United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MISS BELLA MORRIS (of Counsel) Instructed by: Messrs Thompsons Solicitors 18 Lawford Street Old Market Bristol BS2 0DZ
For the Respondent	MR JAMES BAX (of Counsel) Instructed by: Messrs Wolferstans Depford Chambers 60-66 North Hill Plymouth Devon PL4 8EP

SUMMARY

Equal Pay Act – European law; Article 141

Part-time pensions case. The Appellant was an employee who did not join a voluntary scheme for some eight years after having become eligible to do so. She initially claimed that this was because she had taken out a private pension, but that was rejected on the evidence. The Appellant alleged that the Tribunal had failed to ask the fundamental question whether she would have joined earlier had she been eligible, and contended that there was evidence that she would have done so, notwithstanding her failure to do so later. Instead the Tribunal had simply focused on whether her reason for not joining later was the fact that she had a private pension. The EAT agreed that the Tribunal had not focused on the right question and remitted the case for further consideration. Paragraph 7.2 of Part Time Worker Pension Cases Information Bulletin Number 9 considered.
 


THE HONOURABLE MR JUSTICE ELIAS (PRESIDENT)

1. This is an appeal against the decision of the Employment Tribunal (ET) sitting at Exeter in which it found that Mrs Dennisons's claim for retrospective access to the local government superannuation scheme failed. She had sought to establish that she had the right to claim access to that scheme from the date of commencement of employment on 23 April 1979 to the point when she in fact joined the scheme on 31 January 1995.
2. Miss Morris, before us, conceded that the claim could in fact only run from when her employment commenced to the point when she was given the right to join the scheme which was from 1 April 1987. Thereafter, she would not of course have been treated differently to any of the full-time employees.

The Background

3. The Appellant's employment as a part-time copyist commenced on 23 April 1979. She was informed that she may apply to join the pension scheme, but would be subject to the scheme's regulations. The Tribunal found that she did in fact make enquiries as to whether she could join but she was told that she could not, because she worked fewer than 30 hours per week (in fact it was 27¹/₂ hours). Such part-timers were excluded from the scheme. Membership of the scheme for full-timers was always voluntary.
4. The Appellant was given a new contract of employment in 1984, under which she worked the same hours. She enquired again whether she could join the scheme but was told that she remained ineligible for the same reason as before. She signed a new contract on 6 July 1984. She took out a private pension plan with Equitable Life on 6 June 1984. The Tribunal summarised her reasons for doing this as follows:

"12 The reason that the claimant joined the scheme with Equitable Life private pension in 1984 is that having been told by her employer that she was not eligible to join their scheme on at least two occasions and having been informed by the husband of a colleague that she should make her own private provision she determined that she should do so."

5. In 1986 the regulations governing the scheme were revoked and replaced. The replacement regulations were then amended in 1987 and they allowed certain part-time workers to join the scheme. They also gave retrospective effect so as to provide a start date for entitlement to 1 April 1986. In 1988 the Appellant's hours were increased to 32¹/₂ hours per week, thereby taking her over the threshold of the 30 hours. She thus became eligible to join the scheme. However, at that stage she made no enquiry as to whether she could join. Because membership was voluntary, she was not obliged to do so.
6. The Tribunal found that, on the rules being changed in 1987 and 1988 notices were posted on notice boards, available to the Appellant, informing her and other employees that they were entitled to join the scheme. Furthermore, the Tribunal also expressly found, contrary in fact to the evidence advanced orally by the Appellant, that she was on a number of occasions encouraged to join the scheme by Mrs Basker, the personnel manager of the Respondent company. This was when her hours changed in 1988.
7. On 7 December 1992, she signed a new contract of employment in which she was unequivocally informed that she would be able to join the pension scheme. Again the Tribunal found that Mrs Basker encouraged her at this time, and she plainly knew, or at least was in a position to know, that she could join the scheme. She finally joined it in 1995 after having attended a meeting when it was explained that she could join. At that stage she left the private pension scheme.

