ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
Sir David Keene
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LEWISON
LORD JUSTICE UNDERHILL
| DERMOD O'BRIEN
|- and -
MINISTRY OF JUSTICE
MR JOHN P D WALKER
- and -
INNOSPEC & ORS
SECRETARY OF STATE FOR WORK AND PENSIONS
MR JOHN CAVANAGH QC, MR CHARLES BOURNE QC & MS RACHEL KAMM
(instructed by the Government Legal Department) for the 1st Appeal Respondent
MR MARTIN CHAMBERLAIN QC & MR MAX SCHAEFER (instructed by Liberty) for the 2nd Appeal Appellant
MR NICHOLAS RANDALL QC & MS CLAIRE DARWIN (instructed by Eversheds LLP) for the 2nd Appeal Respondent
MR JASON COPPEL QC & MS HOLLY STOUT (instructed by the Government Legal Department) for the Interested Party in 2nd Appeal
Hearing dates : 29, 30 June and 1 July 2015
Crown Copyright ©
Lord Justice Lewison:
The two appeals
"If a Member dies on or after 1 December 1999 leaving a surviving spouse that spouse will receive a pension for life."
The relevant principles of EU law
i) A claim by employees for compensation because their former employer had ceased to pay them on becoming insolvent, was held to have been a situation that became permanently fixed on the declaration of insolvency and the termination of the employment.
ii) A claim for compensation arising out of a traffic accident was held to have been a situation that became permanently fixed at the date of the accident.
i) A new rule affected ongoing legal proceedings, even though they had been begun before the change in the rule.
ii) A change in the law affects the continuing future performance of an ongoing contract of employment (Land Nordrhein-Westfalen v Pokrzeptowicz-Meyer); or the continued enjoyment of election to a representative position (Licata v Economic and Social Committee).
iii) Where exploitation of a musical work had begun at a time when the work was not protected by copyright, a new law that revived copyright precluded further exploitation of the work (Butterfly Music Crl v CEMED).
"… overriding considerations of legal certainty preclude legal situations which have exhausted all their effects in the past from being called into question where that might upset retroactively the financial balance of many contracted-out pension schemes."
"The conclusion of a fixed-term contract of employment does not exhaust its legal effects on the date of its signature, but, on the contrary, continues regularly to produce its effects throughout the duration of the contract."
"I also consider the distinction between the accrual of the pension, or the coming into being of pension rights, and the pension's falling to be paid for the first time, or the pension rights' becoming exercisable, to be important for a proper understanding of what the court means in Barber, para. 44, where it holds that "legal situations which have exhausted all their effects in the past" may not be called in question. To give that passage a literal reading, as do certain parties in the Coloroll case, namely, James Russell, Gerald Parker and Robert Sharp, is quite wrong. On a literal reading, it may indeed be asserted that the effects of an occupational pension are only fully exhausted once the pension has been paid in full to the retired employee. Such a reading would mean that the temporal limitation of the judgment decided on by the court would have almost no significance and that the useful effect of the limitation imposed by the court would largely vanish. …
Here again, the distinction between the accrual and the falling due of the pension helps to clarify matters. Since it is the service itself and, in some cases, the relevant contributions which give rise to the rights and obligations of the employee and the employer and/or of the trustees of the pension scheme, it may reasonably be assumed that in using the expression "legal situations which have exhausted all their effects in the past" the court had in view situations in which the right to a pension had already been acquired by virtue of periods of service prior to the judgment in Barber  ICR 616 The coming into being of a pension right on the basis of a period of service in the past leads indeed to a legal situation whose effects are exhausted in the sense that the worker has definitively acquired the pension right relating to that period of service. " (Emphasis added)
"…it is a characteristic of that form of pay that there is a time-lag between the accrual of entitlement to the pension, which occurs gradually throughout the employee's working life, and its actual payment, which is deferred until a particular age."
