The Employment Tribunal that heard the high-profile case of age discrimination between Peter Bloxham and City law firm Freshfields Bruckhaus Deringer yesterday ruled that there had been discriminatory treatment but that this was justified. The case highlights the fact that even if an employer engages in direct discrimination under the Employment Equality (Age) Regulations 2006, they are able to use the defence of justification, and provides an indication of how this may be applied by tribunals.
Mr Bloxham had claimed that the transitional pension scheme operated by Freshfields on the closure of its existing pension scheme was directly discriminatory. Under the old scheme and the transitional arrangements, a partner who was 54 at the date of closure of the scheme and retired with consent would be subject to a discounted pension whereas those who were 55 and over at that time would receive their full entitlement. As Mr Bloxham was 54 and had only received a discounted pension he had suffered less favourable treatment on grounds of age.
However, under the Regulations, it is a defence to show that the treatment was a proportionate means of achieving a legitimate aim. The Tribunal found that Freshfields had a legitimate aim in reforming its pension arrangements to reduce the ‘intergenerational unfairness’ caused by the structure of the existing scheme. If the scheme was not reformed, younger partners would contribute more and more to pensions yet would receive smaller and smaller pensions. Importantly, in reaching this view, the Tribunal stated that it would be ‘an error of law to focus solely upon the treatment and not consider the context in which the treatment occurs. It seems to the Tribunal that this will be particularly necessary in cases of age discrimination because of the need to recognise the changes to the treatment of persons of one age or age group may, as in the instant case, directly affect to some extent the treatment of persons in a different age group.’
The Tribunal went on to consider whether Freshfields had used a proportionate means of achieving this legitimate aim, and listed the following factors as being of particular importance:
- The reforms themselves were aimed at addressing an issue whereby, apart from any issues of discrimination, there had been a recognition that younger age groups were becoming increasingly disadvantaged.
- That in such a process maintaining the status quo for those most proximately affected is acceptable.
- That maintaining the status quo does not absolve the employer from considering other steps.
- That improving the position of the consent group, already protected by the transitional provisions, in the context of the aim of the reforms would be and seen to be both unfair and perverse.
- That even at the conclusion of the lengthy and through consultation period leading to the reforms and by the end of the Hearing before the Tribunal no less discriminatory alternative could be put forward.
The case provides the first important judgment on justification in benefit changes under age discrimination. Employers can now use the above factors to consider whether any potentially discriminatory practices they are using can be justified and whether any remedial action is required. Of course, it is only an Employment Tribunal judgment and may be appealed.