The law

8. Both parties submitted that the Appellant's case is to be considered under the principles established in the case of Preston v Wolverhampton Healthcare NHS Trust (No. 3) [2004] IRLR 96, although in fact that case did not determine the point in issue in this case. The Judgment in that case was given by HHJ McMullen. He set out at the beginning of that Judgment an admirably concise statement of the principal features of the law in relation to access to pension benefits. The essential feature is that the right of access to a pension scheme of this kind falls under the terms of Article 141 of the Treaty of the European Union (formerly Article 119 of the Treaty of Rome). That was established in a number of decisions of the European Court of Justice, including Bilka-Kaufhaus GmbH v Weber von Hartz [1986] IRLR 317 and Vroege v NCIV Instituut voor Volkshuisvesting BV [1994] IRLR 651.
9. In the Preston case, the court was considering appeals in relation to a number of issues that had arisen out of, or in connection with, earlier decisions of the ECJ as interpreted by the House of Lords made in the course of the same litigation: see [2000] ICR 961 and [2001]ICR 217 respectively. The appeals to the EAT were from a number of cases heard by Mr McMillan, the Chairman of the Employment Tribunal who was the Chairman nominated to deal with all these complex pension cases. One of the questions that potentially arose for consideration by the Employment Appeal Tribunal (EAT) was summarised as follows:

"35.…I must now deal briefly with those cases which fall between test issues 5.1(b) and 5.2(a), that is applicants whose claims include periods when they remained excluded from the scheme by virtue of their part-time hours but membership of the scheme was not obligatory for full-timers. In these cases, the applicants' failure to join the scheme upon becoming eligible to do so, or only after a significant delay (any applicant can, I think, be afforded a period of grace to make up her mind which would not jeopardise her earlier claim but in respect of which, as the scheme rules no longer excluded her, a claim would not lie) may be high relevant in determining whether there has been a breach of the equality clause. Here I think the respondents are right when they submit that there has been no less favourable treatment, or the applicant has not suffered a detriment if, although excluded from membership by the rules of the scheme, she would not have joined even if she had been given the opportunity."

And then the Chairman's ruling on the matter was set out at paragraph 36 of Preston in the following terms:

"36 '3. There is no breach of the equality clause for any period of claim during which an applicant was excluded from membership of the pension scheme because of her part-time hours but membership of the scheme for her full-time comparator was not obligatory, where an applicant did not join the scheme on becoming eligible to do so, or only joined after a significant delay, unless the applicant can satisfy the tribunal on the balance of probabilities that she would have joined the scheme during the period of exclusion, had she been eligible.'"

However, having identified the issue and having set out the Chairman's conclusions, the EAT acceded to an argument that in fact the issue was not properly before it and that it should not therefore express a concluded view on the matter.

10. The Chairman subsequently provided certain guidance for those concerned with these part-time pension cases, which has in fact proved extremely valuable to employment tribunals. One of the paragraphs of the information bulletin No. 9 is highly pertinent to this decision, paragraph 7.2 which is as follows:

"7.2 Membership for full time employees not compulsory – part-timers excluded

Your claim will not succeed in respect of this period of time if you do not join the scheme when the rules later changed to allow you to do so or you only did so after significant delay. This is because your failure to join the scheme when you were allowed to, suggests that had you been a full-timer you would not have joined the scheme during this earlier period of time anyway and therefore you have lost nothing. However, there is an exception for applicants who can satisfy a tribunal that they would have joined during the earlier period had they been eligible. This is to allow for special cases such as those where by the time the rules were changed to enable part-timers to join, an applicant was so near to retirement that joining was pointless, or she had already taken out a private pension plan."

Paragraph 7.2 is in similar but not identical terms to the passage of the Chairman's judgment, which we have quoted, found in paragraph 36 of the Preston decision. In effect, it raises a rebuttable presumption. If on becoming eligible a person did not join the scheme, then the presumption is that they would not have joined it even had they been eligible to join at an earlier stage, but there may be circumstances where they can rebut that presumption by demonstrating in one way or another that they would then have joined. Neither party has suggested that the guidance is inappropriate or legally incorrect, and in my judgment it provides a legally sound and practical approach which tribunals can safely adopt in relation to cases which it is addressing.

