England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL
TRIBUNAL

		Royal Courts of Justice Strand, London, WC2A 2LL Tuesday 12th February 2002

Lord Justice Mummery :

Factual and Legal Background of the Appeal

1. This is a case in which a male worker relies on the direct effect of European Community Law on equal pay to establish a claim in the Employment Tribunal of discrimination on the ground of sex in respect of pension rights under an occupational pension scheme. Mr William Quirk, the appellant, is a male nurse employed by Burton Hospital NHS Trust, the first respondent. Since 7 October 1963 he has been a member of, and has contributed to, the National Health Service Pension Scheme (the Scheme), which is run by the second respondent, the NHS Pensions Agency, on behalf of the Secretary of State for Health. The first respondent relies on the arguments advanced by the Secretary of State on behalf of the Pensions Agency.
2. Under the National Health Service Pension Scheme Regulations 1995 (SI 1995 No.300), which were made pursuant to the Superannuation Act 1972 and govern the Scheme, the normal retiring age is 60, but a member is entitled to retire and claim pension benefits at 55. On inquiring about his pension benefits on voluntary early retirement at age 55 Mr Quirk discovered that, under all the options for pension benefits for him at that age, he was worse off than a female member of the Scheme seeking to retire at 55 with the same pensionable service and the same pensionable pay.
3. The origin of this disparity in the treatment of men and women is to be found in the earlier National Health Service (Superannuation) Regulations 1980 (SI 1980 No. 362), which governed the Scheme until they were replaced in 1995. Under the 1980 Regulations only a female nurse was entitled to retire at 55 and take an immediate pension. If a male nurse retired at 55 he had to wait until he was 60 before he could draw his pension.
4. The difference in the treatment of male and female members of the Scheme was removed in 1995 for future service. The amendment was the result of the decision of the European Court of Justice in Barber v. Guardian Royal Exchange Assurance Group [1990] ECR 1-1889 (Barber) on 17 May 1990 that pension benefits under a contracted out private pension scheme were "pay" and that differential retirement ages for men and women in a pension scheme were discriminatory and contrary to Article 119 and the Equal Pay Directive. The amendments in the 1995 Regulations were not, however, given retrospective effect. Regulation 2(4) in Part R of the 1995 Regulations provided that, in the case of a male member, the amount payable on retirement before the age of 60 shall be

"calculated only by reference to pensionable service on or after 17^th May 1990."

5. The cut off date in the 1995 Regulations reflects the temporal limitation set by the Court of Justice in Barber, so as to prevent reliance on the direct effect of Article 119 in order to claim entitlement to a pension with effect from a date prior to the date of the judgment in that case, save where legal proceedings had already been begun or an equivalent claim had been raised under applicable national law. The temporal limitation was imposed on account of overriding considerations of legal certainty and on the basis that it had not been generally appreciated by Member States and the parties concerned before Barber that the differential age treatment of men and women in respect of pensions under contracted-out schemes was unlawful sex discrimination. The limitation ensures that the decision in Barber only has prospective effect and that the financial balance of contracted-out pension schemes is not upset by the retrospective application of the equal pay principle to cases which Member States and the parties concerned were reasonably (though erroneously) entitled to consider were not subject to Article 119.
6. Subsequent decisions of the Court of Justice on sex discrimination in the context of pension schemes have identified factors affecting the application of the temporal limitation. The decisions of the Court of Justice reveal a difference in the treatment of (a) claims relating to the right to join or to be fully admitted to a pension scheme and its benefits, which were referred to in argument as "access cases", and (b) claims relating to the calculation of the level of benefits under a pension scheme. The Court of Justice has applied the temporal limitation to claims falling within (b), but not to claims falling within (a). Barber falls within (b) as the inequalities in the treatment of men and women stem from the differential retirement ages of men and women who are members of the pension scheme and not from a denial of the right to membership of the scheme on the ground of sex. See also Ten Oever [1993] ECR 1-4879; Coloroll Pension Trustees Limited v. Russell [1994] ECR 1-4389; Moroni v. Collo Gmbh [1993] ECR 1-6591; and Neath v. Hugh Steeper Limited [1993] ECR 1- 6935. On the other hand, Vroege [1994] ECR 1-4541, Dietz [1996] ECR 1-5223 and Magorrian v. Eastern Health and Social Services Board [1997] ECR I-7153 (Magorrian) are instances of denial of access to a scheme. In those cases periods of service prior to 17 May 1990 are to be taken into account in the calculation of pension benefits. Counsel also cited the most recent decision of the Court of Justice, Deutsche Telekom v. Schroder [2000] ECR 1-743. It was held (see paragraph 38 of the judgment) that the direct effect of Article 119 may be relied upon " in order retrospectively to claim equal treatment in relation to the right to join an occupational pension scheme", being cases of a kind in which there was no reason to suppose that those concerned could have been mistaken as to the applicability of Article 119. Those are distinguished from the position in Barber and in similar cases on pension schemes with different retirement ages for men and women, that being the kind of discrimination which employers and pension schemes could reasonably have considered to be permissible prior to 17 May 1990.
7. The limitation has been embodied in the Barber Protocol (No 2) to the Treaty on European Union, which came into force on 1 November 1993. The effect of the limitation is to permit the maintenance of differential levels of benefit for men and women in respect of periods of service prior to 17 May 1990. It provides that-