"Entitlement to such a benefit is a consideration deriving from the survivor's spouse's membership of the scheme, the pension being vested in the survivor by reason of the employment relationship between the employer and the survivor's spouse and being paid to him or her by reason of the spouse's employment."
"Legal certainty means in this connection that the extent of those rights falls to be determined on the basis of the Community rule which applied at the time of the period of service on the basis of which those rights were acquired, that is to say article 119 as it was interpreted before Barber." (Emphasis added)
"Given the reasons explained in Barber … for limiting its effects in time, it must be made clear that equality of treatment in the matter of occupational pensions may be claimed only in relation to benefits payable in respect of periods of employment subsequent to 17 May 1990, the date of the judgment in Barber, subject to the exception in favour of workers or those claiming under them who have, before that date, initiated legal proceedings or raised an equivalent claim under the applicable national law." (Emphasis added)
"I now come to an examination of the question whether the present dispute concerns admission to a pension scheme, in which case … the temporal limitation imposed by the court in Barber and adopted in Protocol No. 2 does not apply or, conversely, whether it concerns the calculation of benefits granted under such a scheme, in which case the temporal limitation does apply."
"[The PTWD] governs the calculation of qualifying weeks for access to the pension at issue in the main proceedings, to the extent that none of the claimants had retired definitively before the entry into force of the [PTWD]."
"65 Accordingly, the calculation of the amount of the pension is directly dependent on the amount of time worked by the employee and the corresponding amount of contributions, in accordance with the principle of pro rata temporis. It must be borne in mind, in that regard, that the Court has already held that EU law does not preclude a retirement pension being calculated pro rata temporis in the case of part-time employment. Taking into account the amount of time actually worked by a part-time worker during his career, as compared with the amount of time actually worked by a person who has worked on a full-time basis throughout his career, is an objective criterion, allowing his pension entitlement to be reduced proportionately (see, to that effect, Schönheit  1 CMLR 51 at  and , and Gómez-Limón Sánchez-Camacho v Instituto Nacional de la Seguridad Social (INSS)  3 CMLR 41 at ).
66 On the other hand, the principle of pro rata temporis is not applicable for the purpose of determining the date required to acquire pensions rights, since that depends solely on the worker's length of service. The length of service is, in fact, the actual duration of the employment relationship and not the amount of time worked during that period. In accordance with the principle of non-discrimination as between full-time and part-time workers, therefore, the length of the period of service taken into account for the purpose of determining the date on which a worker becomes entitled to a pension should be calculated for a part-time worker as if he had held a full-time post, periods not worked being taken into account in their entirety."
Mr O'Brien's appeal
"It is clear that, in taking into account periods of service before the Directive entered into force, the court was only dealing with the issue of qualifying service, not with the level of pension to which the claimants were entitled. One can appreciate that it may seem strange to take into account such periods of employment for one purpose and not to do so for another. Yet the court was not seeking to deal with the issue of the level of benefits, and if it had been addressing that issue, it would have had to deal with the long-established law on the topic of occupational pensions and how far past service could be reflected in the amount payable. It would have had to deal, as would the Advocate General, with Ten Oever, Barber, Coloroll, Magorrian, Brouwer and other previous decisions of the court, and to explain why the fundamental principle of legal certainty did not operate in this instance. It would have had to consider the effect on any decision as to the level of benefits of the "deferred pay" nature of those benefits. It did none of those things. It observed that "pay" covered pensions (para 41), but it did so only in order to judge whether pensions were covered by the phrase "employment conditions" in clause 4(1) of the framework agreement: see para 42 of the judgment."
"…the extent of [pension] rights falls to be determined on the basis of the Community rule which applied at the time of the period of service on the basis of which those rights were acquired."
Mr Walker's appeal
"(1) A person does not contravene this Part of this Act, so far as relating to sexual orientation, by doing anything which prevents or restricts a person who is not within sub-paragraph (1A) from having access to a benefit, facility or service—
(a) the right to which accrued before 5 December 2005 (the day on which section 1 of the Civil Partnership Act 2004 came into force), or
(b) which is payable in respect of periods of service before that date.