11. The way in which this case was originally put by the applicant before the Tribunal was as follows:

"In 1984 the Applicant made private pension arrangements with Equitable Life to secure her retirement future, and in the absence of being eligible to join the Respondent's pension scheme. This demonstrates her willingness to join. The Applicant therefore asserts that she would have joined in any earlier period if she had been eligible and she falls into the special cases outlined in paragraph 7.2 of bulletin no. 9 having already taken out a private pension plan."

That suggests that it was the taking out of the pension plan which had caused her not to join the pension scheme when she became eligible to do so. If that had been a reason then indeed it would have qualified as a special case, as envisaged by paragraph 7.2. The Tribunal, not unnaturally, focused on this way in which the case was advanced. They say at paragraph 4 of their decision:

"4 … this hearing has been convened to determine, on the basis of the evidence, whether this claim was in fact a special case in accordance with paragraph 72 [7.2] of Bulletin 9 as put forward by the Claimant's representative."

They concluded in terms that there was no period during which the taking out of the private pension scheme was the reason why the claimant did not join the employer's scheme.

12. On this basis, therefore, she failed to fall within the special case upon which she was ostensibly relying. Indeed, the Tribunal noted that the claimant's case changed colour during the course of the hearing. Her evidence was not that she had decided not to join because she already had a private pension provision, but rather that there had been misinformation provided by the Employer. That, if it had been established, might have brought her within another exception at paragraph 7.3, which it is not necessary to set out. But the Tribunal rejected that argument too, noting that there was simply no evidence to sustain that allegation, and as we have said, there was plenty of evidence that she had been notified of her right to join on numerous occasions. Therefore the Tribunal concluded that she did not fall within the exception in paragraph 7.2, nor indeed, in so far as it was being run, paragraph 7.3.
13. They concluded at paragraph 20 of the decision as follows:

"20. The explanation for this [not joining once eligible] has nothing to do with fact that the claimant took out a private pension scheme. Her evidence is, and we find, that had she properly understood the position from the outset she would have abandoned the pension scheme at the earliest juncture in 1987/1988 and moved herself into the employer's scheme. Therefore it was never the private pension scheme that stopped her from joining. Instead it was something else which to us appears to be her failure to properly have understood at the time the implications of the changes to the local government pension scheme. The claimant finally fully understood those changes in 1995 having attended a meeting at which this was explained to her."

