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[1991] UKSSCSC CSU_46_1989 (04 July 1991)

R(U) 3/92

Mr. W. M. Walker CSU/46/1989
4.7.91

Discrimination on grounds of sex – abatement of unemployment benefit of claimants aged 60 or over on account of occupational pension – whether discrimination contrary to Council Directive 79/7/EEC

The claimant's unemployment benefit was reduced when he attained the age of 60 years because he was in receipt of an occupational pension which exceeded a prescribed amount. The claimant did not dispute that the adjudication officer had made a correct administrative decision but complained that the regulations involved offended against European law as they discriminated on grounds of sex.

The claimant argued that a woman in exactly the same circumstances as his would receive retirement pension at age 60, as opposed to unemployment benefit and would not be subject to a deduction from her contributory benefit. On appeal a social security appeal tribunal confirmed the decision of the adjudication officer. The claimant appealed to a Commissioner.

Held that:

no direct or indirect discrimination occurs on the grounds of a claimant's sex in Section 5(1) of the Social Security Act 1980. Any prejudice existing is caused by other legislation in the contributory benefit system (para. 14);

when comparing a class of men and women to establish whether discrimination exists the demographic test applied by the Court of Appeal in Jones v. Chief Adjudication Officer (R(G) 2/91) is preferred to the pool test outlined in R(U) 10/88(T) (paras. 13 and 14);

when looking to see if legislation causes any prejudice for a particular sex only one benefit and its legislative scheme should be examined, with consideration of two or more applying only if there is some inter-connection or gearing between them (para. 14).

DECISION OF THE SOCIAL SECURITY COMMISSIONER

I do not find an error of law in the decision of the Glasgow South social security appeal tribunal dated 29 September 1989 such as to warrant my interference therewith. Accordingly I dismiss this appeal.

This case came before me by way of an oral hearing at which the claimant appeared on his own behalf and the adjudication officer was represented by Mr. Michael Kent, of Counsel, instructed by the Solicitor to the Departments of Health and Social Security.

The case arose from a decision by an adjudication officer issued on 10 November 1988 holding unemployment benefit payable to the claimant at a reduced rate because he had attained the age of 60 years and was in receipt of an occupational pension which exceeded a prescribed amount. The law involved was section 5 of the Social Security (No. 2) Act 1980 and regulations 23 to 28 of the Social Security (Unemployment, Sickness and Invalidity Benefit) Regulations, 1983. The claimant appealed to the tribunal, but in vain. The tribunal had before them verbal representations by both the claimant and the adjudication officer, and written submissions by the former. They made certain findings of fact, which I need not rehearse. They were not in dispute nor does any issue now arise on them. In explaining their reasons to uphold the adjudication officer's decision they said, so far as now relevant, this:

"In terms of the Social Security (Unemployment, Sickness and Invalidity Benefit) Regulations 23-28 [the excess figure] requires to be deducted from the appellant's unemployment benefit. These regulations apply to persons and not either males or females. The tribunal did not accordingly consider these regulations to be fundamentally flawed as being contrary to basic provisions of European law against discrimination on the grounds of sex."

In his application for leave to appeal from the tribunal the claimant did not dispute that the adjudication officer had made a correct administrative decision. His complaint was that the regulations themselves offended again the precepts of European law.

I should pause to note that an additional point, originally raised in regards to the effect upon the increment in his benefit in respect of his wife, was abandoned before me and so I say no more about it.

I think the proper starting point is section 5(l) of the Social Security (No. 2) Act 1980. It provides this:

"5(1) If payments by way of occupational or personal pension which in the aggregate exceed the maximum sum are made for any week to person who has attained the age of 60, the rate of any unemployment benefit . . . shall be reduced by 10p for each 10p of the excess; and in this sub-section the "maximum sum" means such sum not less than £35 as is prescribed."

Shortly after the adjudication officer's decision was made the age mentioned was lowered but that does not effect this case because it is the date of the decision by the adjudication officer that matters. And regulation 24 of the Unemployment, Sickness and Invalidity Benefit Regulations prescribes £35 as the sum. So far so good. The section quoted and that regulation upon their face make no distinction between persons on the grounds of either age or sex. No question of direct discrimination arises. But the question in the case was as to whether or not there was an indirect discrimination, against males.

The claimant throughout sought to point out that there was such a discrimination effected by the legislation on the grounds of his sex; which discrimination offended against European law. His argument before me was ingenious. It was encapsulated in a comparison to which he referred more than once. Two colleagues, of the same age, one of each sex, worked for the same employer. Both paid into their employer's occupational pension scheme. Both were on the same rate of pay. Both retired on the same day at age 55 and then entered part-time employment. Both finished that part-time employment on the same day. Each was then aged 60. Each thereby became entitled to a contributory benefit. Both benefits fall to be paid at the same rate. But whereas the man, because of his occupational pension, would suffer a deduction from his contributory benefit (unemployment benefit) the woman would suffer no deduction from her contributory benefit (retirement pension). That clearly demonstrated discrimination against males within the framework of the social security contributory benefit system.