" For the purposes of Article 119 of this Treaty, benefits under occupational social security schemes shall not be considered as remuneration if and in so far as they are attributable to periods of employment prior to 17 May 1990, except in the case of workers or those claiming under them who have before that date initiated legal proceedings or raised an equivalent claim under applicable national law."

The Tribunal Proceedings

8. Mr Quirk considered that the proper application of the provisions concerning equal pay in the Equal Pay Act 1970, Article 119 (now Article 141 EC) of the Treaty and the Directives on Equal Pay (75/117/EEC) and Equal Treatment (76/207/EEC) should produce for him the same pension benefits as for a female nurse retiring at 55. So, on 2 December 1995 he presented an application to the Employment Tribunal complaining of continuing sex discrimination. He sought a declaration that, if he were to retire at 55 (1 July 1999), he would be entitled to the same pension and lump sum as if he were a female nurse.
9. In their Extended Reasons sent to the parties on 16 June 1999 the Employment Tribunal at Leicester unanimously held, on the basis of a statement of agreed facts, that Mr Quirk was not entitled to a declaration of entitlement to equal treatment with female nurses in respect of his pension rights and in the calculation of the benefits. Although he had been the victim of sex discrimination when he was excluded by the 1980 Regulations from the rights given to female nurses retiring at 55, the Scheme had been amended with effect from 17 May 1990 to give him equal access to those rights. Discrimination pre-17 May 1990 affecting the calculation of the level of pension benefits to which he was entitled on retirement at 55 was allowed to continue to operate under the 1995 Regulations as a result of the application of the temporal limitation in Barber.
10. On 12 January 2001 the Employment Appeal Tribunal dismissed Mr Quirk's appeal, holding that there was no error of law in the decision of the Employment Tribunal. The Appeal Tribunal granted permission to appeal to this court.

The Appeal

11. It is common ground that the only issue on this appeal is whether the temporal limitation in Barber applies to the pension rights of Mr Quirk. He has confined his argument to the effect of Article 119, as interpreted by the Court of Justice. Each side contends that the correct answer is clear and that it is unnecessary to refer a question to the Court of Justice.
12. Mr Quirk contends that the temporal limitation in Barber does not apply to his case. He is denied access to an entitlement to additional pension benefits under a special scheme (i.e. benefits in respect of his period of service before 17 May 1990), which would be payable to him if he were a female nurse wishing to retire at 55. The only reason for denial of full membership of the Scheme is that he is a man. That is unlawful discrimination on the ground of sex. He argues that Regulation 2 (4) of Part R of the 1995 Regulations failed to remedy the discrimination against a male nurse on retirement at 55 and that he is entitled to receive full equal treatment from 8 April 1976, that being the date of the decision of the Court of Justice on the direct effect of Article 119-Defrenne v. Sabena (No 2) [1976] ECR 455. He relies heavily on the decision of the Court of Justice in Magorrian in order to characterise this as an "access case" and for the proposition that the application of the temporal limitation in Barber in such cases is impermissible.

