Age discrimination - Justify Yourself

Employment Tribunal case: Bloxham v Freshfields Bruckhaus Deringer

The employment tribunal reached its decision in the high profile age discrimination claim against law firm Freshfields Bruckhaus Deringer on 10 October 2007.  The claim, brought by a former insolvency partner is the first case involving a senior city figure to go to trial since age discrimination legislation came into force in October 2006 and is one of the first to consider the application of the Employment Equality (Age) Regulations 2006 ("the Regulations").

Direct Discrimination

Mr Bloxham claimed that by virtue of transitional provisions put in place on the closure of the partners' pension scheme in April 2006, a 20% reduction was applied to his benefits which would not have been applied had his age at the birthday nearest the date of the closure been 55 rather than 54.  Mr Bloxham alleged that he was effectively forced to retire when he did in order to receive benefits from the firm's original and more generous scheme, albeit subject to a reduction.

The tribunal found that, subject to justification, Mr Bloxham was treated less favourably on grounds of age by reason of the transitional provisions.

Justification

The case demonstrates how important the issue of justification is in relation to age discrimination.  Age discrimination is distinct from other types of discrimination in that direct age discrimination may be justifiable.  Under the Regulations, the party accused of a discriminatory act must demonstrate the provision, criterion or practice to be a proportionate means of achieving a legitimate aim.

Proportionality

The tribunal found that the discrimination was justified as a proportionate means of achieving a legitimate aim.  In reaching its view, the tribunal considered the following factors to be of particular importance:

		The case involved a pot of a defined amount and a decision as to the size of respective shares to which participants would be entitled;
		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 closely affected is acceptable;
		That maintaining the status quo does not absolve the employer from considering other steps;
		That improving the position of the group of partners in Mr Bloxham's position (who were already protected by the transitional provisions) in the context of the aim of reforms would be seen as both unfair and perverse; and
		That even at the conclusion of the lengthy and thorough consultation period leading to the reforms and by the end of the Hearing before the tribunal no less discriminatory alternative could be put forward.

Points made by the Tribunal in relation to the Regulations

Mr Bloxham also alleged indirect discrimination but failed to identify a provision, criteria or practice which the Respondent has applied equally to a comparator group.

The result is a blow to Mr Bloxham and is likely to affect former corporate partner, Lois Moore, who is bringing a similar claim against Freshfields.

It has been widely reported that Mr Bloxham is considering an appeal. The decision of the employment tribunal can only be appealed on a point of law.  It seems likely, therefore, that to be successful, Mr Bloxham would need to appeal on the grounds that the test for objective justification had been wrongly applied.

European case: Palacios v Cortefiel Servicios SA

The European Court of Justice (ECJ) has just handed down its judgement in the Spanish case of Palacios v Cortefiel Servicios SA.  It is timely because here in the UK, Heyday¹ are currently challenging the UK's retirement provisions before the ECJ on the basis that provisions dealing with mandatory retirement ages in the Employment Equality (Age) Regulations are incompatible with the EU Equal Treatment Framework Directive ("the Directive").

In Palacios, the ECJ have held that a general mandatory retirement age does fall within the scope of the Directive but that, on the facts, a mandatory retirement age was justifiable because it was viewed as being an appropriate and necessary means to achieve a legitimate aim.  That aim was to reduce unemployment and promote employment opportunities.

The judgment appears to leave the door open to argue that, in another time and place, no legitimate aim exists for a mandatory retirement age or that the means of achieving it are not appropriate and necessary.

¹ R(on the application of the Incorporated Trustees of the National Council for Ageing (Age Concern England)) v Secretary of State for Business, Enterprise and Regulatory Reform

For more information or advice, please contact:
Carolyn Saunders +44 (0)20 7300 4752 or email
Mark Smith +44 (0)20 7300 4090 or email 
Ewan Horn +44 (0)20 7300 4860 or email