The claimant then turned to Article 119 of the Treaty of Rome which states, so far as relevant, this:

"Each Member State shall during the first stage ensure and subsequently maintain the application of the principle that men and women should receive equal pay for equal work.

For the purpose of this Article, 'pay' means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives, directly or indirectly, in respect of his employment from his employer."

The claimant's argument then was that ". . . any other consideration…" included pension benefits and that effectively these were being used, so far as males were concerned, to cut down or elide payment of unemployment benefit which was "pay" within the concept of the second paragraph of Article 119. Support for that was said to be derived from Barber v. Guardian Royal Exchange Assurance Group [1991] WLR 72.

But having considered the decision by the Court of Justice of European Community in the Barber case, I find that it specifically excludes from the scope of Article 119 a social security scheme or benefit. And that is what is in question here. Although given some two years earlier I find R(U) 10/88, cited to me along with Barber, at paragraph 7, to be in accord with Barber on that point. What was being abated in this case, as in that, was unemployment benefit.

It seems to me to follow that, if any Article be involved in this case, it is Article 118, which requires and directs the general harmonisation of social security and other matters. The only other matter of community law before me was Council Directive 79/7/EEC. That indeed is a measure under Article 118. I quite accept that the private occupational pension scheme involved in this case would be subject to Article 119. But there is no suggestion that payments out of that scheme, as between the claimant's two examples, were affected. Indeed it was of the essence of his example that the man and woman each received equal consideration in respect of equal work.

Mr. Kent argued first, although I rather took it to be a submission alternative to that which followed, that R(U) 10/88 was binding upon me. That was a decision of a tribunal of Commissioners. It held that section 5(1) of the Act, taken with 27(1) which determines the retirement ages of the sexes, had an indirect discriminatory effect and so would have been struck at by Article 118 and Directive 79/7/EEC but for the derogation available under Article 7(1)(a) of the latter. The facts in essence were the same as in present case. But for his main submission I would, of course, have followed that decision and held against the claimant. But I have chosen to travel by a somewhat different route. That that route is different, however, does not assist the claimant. My conclusion is that there was no discrimination against the claimant at all, on the ground of his sex, not even indirectly.

It is necessary, first, to return to the provisions which lead to the differentiation between the two cases figures by the claimant. That takes me back to the Act and Regulations referred to in paragraph 5 above. Prior to age 60, given the claimant's examples, the man would be entitled to the full amount of any occupational pension plus full unemployment benefit equally: so the woman. As Mr. Kent pointed out, the reason why, in the claimant's example, the female appears to gain to the detriment of the male is because at age 60 she must have opted for a retirement pension. The rate prescribed for each of the benefits may be the same but that is not the point. The point in my view must start at the question whether the two benefits are so inter-related, at least so far as concerns the operation of section 5(1), that they must be judged as to discrimination in the light of both operating a severable part of the social security system. In other words the first question is, is there such a close inter-connection between the two schemes that, at least for section 5(1), any discrimination in one will taint the other, and I say that because, of course, there is no doubt that the retirement scheme is age discriminatory.

Accordingly in this case I think it necessary to look more closely at I claimant's hypothetical couple and the law relating to the two benefits. It is then seen that a woman can not just opt to change between the two benefits at an age earlier than can a man. Indeed it is not a question of opting at all. In law the operation is rather more complicated. First, in order to qualify for a pension at age 60, the woman would have had to have given notice of retirement under section 27(4) of the Social Security Act, 1975, in force until just after the tribunal's decision as it happens. But until and unless she did so she would remain eligible for unemployment benefit. The difference arises out of the woman deciding to cease working, and also giving notice that she is to retire. And the decision to cease working alone is enough to disqualify from unemployment benefit because there cannot then be any availability for employment. The other decision, to retire, is what is required as a preliminary to qualification for retirement pension. But the result of this analysis is that there appears to be no inter-connection between the two schemes, even at section 5(1). The supposed inter-connection arises only because of a coincidental identity of rates of benefit. It can then be seen that the social security contributory benefit system does not of itself treat differently those in the two particular schemes.

I must now return to the decision of the tribunal of Commissioners R(U) 10/88. At paragraph 14 it was held that in the class the tribunal identified, there would be a substantially greater number of men than women. The decision goes on:

"Doubtless this is not unconnected with the fact that women who have reached the age of 60 are able to retire and claim both occupational and state retirement pension, while men customarily can not do this they are aged 65."