Conclusion

13. Like the tribunals below, I am unable to agree with Mr Quirk that the treatment of his pension benefits on retirement at 55 is unlawful discrimination on the ground of sex. It is admitted that there is disparity of treatment as between male and female nurses. The critical question is whether the inequality in pension benefits falls within Barber in which case the temporal limitation is permissible.
14. In my judgment, Mr Quirk's complaint is correctly characterised as one of sex discrimination of the kind falling within Barber. The fact is that he has full access to the Scheme. Like female members of the Scheme he now has the right to pension benefits on retirement at 55. But in his case those benefits are calculated on the basis of pensionable service from 17 May 1990. The essence of his complaint is not that he is denied the right to be a member of the Scheme, but that, unlike the case of a female nurse, the calculation of pension benefits on his retirement at the age of 55 would not take account of his years of pensionable service prior to 17 May 1990. That is the consequence of the application of the temporal limitation allowed by Barber. As in Barber, the disparity in the level of benefits payable is permissible, being the result of age differentials between men and women applied in the period prior to 17 May 1990. The disparity does not arise from a denial of access by Mr Quirk to the Scheme. As the temporal limitation applies in this case, the inequalities in the level of benefits do not amount to unlawful sex discrimination of which Mr Quirk can complain under Article 119.
15. In my judgment, there was no error of law in the decision of the Employment Tribunal distinguishing Mr Quirk's case from Magorrian. They are significantly different cases. In Magorrian the female claimants, on account of the fact that they worked part time, were specifically excluded from a status which gave access to a special scheme conferring entitlement to additional superannuation benefits. The discrimination suffered by them stemmed from discrimination concerning access to a special scheme. As already explained, Mr Quirk's claim does not concern his right to belong to the Scheme nor does it arise out of denial of access to a special scheme or to a special class within the Scheme. His claim relates to the length of the period of pensionable service to be taken into account in calculating the amount of the pension which he would be entitled to be paid in the event of early retirement at 55. Given the reasons underlying the setting of the temporal limitation in Barber, in the Protocol (No 2) and in Regulation 2 (4) in Part R of the 1995 Regulations, this is clearly a case in which the limitation on the effects of Barber applies, so as to permit, though only in respect of the period of service prior to 17 May 1990, age differentials for men and women affecting the level of pension benefits payable on early retirement. The tribunal rightly refused the declaration sought by Mr Quirk. I would dismiss the appeal.

Lord Justice Buxton

16. I agree. I venture to add some words of my own.
17. In Case 170/84 [1986] ECR 1607 (Bilka) the European Court of Justice [ECJ] held that any condition of access to a private occupational pension scheme that had the effect of giving unequal access to the scheme to men on the one hand and women on the other fell foul of the requirement of equal pay for equal work in Article 119 of the EEC Treaty: unless the degree of exclusion of women from the scheme could be objectively justified by factors unrelated to discrimination on grounds of sex. That general finding as to the susceptibility of occupational pension schemes to the regime of Article 119 was followed in Case C-262/88 [1990] ECR I-1889 (Barber). Accordingly, provisions within such a scheme as to date of entitlement that imposed different ages according to sex equally fell foul of the requirements of Article 119. As the ECJ put it, in paragraph (3) of its ruling:

"It is contrary to Article 119 of the Treaty for a man made compulsorily redundant to be entitled to claim only a deferred pension payable at the normal retirement age when a woman in the same position is entitled to an immediate retirement pension as a result of the application of an age condition that varies according to sex in the same way as is provided for by the national statutory pension scheme."