(1A) A person is within this sub-paragraph if the person is—
(a) a man who is married to a woman, or
(b) a woman who is married to a man, or
(c) married to a person of the same sex in a relevant gender change case."
i) The act of discrimination on which Mr Walker relies is the refusal of the Innospec pension trustees to confirm that his civil partner (and now his husband) would be entitled to a survivor's pension. That is an act that took place after the Framework Directive came into force; and consequently the future effects principle applies.
ii) In any event the Court of Justice has decided in (Case 267/06) Maruko v Versorgungsanstalt der deutschen Bühnen  All ER (EC) 977 and in (Case C-147/08) Römer v Freie und Hansestadt Hamburg  CMLR 11 that a claim such as Mr Walker's is permitted by the Framework Directive even though his period of service ended before it came into force.
iii) The prohibition on discrimination on the ground of sexual orientation is a fundamental principle of EU law. Accordingly, paragraph 18 must either be read in such a way as to make it compatible with the Framework Directive or, if that is not possible, it must be disapplied.
"The VddB considers that the case which led to the judgment in Barber's case differs, on its facts and in law, from the case in the main proceedings and that [the Framework Directive] cannot be given retroactive effect by means of a decision that the directive applied at a date prior to the date of expiry of the period allowed to member states for its transposition."
"It follows from the foregoing that the answer to the fifth question must be that there is no need to restrict the effects of this judgment in time."
"If Question 5 is answered in the affirmative:
Is that subject to the qualification—in accordance with the grounds of the Court's judgment in Case C-262/88 Barber —that in the calculation of pension entitlement the principle of equal treatment is to be applied only in respect of that proportion of pension entitlement earned by the pensioner for the period from 17 May 1990?"
"In that regard, it should be observed, first of all, that, if there were discrimination within the meaning of [the Framework Directive], the applicant in the main proceedings would not be entitled under that directive, before the expiry of the period allowed to Member States to transpose it, to the same rights as married pensioners in respect of the supplementary pension at issue in the main proceedings."
"… the answer to Question 5 is that, should [the national provision] constitute discrimination within the meaning of art.2 of [the Framework Directive], the right to equal treatment could be claimed by an individual such as the applicant in the main proceedings at the earliest after the expiry of the period for transposing the Directive, namely from 3 December 2003, and it would not be necessary to wait for that provision to be made consistent with EU law by the national legislature."
"As regards Question 6, it is sufficient to state that the dispute in the main proceedings relates to entitlement to a supplementary retirement pension paid from 1 November 2001, on which the limitation of the effects in time of the judgment in Barber v Guardian Royal Exchange Assurance Group … to the period after 17 May 1990 cannot have any bearing, notwithstanding the fact that the contributions underpinning the entitlement had been paid before the date of that judgment. Furthermore, neither the Federal Republic of Germany nor the Freie und Hansestadt Hamburg suggested any limitation in time of the effects of the present judgment and no evidence submitted to the Court indicates that they should be so limited."
"By its sixth question, the national court asks whether, if the Court should hold that Directive 2000/78, art.141 EC or any general principle of Union law precludes legislation such as that that at issue in the main proceedings, the entitlement to a pension in the same amount as that paid to married pensioners must be limited in time, and particularly whether it must be considered that, in the calculation of pensions, the principle of equal treatment is to be applied only in respect of the pension entitlement earned by the pensioner by virtue of contribution periods after 17 May 1990, in accordance with the judgment in Barber … pronounced on that date."
"The court [in Römer]was recognising that the enforcement of equal treatment of the claimant, so far as payment of his pension was concerned, was not to run from the date of his contracting a registered partnership, but from the date that the law recognised that the relevant discrimination was unlawful. In short, legislating that such treatment was unlawful did not have the retrospective effect of rendering unlawful payments which would not have been recognised as such at the time that they were made."
Reference to the Court of Justice
Lord Justice Underhill:
The Master of the Rolls: