United Kingdom Employment Appeal Tribunal

APPEARANCES

 

For the Appellant	MS A BROWN (of Counsel) Instructed by: Messrs Thompsons Solicitors Arundel House 1 Furnival Square Sheffield S1 4QL
For the First Respondents	No appearance or representation by or on behalf of the First Respondents
For the Second Respondents	MS L BAGHA (Solicitor) Scottish Executive Solicitor's Office Legal & Parliamentary Services Victoria Quay Edinburgh EH6 6QQ


 


SUMMARY

EQUAL PAY ACT: Part time pensions

Part-time pensions. NHS employee did not join a voluntary scheme for about 5½ years after having become eligible to do so. Pre-hearing review. Claimant's evidence that she did not join immediately as she was paying into a private pension and could not afford to do so; she would have been penalised if she had ceased contributing to the private pension. Tribunal proceeded on the basis of a presumption that the claimant would not have joined the NHS scheme when she became eligible to do so and asked whether the claimant would, on a balance of probabilities, have joined the NHS scheme when she became eligible to do so had she not been contributing to her private pension. Claim struck out. The EAT held that the Tribunal had not focussed on the right question. It required to ask whether, on a balance of probabilities the claimant would have joined the NHS scheme when she should first have been entitled to do so.


 


THE HONOURABLE LADY SMITH

Introduction

1. This is an appeal against the decision of the Employment Tribunal sitting at Glasgow, Employment Judge Garvie, registered on 5 March 2008, in which it found that Mrs Lavety's claim for retrospective access to the Scottish NHS pension scheme should be struck out under rule 18(7)(b) of Schedule 1 of the Employment Tribunals (Constitution and Rules of Procedure) Regulations 2004 on the ground that it had no reasonable prospect of success.
2. The respondents were the relevant health board and the Scottish Ministers. Such pensions are administered by a government agency, the Scottish Public Pensions Agency and an observer from SPPA was in attendance both before the Tribunal and before me.
3. I will continue to refer to parties as claimant and respondents.

Background

4. The matter came before the Tribunal by way of pre–hearing review. The Tribunal heard evidence from the claimant and records it in its judgment without adverse comment. I take from that that the Tribunal formed the view that the claimant's evidence could be accepted as credible and reliable and could approach its task on the basis that she would be in a position, at a full hearing, to establish as fact those matters which she spoke to in evidence at the pre- hearing review.
5. The claimant is a midwife. Her 60th Birthday was on 19 April 2001.
6. The claimant's claim for retrospective access to the NHS scheme is for the period 1 September 1983 to 31 March 1991.
7. The salient features of the claimant's evidence were as follows. She was interviewed for the post of midwife (part-time – 16 hours per week) in August 1983. She enquired at the interview whether she would be able to join the NHS pension scheme and was told that only part-timers who worked at least 24 hours per week were eligible. In 1986, she took out a pension policy with the Royal National Pension Fund for Nurses which involved a monthly payment of £20.21. In 1989 she took out a further pension policy with that Fund which involved a further monthly payment of £30. In or around January 1991 she took out another pension policy with the same fund at a cost of £50 per month, with effect from April 1991. Thus, by April 1991 she was paying £100.21 per month into these policies. She did not, though, expect to receive a return from them which was as beneficial as that which she could have expected to receive from the NHS pension fund had she been allowed to join it.
8. The Tribunal states, at paragraph 17 of its judgment:

"Had she been allowed to join the NHS Scheme during the period 1983 to 1991 she would have done so."

9. Some time after 1 April 1991 the claimant was informed that the restriction on part-timers joining the NHS Scheme had been lifted. She made that discovery in 1991 or 1992. At that stage she could not afford to pay any more into her pension than she was already paying to the Royal National Pension Fund for Nurses and if she had ceased to pay into those policies she would have suffered a penalty.
10. By 1996 the claimant's earnings had increased as she was working more unsocial hours and she joined the NHS Scheme in November 1996. In 1998, when her hours increased to 22½ hours per week, she bought back three years of NHS pension.
11. In 1983, a part-timer working only 16 hours was not allowed access to the NHS Scheme. The Scheme was, at that time, compulsory for full-timers and was optional for part-timers who worked sufficient hours to qualify. On 6 April 1988, membership of the NHS Scheme ceased to be compulsory for full-time employees. On 1 April 1991, the eligibility restrictions for part-time employees were lifted and an employee only working 16 hours per week was entitled to join the scheme if she opted to do so then or at any date thereafter.

Relevant Law

12. The claimant's claim is made under the Equal Pay Act 1970. She asserts that she received unequal treatment during the period that she was excluded from access to the NHS Scheme on the ground that she was a part-time worker. The right of access asserted falls under Article 141 of the Treaty of the European Union: Bilka–Kaufhaus GmbH v Weber von Hartz [1986] IRLR 317; Vroege v NCIV Instituut voor Volkshuisvesting BV [1994] IRLR 651. As a claim under the Equal Pay Act, the relevant right is a right to rely on the term of the contract of employment implied by section 1 of the Act, namely an implied equality right. In the case of access to a pension scheme, that amounts to the right of female part-timers not to be excluded from a pension scheme because of their particular part-time status. An employer is in breach of the implied equality right where pension scheme membership is compulsory for full-time staff but part-time staff are excluded. The employer is not, however, in breach, if membership is compulsory for full-time employees and optional for part-time staff (see: Preston v Wolverhampton Healthcare NHS Trust (No 3) 2004 IRLR 96). Accordingly, in the case of this claimant, the right to have access to the Scottish NHS Pension Scheme was implied into the contract of employment she entered into on 1 September 1983. Membership of the Scheme did not require to be compulsory for part-timers but the claimant ought to have been entitled to join it as from that date.
13. When it comes to remedy it is, accordingly, necessary to look at the question of whether a part-time worker who has been excluded from a pension scheme would, on a balance of probabilities, have joined the Scheme during the period of her exclusion from it if she had been eligible to do so. That that is the fundamental question was confirmed by the President (Elias J) in Dennison v The University College of St Mark and St John & Others UKEAT/0196/06.
14. In such a case, a sharp issue of fact arises but it is one which requires to be arrived at by way of drawing inferences. That is, the fact finder requires to hypothesise regarding what action the employee would have taken had access to the relevant pension scheme not been withheld.
15. I hesitate, under a section of this judgment entitled "Relevant Law" to refer to non-statutory guidance since it is not, in short, law. I will, however, do so since it was relied on by the Tribunal and commented on in Dennison. The guidance in question relates only to the circumstances where membership of a pension scheme is not compulsory for full-time workers and part–timers are excluded from it, as was the case here as of 6 April 1988. It is contained in the Employment Tribunal's Information Bulletin No. 9 on part-time worker pension cases, paragraph 7.2 of which provides:

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

Your claim will not succeed in respect of this period 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."

16. I have a concern that if the first sentence of that paragraph is taken out of context then a claimant who is in fact in a position to succeed in her claim will assume that she is not. It is plainly not the law that a claimant cannot succeed in the circumstances envisaged. She may well be able to do so. In Dennison, Elias J commented, at paragraph 10, that:

"In effect, it raises a rebuttable presumption. If on becoming eligible the 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."

17. I do not read those comments as indicating that there is a presumption in law that requires to be rebutted in any case where a claimant has not joined a pension scheme when first allowed to do so or has delayed. Indeed, the governing statute, the Equal Pay Act, does not provide for any such presumption. Another way of putting it would be to recognise that as a matter of evidential assessment, a Tribunal will be entitled to infer from the fact that the claimant did not join the scheme when she became entitled to do so or, if she did join later, that she delayed in doing so, that she would probably not have joined it at an earlier date. However, as ever, the Tribunal will require to consider the whole facts and circumstances and will, equally, be entitled to conclude that the claimant would have joined earlier notwithstanding her not having done so at the first opportunity if, on those facts and circumstances, it is satisfied that she probably would have done. As the present case shows, approaching matters in terms of presumptions which require to be rebutted may not always be helpful.
18. I should add a further consideration that helpful though guidance documents such as the Bulletin No.9 may be, they are no substitute for the relevant law and the risk of their acting as a distraction from it has to be recognised. It is not, for instance, the law that it is only where a woman can show that she did not join when she became eligible to do so because she was too close to retirement or because she had already taken out a pension plan, that she will qualify for the Equal Pay Act remedy. Certainly, those are examples of cases where a Tribunal may well be satisfied that a failure to join a scheme at the first opportunity does not point to a likelihood that the claimant would not have joined at an earlier stage but, as was explained in Dennison, where the Tribunal had fallen into the trap of treating them as rules, that they are not.

The Tribunal's Judgment

19. The focus of the Tribunal's considerations was the period between 6 April 1988 and 1 April 1991. That would appear to be on account of the way in which the first issue for consideration at the Pre hearing Review was framed by the claimant, namely:

"(1) can the claimant succeed in her claim in respect of the period 6 April 1988 to 31 March 1991 notwithstanding the fact that there was a significant delay in her joining the scheme from the date she became eligible to do so?"

20. However, the second issue refers back to the earlier period between 1 September 1983 and 5 April 1988. Such confusion as there may have been as to the period that required to be considered could be attributable to the first Respondents' having at one stage conceded liability for the period between September 1983 and April 1998 but that concession was withdrawn. The whole period was and, as I understand it, is in issue between the parties.
21. The Tribunal noted, as I have observed, that the claimant would have joined the Scheme when she began her employment in 1983 had she been allowed to do so. However, it restricted its consideration to the period 6 April 1988 to 1 April 1991. At paragraph 26, the Tribunal states that if paragraph 7.2 of Information Bulletin no.9 is applied to the facts of this case:

"…this would mean that the claimant's claim would not succeed in respect of the period between 6 April 1988 and 1 April 1991 if the claimant did not join the NHS Scheme when the rules changed on 1 April 1991 to allow her to do so or the claimant did so but only after a significant delay."

22. The Tribunal refers to Dennison. At paragraph 33, the Tribunal seeks to explain but unfortunately, in my view, creates and demonstrates confusion:

"33. The difficulty for the claimant is that, whether I take the earlier date of her becoming aware of her entitlement either at some point in 1991 or a later date of some time during 1992, there was a considerable delay between her becoming aware of her entitlement to join the NHS Scheme and her actual date of joining in November 1996. While I can sympathise with the claimant's position that she was already paying contributions to a private pension fund and could not afford to continue to do so as well as pay contributions to the NHS Scheme, the question is whether, had she known of her eligibility to join as at 1 April 1991 or when she did become aware of the position (either during 1991 or at some time in 1992) she would have done so."

23. In fairness, the Tribunal later, in paragraph 35, poses a question which is clear and comes closer to meeting the correct test:

"Did her failure to join the NHS Scheme until November 1996 suggest that had she been a full-timer she would not have joined the NHS Scheme during the period 5 April 1988 to 1 April 1991?"