18. The terms of this ruling explain why the ECJ found it possible in that case to limit the effect of its judgment ratione temporis. As Miss Sharpston QC established, at the forefront of her able argument, the restriction of the effect of the Barber judgment to the period after 17 May 1990 turned directly on the objectionable feature of the scheme in that case having been an example of discrimination on grounds of age, with the operative age differing according to the gender of the pensioner. It was, as the ECJ put it, an age condition that varied according to sex. However, at paragraph 42 of its judgment the ECJ accepted that member states might reasonably have thought that such discrimination was permissible because Council Directives had provided for the deferment of implementation of equal treatment as to pensionable age in social security schemes. That was in particular because, as again the ECJ put it, the age condition in the private pension schemes varied according to sex in the same way as is provided (without breach of Community law) by the national statutory pension scheme. It might well be thought that pensions paid by the state and pensions paid by a private employer would be placed on the same level by, or at least that the state provision would be no less susceptible to control by, the principles of Community Law. That was however not the then state of Community Law, but only so for the technical reason that it was not seen as a legitimate exercise in statutory construction to bring pensions provided by the state, as opposed to pensions paid under an agreement between employer and employee, within the concept of "pay" in Article 119 (see paragraph 22 of the judgment in Barber).
19. In those unusual circumstances, it was very understandable that the ECJ should consider it venial on the part of a member state to think, until put right by the ECJ in Barber, that age differentials based on gender were not contrary to Community law in the sphere of private pensions: granted that the same differentials based on gender were not contrary to Community law when applied in the sphere of state pensions.
20. Accordingly, in determining whether the Barber rule ratione temporis and the "Barber" protocol apply to a particular case, the short question should be asked of whether the discrimination complained of involves the application of the element engaged in Barber, an age condition that varies according to sex. For my part, I consider that that question properly represents the effect of Barber, and does so in a form that leads to a more accurate application of the jurisprudence than the questions suggested to us of whether the case is a "Bilka" case or a "Barber" case; or whether the issue is one of "access" on the one hand or of level of benefit, on the other.
21. Applying this approach, therefore, the only question is whether the discrimination suffered by men before 17 May 1990, the effect of which is arguably reproduced in the 1995 Regulations, was an age-related discrimination. There can be only one answer to that question: men do worse if they take retirement at a particular age than do women.
22. The same answer is, however, obtained if the question is formulated as the appellant urged, in terms of whether the discrimination was in relation to access or to in relation to level of benefits: though, as the following paragraphs will show, at the expense of somewhat more tortuous reasoning. All of the cases that, following Bilka, have held that "access" limitations cannot benefit from the Barber saving ratione temporis have made it clear that what they are concerned with is access to the relevant scheme: see, for instance, Case C–57/93 [1995] ECR I–4541 [32] (Vroege); Case C–28/93 [1995] ECR I–4583[28] (Fisscher); and Case C–435/93 [1996] ECR I–5223 [26] (Dietz). All these cases were strongly relied on by the appellant, to show that Mr Quirk was entitled to access to the right to retire at the age of 55 just as a woman was. But they do not establish that point. All that they show is that men and women must be admitted to the scheme without discrimination, as Mr Quirk undoubtedly was admitted. They say nothing of discrimination within the terms of the scheme, which is what Mr Quirk complains of.
23. This last point can be put in another way. It was argued that Mr Quirk had a special status, as someone only permitted to retire with full rights at age 60; and he was discriminated against in respect of that (gender-related) status. But he only acquired that "status" by the application to him of the rules of the scheme. Accordingly, far from Mr Quirk's argument establishing that he was excluded from the scheme, it could only be formulated on the basis that he was admitted to the scheme. And it completely artificial to seek, as did the appellant, to characterise the rules of the scheme with regard to retirement age as a "special scheme", from which Mr Quirk can be said to be excluded.
24. Even, therefore, if the fundamental rationale of Barber, set out in paragraphs 17-18 above, is expressed through an analysis in terms of "access", that analysis does not assist Mr Quirk once it is seen that men had access to the scheme on the same terms as women: but were, within the scheme, subjected to the age-related discrimination in respect of which Barber introduced a special regime.
25. However, it was further contended that, whatever the difficulties for Mr Quirk in the earlier jurisprudence, it was established by reference to Case C–246/96 [1997] ECR I–7153 (Magorrian) that he was indeed being discriminated against within the terms of the scheme, as opposed to being discriminated against in respect of access to the scheme. The ECJ could be understood to have held, on the facts of that case, that a right to be admitted to a scheme entailed a right to be admitted on equal terms to all the benefits of that scheme; and that right had to be backdated not merely as far as Barber, but back to the recognition of the direct effect of article 119 in Case 43/75 [1976] ECR 455 (Defrenne). Therefore, once within the scheme, albeit by acceptance by the rules of the scheme rather than by a court's order, Mr Quirk had to have the same benefits within it as a female member. But that argument must fail because the ECJ in Magorrian could not have intended to extend its ruling to an aspect of a scheme or to a benefit under a scheme that fell within the limit on the Defrenne rule that was established in Barber; or at least would not have done so without making very clear that that was the court's intention. And there is no such indication in Magorrian that the ECJ intended to disturb the special rule in relation to age-related discrimination that it laid down in Barber.
26. I am therefore satisfied that the jurisprudence of the ECJ remains as the Court stated in Barber, and that age-related gender discrimination is deemed to be contrary to Article 119 only in respect of its effects in relation to employment after 17 May 1990. Applying that approach to the present case, until this appeal the primary argument of the appellant had been that the 1995 Regulations discriminate against men because they calculate men's pension on early retirement only in relation to service after 17 May 1990. That is of course the case, and is conceded to be such. But that argument fails because the discrimination is age-related, in the sense that it arises only in respect of steps taken at or before a particular age. Service before the date on which schemes became subject in that respect to Article 119 can therefore legitimately be left out of account. Before us, however, Mr Algazy emphasised a different argument that had been only lightly touched on below. Because the 1980 Regulations had applied different ages for retirement on the part of men and women, and the new Regulations had only been drafted as they were in order to maintain as far as possible those effects, the new Regulations were ineluctably tainted with the discrimination practised by the old Regulations. But that argument fails also, on the straightforward ground that the differential retirement age based on gender grounds found in the 1980 Regulations was just the sort of provision that was in the mind of the ECJ in Barber as a provision that was outside the reach of Article 119 until 17 May 1990.
27. The appellant's arguments were based, as is the preceding part of this judgment, upon the jurisprudence of the ECJ. There may, however, be a more direct route to the same result. The guiding rule should be, not what can be extracted from the jurisprudence of the ECJ, but the Treaty provision, the "Barber protocol", introduced to codify the temporal limitation. The protocol reads:

