UK Social Security and Child Support Commissioners' Decisions

Secretary of State for Social Services and Anor v. Graham & Ors [1995] UKSSCSC CS_27_1991 (11 August 1995)

R(S) 2/95

(Secretary of State for Social Security and Anor. v. Graham and Others
(C-92/94))


Mr. J. J. Skinner CS/27/1991

1.4.92

ECJ (F. A. Schockweiler, President of the Chamber,

P. J. G. Kapteyn, C. C. Kakouris, J. L. Murray,

H. Ragnemalm, Judges;

Advocate General: C. O. Lenz)

11.8.95

Discrimination on grounds of sex - invalidity benefit - whether unequal age conditions linked to different pension ages for men and women contrary to Council Directive 79/7/EEC

The claimant became incapable of work at the age of 58 and was paid sickness benefit and then invalidity pension at the standard rate. When she reached pensionable age (60 for a woman but 65 for a man), the rate at which her invalidity pension was paid was reduced to the rate at which she would have been entitled to retirement pension had she not deferred her entitlement to it. Her appeal to a tribunal was dismissed and she appealed to a Commissioner, arguing that, because a man of her age in her position would have continued to be paid invalidity pension at the standard rate for a further five years and, furthermore, would have been entitled to the lowest rate of invalidity allowance which was payable to a person who had become incapable of work when more than five years below pensionable age, she had been the victim of discrimination on grounds of sex contrary to Council Directive 79/7/EEC. The adjudication officer argued that the discrimination was lawful because Article 7 of the directive permitted Member States to exclude from the scope of the directive "the determination of pensionable age and the possible consequences thereof for other benefits". The Commissioner allowed the claimant's appeal, holding that she remained entitled to the standard rate of invalidity pension and also that she was entitled to the lowest rate of invalidity allowance. The Secretary of State for Social Security and the Chief Adjudication Officer appealed to the Court of Appeal who referred questions arising in the case and in two others (on appeal from CS/92/1992 and CS/79/1992) to the European Court of Justice.

Held that:

where a Member State prescribes different pensionable ages for men and women for the purposes of granting old age and retirement pensions, the scope of the permitted derogation allowed as "the possible consequences thereof for other benefits" was limited to the forms of discrimination existing under the other benefit schemes, which were linked to the difference in the pensionable age and were objectively necessary in order to avoid disturbing the financial equilibrium of the social security system or to ensure coherence between the retirement pension scheme and other benefit schemes (paras. 11 and 12);

since invalidity benefit was designed to replace income from occupational activity, there was nothing to prevent a Member State from providing for its cessation and replacement by a retirement pension at the time the recipients would in any case stop working because they have reached pensionable age (para. 14);

the derogation also extended to differences between the rates of invalidity pension payable to men and women from the time they reached pensionable age and with regard to the difference between the qualifying dates for the grant of invalidity allowance (paras. 19 and 20).

[Note: In the light of the ruling of the European Court of Justice, the Court of Appeal subsequently allowed by consent the appeals brought by the Secretary of State and the Chief Adjudication Officer.]

DECISION OF THE SOCIAL SECURITY COMMISSIONER

1. My decision is that the decision of the social security appeal tribunal is erroneous in point of law and accordingly I set it aside. There is no dispute as to the facts and, in exercise of my jurisdiction, I give the decision myself, namely that the claimant's invalidity pension is not to be reduced from 12 July 1990 and further that invalidity allowance is payable to her at the lower rate specified in Schedule 4 to the Social Security Act 1975 from 26 April 1989.

