Judgment has been passed on the first major age discrimination case to be brought to tribunal since the law came into force in October 2006.
In the case of Bloxham v. Freshfields Bruckhaus Deringer ("Bloxham"), an English employment tribunal ruled in favour of the law firm, Freshfields, after Mr Peter Bloxham, a former partner, accused them of age discrimination following a change of pension provisions.
The Age Regulations prohibit direct and indirect discrimination on the grounds of, amongst other things, age. However, whilst discrimination is banned, there are exemptions which provide that differences in treatment on grounds of age shall not constitute discrimination if they are “objectively and reasonably justified by a legitimate aim”.
This ruling helps to clarify the interpretation of the law and has implications for the legal industry as a whole and other partnerships.
Details of the Bloxham case
Freshfields had historically provided retirement benefits to former partners by paying a share of partnership profits. If a partner retired before their 55th birthday a reduction was applied to the benefit that would otherwise be payable. By 2002 it was accepted that the current retirement arrangements could not continue indefinitely as younger partners would, in effect, be supporting a much greater number of retired partners. The partnership then engaged in considerable debate about alternative options and engaged professional consultants to advise them.
In August 2005, consultation papers were sent to partners for consideration and extensive discussion took place about the proposals to terminate the arrangement. In March 2006, after consideration of the proposals and modification options, the final reform proposal was put to a vote. 87% of the partners agreed the final proposal, which terminated the existing retirement arrangements but permitted partners over the age of 50 to retire on three months’ notice, on or before 31 October 2006, and receive benefits under the pre-existing retirement arrangement.
Partners who elected to retire could, in certain circumstances, be offered continuing consultancy arrangements with the firm.
Mr Bloxham, who was 54, requested consent to retire in July 2006 and duly retired on October 31 2006. He then brought a claim under the Age Regulations that he had suffered discrimination on the basis he had to retire to get benefits under the existing arrangements and he received a reduced retirement allowance compared to older partners. He argued that Freshfields could not show that his treatment was a proportionate means of achieving a legitimate aim. The Employment Tribunal agreed that the closure of the retirement arrangement, and the treatment applied to Mr Bloxham, compared to an individual of 55 or older, was discriminatory. However, the Tribunal found that the discrimination was justified i.e. the treatment was a proportionate means of achieving a legitimate aim.
Importantly, they noted that "it is an error of law to focus solely upon the treatment and not consider the context in which the treatment occurs". They further stated: "It seems to the Tribunal that this will be particularly necessary in cases of age discrimination because of the need to recognise that changes to the treatment of persons of one particular age or age group may, as in this case, directly affect to some extent the treatment of persons in a different age group." The Tribunal accepted that the reform of the retirement arrangements was legitimate and necessary and that no alternative less-discriminatory solution could be conceived.
What does this judgment mean?
Firstly, just because there is discrimination because of a person’s age, it does not mean the discrimination must be eliminated if the employer can show that the reason, practice or treatment is a proportionate means of achieving a legitimate aim.
Secondly, tribunals will almost invariably look more favourably upon cases where the employer can demonstrate it has thought through all of the possible alternatives to try and eliminate the discrimination, and cannot sensibly propose a better alternative in the circumstances.
Thirdly, it is desirable for the employer to have provided information to employees, consulted with them about the proposals, and to have considered any alternatives that have been suggested.