24. There is, however, a problem with that question because the issue is not what would the claimant have done had she been a full-time employee; the issue is what would she have done if, as a part-timer, she had been afforded the access to the NHS Scheme which was in fact denied to her. Further, the focus on 1988, whilst no doubt the result of the way that the case had been approached by parties prior thereto, is misleading and resulted in the Tribunal missing the fundamental point, namely that of whether she would have opted to join when she should first have been afforded the option, which was in 1983. That was the case that the claimant was offering to prove.
25. The Tribunal states further, at paragraph 36:

"The difficulty for the claimant is that she accepts that she became aware of her entitlement to join the NHS Scheme either in 1991 or during 1992. There was then a significant delay in her joining. At best, it is the period from at latest the end of 1992 until November 1996. While I have considerable sympathy with the claimant and I appreciate the reason she gave as to (sic) she did not join during that period ,namely that she postponed applying for membership of the NHS Scheme until she could afford both sets of contributions, I am not satisfied that the fact that she was aware of her entitlement to join the NHS Scheme but delayed doing so on the basis of her inability to afford to contribute to both the private fund and the NHS Scheme demonstrates that she has rebutted the presumption that she would (sic) have joined the NHS Scheme prior to 1991 had she been eligible to do so. I disagree with her contention that the evidence outweighs the presumption that she did not wish to be in the NHS Scheme, given the substantial delay which there was between the date of the claimant becoming aware of her entitlement to join and the actual date of joining it in 1996."

I take it that the word "not" is missing from the penultimate sentence and that it should be inserted after the word "would".

The Appeal

26. For the claimant, Ms Brown submitted that the Tribunal had fallen into error. It was submitted that the claimant had plainly shown enough to rebut any presumption that she would not have joined the scheme earlier. The Tribunal had become confused, as was evident from paragraph 33. It should not have proceeded on the basis that the substantial delay gave rise to a presumption that the claimant would not have joined the scheme earlier. The claimant's case was that she would have joined it in 1983 had she been able to do so and her claim should not, on the facts indicated, have been struck out.
27. For the second respondents, Miss Bagha submitted that the effect of paragraph 7.2 of the Information Bulletin no.9 required the Tribunal not to go back to 1983. It would not have been necessary if a Tribunal had to do so. The Tribunal had not erred. The focus was properly on the period 1988 to 1991 and the claim ought to have been struck out, as happened.

Discussion and Decision

28. I am satisfied that the Tribunal fell into error. Despite referring to Dennison it appears to have fallen into the same error as the Tribunal in that case in that it failed to focus on whether or not the claimant could establish that had she been afforded access to the NHS pension Scheme when she should have been, she would, on a balance of probabilities, have joined it. Her case was: when she was interviewed in 1983, she asked whether she would be able to join the scheme. She would, as the Tribunal appears to have accepted, have joined the scheme at that stage had she been allowed to do so. Within three years of commencing employment, not being able to join the NHS Scheme, she had taken out a private pension policy. By January 1991, she had taken out three such policies and was paying a significant sum into them each month. She understood, however, that the NHS Scheme was a better pension scheme than her private policies. She could not afford both to pay into her private policies and to take up her entitlement to join the NHS Scheme when she first got to know about it. If she had ceased making her private policy payments, she would have suffered a penalty on that investment. When she could afford to pay into both the NHS Scheme and her private policies, she opted into the former. This was not, accordingly, a case of a woman who would not have bothered about securing a pension for herself; nor is it a case of a woman who was opposed in principle to joining her employers' pension scheme. It is hard to see what more would be required to persuade a Tribunal that she would have joined the Scottish NHS Pension Scheme in September 1983 had she not been denied the opportunity to do so on account of her part-time status. I can only think that the Tribunal here has focussed unduly on the fact of the delay between eligibility and joining in 1996, overlooking the need to ask what would have happened at the earlier stage. There is also a clear sense of the Tribunal considering that it requires to approach matters on the basis that if there is a delay then there is a presumption in favour of the respondents but as I have already observed, that is not a legal presumption. The Tribunal then appears to have proceeded to look for something of particular weight to overcome it which, again, is not the correct approach. In any event, even if it was, the facts of this case as outlined above are of considerable weight and it is difficult to see what more could have been asked for. On any view, there was sufficient to allow the case to go forward to a full hearing on the merits.

Disposal

29. In these circumstances, I will uphold the appeal and remit the claim to the Tribunal to proceed with a full hearing on the merits of the claim.