An Employment Tribunal has dismissed the claim of former partner Peter Bloxham against law firm Freshfields Bruckhaus Deringer that he had been discriminated against on the grounds of age.
Freshfields’ Partnership Deed provided for payments described as "pensions" to be paid to partners on retirement. The firm took the decision to amend these pension arrangements on the basis that they were no longer financially viable. It then undertook a consultation process that eventually led to the amendment of the existing pension arrangements and to the application of a number of transitional provisions. Mr Bloxham alleged that the changes amounted to unlawful age discrimination, arguing that he was forced to retire early and as a result would suffer a reduction in his pension entitlement.
The Tribunal rejected Mr Bloxham’s claim on the ground that, whilst the amendments to the pension arrangements did amount to less favourable treatment on age grounds, the revisions to those pension arrangements were a proportionate means of achieving a legitimate aim.
Under the Employment Equality (Age) Regulations 2006 employers can justify both direct and indirect age discrimination if they can prove that the treatment, provision, criterion or practice is a "proportionate means of achieving a legitimate aim". This means that a difference of treatment based on age grounds is not unlawful if it is objectively and reasonably justified by a legitimate aim and if the means of achieving that aim are appropriate and necessary. By contrast, under the sex, race, sexual orientation and religion/belief discrimination legislation only indirect discrimination can be justified.
In reaching its decision, the Tribunal found that Freshfields’ pension reforms had been driven mainly by the unfairness of the existing arrangements towards younger partners and that as part of the reform process the maintenance of the status quo for those partners closest to retirement age was deemed acceptable. In the Tribunal’s opinion, the changes to the pension arrangements had to strike a balance between conflicting interests among partners of different generations. Whilst it was reasonable that the transitional provisions allowed those who had already accrued the right to retire under the old arrangements to retain that right, a proposal to enhance those rights would have been unfair. The Employment Tribunal also noted that the firm had consulted at length about the different options available and that no less discriminatory alternative could have been proposed which would have achieved the same aims.
Interestingly, the Tribunal held that the pensions provisions of the Age Regulations were not restricted to occupational pension schemes or personal pension schemes provided that the relevant scheme constituted a "pension scheme" in the wider context (although the exemptions listed in the Schedules to the Age Regulations are limited to occupational and personal pension schemes).
Whilst Employment Tribunal decisions are not binding on other Tribunals, and even though such cases are always fact-specific to some extent, the case does provide a faintly cheering indication of how Tribunals may approach the issue of justification in age discrimination claims, particularly in the pensions context.
STOP PRESS
It looks like the UK’s mandatory retirement age of 65 and duty to consider procedure under the Age Regulations are set to stay (at least for now), following the European Court of Justice’s judgment in the Spanish age discrimination case of Palacios v Cortefiel Servicios SA.
The ECJ has held that whilst the European Equal Treatment Directive does apply to legislation on mandatory retirement, the compulsory retirement age contained in the collective agreement in question was a proportionate means of achieving the legitimate aim of increasing job opportunities and reducing unemployment. It could therefore be objectively justified and was not precluded by the Directive.
The ECJ’s decision will come as a blow to Heyday (a membership organisation backed by the charity Age Concern), which is arguing that the Age Regulations contravene the Directive by allowing employers to retire employees at or above the age of 65. If Heyday continues with its challenge, the case is unlikely to be heard by the ECJ before 2009.
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