of the changes to remove unfairness to younger partners, it would be unfair and perverse to enhance further the old scheme rights of older partners which they were being permitted to retain under the transitional provisions. Key to the decision was the fact that expert advice had been sought, that there had been extensive consultation with the partners leading to majority approval for the proposals, and that no alternative less discriminatory means had been put forward at any stage.
It remains to be seen whether the decision will be appealed. In the meantime it provides a useful indication of how the concept of justification may be approached by tribunals, in particular the importance of consultation and considering alternatives. The recognition that steps taken to eliminate inequality for one age group won't necessarily be unlawful simply because they inevitably have an adverse effect on another age group may also be useful for employers seeking to eradicate historical discrimination from their benefits. (Bloxham v Freshfields Bruckhaus Deringer, ET)