The Appellant's argument

14. The Appellant accepts that the Tribunal properly concluded that the Appellant's evidence had been that she did not join until 1995 because of a lack of knowledge, and that there was no basis for her original contention that the failure had anything to do with her private pension arrangements. But Miss Morris, Counsel for the Appellant, submits that that was not the end of the story. She contends that the real question here was not why the Employee did not join the pension scheme when she became eligible. Rather the fundamental question was: would she have joined the scheme earlier had she thought that she was eligible, rather than believing that she was ineligible? The submission, in effect, is that the Tribunal has misinterpreted paragraph 7.2.
15. Plainly, an employee has no complaint if she would not have joined the scheme even if eligible to do so. The fact that when she becomes eligible she does not join will be powerful and often very powerful evidence from which a Tribunal will readily draw the inference that she would not have joined even had she been notified of her eligibility at an earlier stage. But it is not necessarily conclusive and the tribunal must always focus on the crucial question whether she would have joined the scheme at the earlier stage or not. There may be explanations as to why she did not join later but would nonetheless have joined earlier. Paragraph 7.2 recognises that this is a clear possibility. A potential special case which identified in paragraphs 7.2 is where she has taken out a private pension and it may have been more sensible for one reason or another to maintain that arrangement in place rather than to go into the employer's scheme. But there may be other explanations, good or bad, as to why she did not join when she became eligible to her knowledge and yet will still be able to establish that she would have joined at an earlier date.
16. Miss Morris submits that this is precisely one of those no doubt exceptional cases. Because the Tribunal did not focus on the fundamental question of whether she would have joined the scheme during her period of exclusion, they failed properly to analyse and consider this case. They looked at whether the particular special case, namely whether the fact that she had taken out a pension contribution, was the reason for her not joining, whereas that was only to look at part of the picture.
17. Furthermore, Miss Morris submits that if one considers the combination of paragraphs 12 and 20 of the decision, the relevant parts of which are extracted above, then the only possible conclusion is that the Tribunal would have drawn the inference that she would have joined the pension scheme at the earlier stage. She therefore submits that this Tribunal ought now to substitute a finding that she should be treated as having access to the pension scheme from the date of commencement of employment until 1 April 1987.
18. Miss Morris also contended in the alternative that the Tribunal did not give proper reasons for its conclusions, citing well-known cases such as Meek v City of Birmingham District Council [1987] IRLR 250 and English v Emery Reimbold & Strick Ltd [2003] IRLR 710. But in truth, as she recognised in the course of her submissions, they really add nothing to the case. If the Tribunal did not address the real question, as she submits, then it is not surprising that they did not give adequate reasons.
19. The Respondents contend that the Tribunal did properly apply paragraph 7.2. They submit that that paragraph creates a rebuttable presumption but submit that, nonetheless, it does require the Tribunal to focus on what happened after the rule changed and she became eligible to join. Mr Bax, for the Respondents, submits that that is a crucial consideration which the Tribunal has to consider. Here the Tribunal did that, and they concluded that her failure to join had nothing to do with the fact that she had taken out an earlier private pension. Accordingly there was no basis on which it was legitimate to infer that she would have joined earlier, had she been told she was eligible to do so. The Tribunal had focused on the way in which the case had been pleaded and the evidence from the Appellant did not sustain that case.
20. Mr Bax conceded that the Tribunal nowhere expressly states that it has reached the conclusion that she would not have joined the scheme when first employed had she been allowed to do so, but he says that that is implicit in the findings, if the decision is read as a whole. As to the question of reasons, it is submitted that it is perfectly plain why the Tribunal reached the conclusion that it did. The short question for this Tribunal was whether the Appellant would have joined the scheme. The Tribunal implicitly inferred, as they were entitled to do on the evidence, that on the balance of probabilities she would not.

Conclusion

21. We have come to the conclusion that the Appellant's contention is correct and that the Tribunal did err in its approach in this case. We do have every sympathy for the Tribunal, however, because the case was certainly, at least initially, run on the basis that the Appellant could bring herself within the particular exception found in paragraph 7.2 which recognises that taking out a private pension may provide an explanation why a woman would have joined, if eligible, at an earlier stage, notwithstanding that she did not do later when she became eligible. Plainly that exception was not applicable here.
22. But we accept that the Tribunal here should have focused on the fundamental question whether the employee would have joined the scheme at the earlier stage, had she thought that she was eligible to do so. There was in this case evidence which the Tribunal could properly consider would be material to that issue, namely the fact that she had made enquiries and she had indeed taken out her own private pension arrangements.
23. Looking at this Tribunal decision, we do not think that the Tribunal did focus on that key question and assess the significance of the evidence when taken as a whole. Had they done so, they might have reached a different conclusion. We are not prepared to say, as Miss Morris urges upon us, that they would inevitably have taken the view that she would have joined at the earlier stage. We are not confident that that was the only inevitable result that they could reach on the evidence before them, but we do accept that they need to focus on that issue and we are not satisfied that they did in this case.
24. That leaves the question of what we should do with the case now. Neither party has suggested that this should go back to a different Tribunal for reconsideration. We think this is a case where it can properly be remitted to the same Tribunal, who can reconsider the matter in the light of this Judgment. It will be for that Tribunal to consider whether it wishes to hear further evidence. It may well take the view that it merely wishes to hear further submissions and that it has all the relevant evidence for it to determine the matter, but we leave that to the Tribunal to determine.
25. Therefore this appeal succeeds, and the case will be remitted to the same Tribunal, if possible, for reconsideration in the light of the guidance given in this judgment.