And the class identified by the tribunal at paragraph 13 consisted of those who:

" . . fall within section 5(1) in conjunction with section 27(1), namely those aged 60 or over but under 65 who have not retired (for whatever reason), who are out of work and available for employment and entitled to unemployment benefit, and who are in receipt of an occupational pension from their former employment."

The tribunal was there applying the 'pool' test suggested in the Shaffter case, [1987] IRLR 53. There Schiemann J held that equal treatment would appear not to be being observed:

". . . if, in a situation where there is an equal number of men and women in the population, one sees a practice working in reality in such a way that many more women than men are adversely affected by it." [My emphasis.]

On a simple approach, then, if there is taken as a 'pool' an equal number of men and women aged 60 to 65 who are, to use the tribunal's words, out of work, available for employment, entitled to unemployment benefit and in receipt of an occupational pension, and section 5(1) is applied, all in the 'pool' will equally suffer the deduction because they are all taken as entitled to unemployment benefit and so not to have retired. In short the class resulting from the operation of the legislation upon the pool will be in the same state of balance between the sexes as was the pool itself; i.e. no discrimination is found. With some diffidence and the greatest of respect to the tribunal I find myself unable therefore to accept their analysis. I only differ, however, because I believe that there is some support for my approach from recent pronouncements in the Supreme Courts.

The pool test is really a simplification of the demographic test. The latest words on that seem to be those of the Court of Appeal in Jones v. Chief Adjudication Officer (31 July 1990); (CG 35/88). The demographic test requires a comparison between the balance of males and females who satisfy all other conditions for a benefit, other than the one under consideration, as against the balance after it has been applied. Thus Mustill LJ's example of the height qualification for the police service: that in the result discriminates against females. Now in this case, of course, there are no actual figures. But it is enough for the purpose of the test, I think, to take x% as the males in the population and y% as the females who satisfy all other relevant conditions at the time in question. That is to say, using the tribunal's definition, x + y = the total population between the ages of 60 and 65, available for, but out of, work, entitled to unemployment benefit and in receipt of an occupational pension. Apply then to that population, section 5(1). Given my earlier analysis logically the percentages of males and females thereafter will remain the same, because all are taken as entitled to unemployment benefit and so not to have retired. It is indeed the same test as the 'pool' one, differently put. The authority of the approach as set out in Jones persuades me that I must follow my doubts about the tribunal decision in R(U) 10/88. In a nutshell, if there is applied to this case the test propounded by Mustill LJ in Jones:

"In my judgement one must . . . identify precisely what prejudice the legislation under attack is alleged to have caused [the claimant], and to have caused her as a woman."

section 5(1) does not appear to me, for the reasons which I have endeavoured to set out, to have caused this claimant any prejudice as a man. As I have tried to state in other words, any prejudice he may be thought to have suffered was caused by other legislation, namely that on retirement ages in the pension scheme part of the contributory benefit system. The key is, I think, only to look at one benefit and its attendant legislative scheme at a time and to be reluctant to consider two or more as they may appear to interact unless there is some inter-connection or gearing between them. That I think rather follows from the Court's endeavour in Jones to isolate and determine the benefit scheme with which they were concerned and also from the Advocate-General's views in Marshall v. Southampton & South West Hampshire Area Health Authority [1986] ECR 123 at 730 on part of Article 7(1)(a) dealing with " . . other benefits under State schemes which are geared to the pensionable age fixed . . ." by the State. It is for the purpose of considering derogation that arises any question as to whether there is a link or gearing and then, of course, whether that link or gearing can be justified; Slade LJ in Thomas v. Chief Adjudication Officer and Secretary of State Social Security and other cases, Court of Appeal (31 July 1990).

As I have largely accepted Mr. Kent's submissions I have, without discourtesy I hope, not troubled to set them out fully herein. The issue is really too short, although not too simple. But Mr. Kent went on to make a further alternative submission, namely that the loss of part of his unemployment benefit under section 5(1) was not discriminatory against the claimant, even if the provisions about awarding it and retirement pension were so, having regard to Mustill LJ's views, in Jones, based upon the example of the children's party where presents were promised but not provided. I am not entirely clear about that and desire to reserve my views on it until a case more directly raising it should arise.

I should perhaps note that had I been persuaded to follow the tribunal decision R(U) 10/88 a question would have arisen about the applicability of the derogation provision in Article 7(1)(a) of Council Directive 79/7/EEC from the strict requirements of Article 4. I am not clear how, or even whether, derogation was established in that case. In Thomas it appears that whether or not an explicit election had to be made was not argued. With respect, I share the uncertainty upon the point expressed by Butler-Sloss LJ in Jones. I would have wished submissions upon the question before coming to a view.

The appeal fails.

Date: 4 July 1991 (signed) Mr. W. M. Walker Commissioner