2. I held an oral hearing of this appeal in Liverpool and heard argument from Mr. Richard Drabble of Counsel who appeared for the claimant and from Mr. David Pannick of Counsel who was for the adjudication officer. On 25 July 1991 I gave an interim ruling stating my reasons for adjourning the oral hearing. I did so to await the decision of the House of Lords in The Secretary of State for Social Security v. Thomas. The report of the decision of the Court of Appeal is entitled Thomas v. Chief Adjudication Officer [1991] 2QB 164. The House of Lords has now referred the questions arising in that case to the European Court of Justice. In those circumstances it seems to me right to give the decision in the appeal before me and not to delay the outcome of the appeal any longer. I have further borne in mind that the European Court of Justice have not dealt at all with the interpretation of Article 7(1)(a) of Directive 79/7 in the Smithson case. In my interim ruling I indicated that I would proceed to determine the case without any further hearing unless the parties wished to present additional oral argument. On 10 December 1991 a nominated officer directed that, if either of the parties wished to request a further hearing, they should inform the Office of the Social Security Commissioners. No such request has been received.

3. There is no dispute about the facts and I have stated them in my interim decision. However, for ease of reference I shall restate them here. The claimant, a married lady, is not able to carry out her work as a machinist because she suffers from angina and arthritis. Invalidity benefit was paid to her since 26 April 1989, following a period during which sickness benefit was paid. The award of invalidity benefit payable at 11 July 1990 was £49.48 per week. The claimant was born on 12 July 1930 and consequently she attained the age of 60 years on 12 July 1990. From that date the adjudication officer revised the amount of benefit on the ground that there had been a change of circumstances. He had regard to section 15 of the Social Security Act 1975 (the Act) and in reliance thereon reduced the benefit to £16.64 per week. Section 15 provides for extra conditions to be satisfied by persons over pensionable age. It also requires the invalidity benefit, after pensionable age, to be calculated according to how much retirement pension the claimant is entitled to. The pensionable age for women is prescribed as 60 years and for men at 65 years. If the claimant had been a man the calculation of invalidity benefit, according to retirement pension contributions, would not apply to her until she had attained the age of 65 years. The claimant appealed to the social security appeal tribunal on the grounds that she was entitled to the protection afforded by the EEC Council Directive 79/7. The tribunal, which gave its decision on 17 December 1990, by a majority found that the reduction in the rate of invalidity benefit payable to the claimant and the failure to award her invalidity allowance was not contrary to the Council Directive because the discrimination is permitted by the derogation specified in Article 7(1)(a) as in their opinion it was a reasonable and necessary consequence of the fact that benefit was designed to compensate for loss of earning ability during working life and so geared to pensionable age. Leave to appeal to the Commissioner was granted by the chairman of the tribunal.

4. I have set out in the appendix hereto the relevant statutory provisions and also Council Directive 79/7 EEC (the Directive).

5. It is conceded on behalf of the adjudication officer that the claimant falls within Article 2 of the Directive and that invalidity pension is within the scope of Article 3. It is further accepted that there is a difference in treatment between men and women in that a man is entitled to receive his invalidity pension under section 15(1) of the Act without satisfying additional criteria until he reaches the age of 65 years, whereas a woman is only so entitled until she reaches the age of 60 years. It is further accepted that such difference in treatment amounts to sex discrimination contrary to Article 4.1 of the Directive unless the case falls within the exceptions listed in Article 7.1 of the Directive. Mr. Pannick submits that the case before me falls within Article 7.1(a). He points to section 12(1) of the Act which defines invalidity benefit as a contributory benefit. He maintains that the sex discrimination of which the claimant complains concerns the rate at which a contributory benefit is paid between the ages of 60 and 65 to those entitled to receive it. He maintains that it is an income replacement benefit designed to replace loss of income during working life, and he refers to section 15(1)(b) which refers to the entitlement for a day of incapacity. Mr. Pannick further submits that the rate of invalidity benefit, after state pension age, is linked to pension entitlement as part of an interlocking system of contributory benefits; entitlement to invalidity pension continues only while entitlement to retirement pension is deferred. The essence of his case is that the provisions of the Act are designed to ensure that a person does not, after pension age, continue to receive an income replacement benefit of a higher amount than she would be entitled to receive under the state pension scheme. This he argues would be contrary to the purpose for which the income replacement benefit is paid, namely replacing income during working life and before a state pension becomes payable and is therefore illogical, and he submits that I should uphold the provision. He further argues that to entitle women to continue to have invalidity benefit after 60 without regard to their pension contributions would be absurd. He points out that Thomas was not concerned with contributory benefit and can be distinguished from the instant case.