"For the purposes of Article 119 of this Treaty, benefits under occupational social security schemes shall not be considered as remuneration if and in so far as they are attributable to periods of employment prior to 17 May 1990."

28. We have seen in paragraph 18 above how Article 119 does not apply to any payment that cannot be characterised as "pay" or remuneration. In Mr Quirk's case he claims that his pension is discriminatorily different from that of a female comparator, because she receives an amount that is calculated by reference to the whole of her service, including service before 17 May 1990. But the protocol provides that that part of her pension that relates to pre–17 May 1990 service is not "pay" for the purposes of the equal pay rule of Article 119. Mr Quirk is, therefore, deemed to be receiving equal pay with a female, because her pay which is the comparator excludes whatever amount is attributable to pre–17 May 1990 service. With the application of the protocol, her pay for Article 119 purposes is the same as his, and there is in law no discrimination.
29. This more direct approach is not inconsistent with any of the cases, and is certainly not inconsistent with the cases on "access" referred to in paragraph 22 above, which have nothing to say about the Barber rule in general or the protocol in particular. Whether the judgment in Magorrian is entirely consistent with the terms of the protocol is perhaps another matter; but one upon which it is not necessary to enter because, as demonstrated in paragraph 10 above, Magorrian does not touch the present case.

Lord Woolf CJ:

30. I have had the advantage of being able to read in draft the judgments of Lord Justice Mummery and Lord Justice Buxton in this appeal.
31. They provide a series of arguments all of which I find convincing for explaining why this appeal should be dismissed. I agree with their conclusions.
Order: Appeal dismissed; No order as to costs; leave to appeal refused. (Order does not form part of the approved judgment)