6. The present case can be distinguished from the cases before the Court of Appeal in Thomas v. The Chief Adjudication Officer and the accompanying appeal in that it relates to invalidity benefit (invalidity pension and invalidity allowance), while Thomas and the related appeals concerned invalidity care allowance and severe disablement allowance. The importance of Thomas to the present case is that the Court of Appeal construed Article 7(1)(a) and explained the proper approach to be adopted when considering whether a provision of the Social Security Act was in breach of the Directive or whether it was an allowable derogation under the Article. The claimants there were women who had applied for severe disablement allowance or invalid care allowance, under either section 35 or section 37 of the Act, and whose applications were refused, under either section 37(4)(d) or section 37(5), because they had reached pensionable age for women and had not been entitled to the allowance immediately before attaining that age. The case for the claimants was that by reason of the directive they were entitled to the benefits concerned notwithstanding the statutory provisions. In the case of four of the claimants their appeals had been allowed by social security Commissioners, who held that the discriminatory effect of the different retirement ages of 65 for men and 60 for women could not be excluded from the scope of the directive by virtue of Article 7(1)(a). The Secretary of State appealed to the Court of Appeal. It was contended on his behalf that Parliament had found it necessary to distinguish between people of working life and those not of working life, by reference to the pattern of employment. Male and female working patterns differ with women tending to retire at 60 and men at 65. About ten times more women retire at 60 than at 65. It was accepted on behalf of the Secretary of State before the Court of Appeal that it may well be right to change pensionable age to a common age and such change may affect female and male working patterns; however it was contended that until such a change is made income replacement benefit must be tied to pensionable age. This was so because it would be inequitable, in comparison with the treatment of persons already over pensionable age, to pay contribution invalidity pensions at the full contributory rate to people under pensionable age. Reference was made to The White Paper Social Security Provisions for Chronically Sick and Disabled People (1974). It was argued that there was a bond or link between the use of pensionable age in connection with retirement pension and its use in connection with other income replacement benefits.

7. The Court held that the object of Article 7(1)(a) of the directive was to confer on Member States the option to differentiate between men and women in relation to old age and retirement pensions. The words "and the possible consequences thereof for other benefits" absolved a Member State from infringement of the directive where of necessity other benefits were affected as a result of fixing different pensionable ages. But it was held those words had to be construed strictly and in accordance with the community principle of proportionality, which required that derogation from an individual right conferred by the directive remained within the limits of what was appropriate and necessary for achieving that aim. It was further held that the legislation relating to old age and retirement benefits did not make it appropriate and necessary for Parliament, when designating the cut-off age for severe disablement allowance and invalidity care allowance purposes, to follow the concept of "pensionable age", with its concomitant discrimination between men and women, rather than designating a uniform age: and accordingly the sex discrimination involved in the sections of the Act could not be justified by reference to the assumed working life of a woman as opposed to that of a man. The proper approach to the construction of Article 7(1)(a) was elucidated by Slade LJ. He explained that the aim of the first limb of Article 7(1)(a) was to confer on Member States the option at their discretion to differentiate between men and women in defining age qualifications in relation to old age and retirement benefit, notwithstanding the general prohibition against sex discrimination contained in the earlier provision of the directive. He then went on to deal with the aim of the second part of Article 7(1)(a) and said at page 183:

"The aim of the second limb was, in my judgment, to absolve Member States from infringement of Directive (79/7/EEC) in cases where people's rights, other than rights to old age and retirement pension, are necessarily affected as a result of the fixing of different pensionable ages for men and women for the purpose of granting old age or retirement pensions."

He referred to the words used by Mr. Advocate General Sir Gordon Slynn, as he then was, in Marshall v. Southampton and South West Hampshire Area Health Authority (Teaching) (case 152/84) [1986] QB 401 (408E) where he had described the second limb of Article 7(l)(a) as "dealing with other benefits under State schemes which are geared to the pensionable age fixed by the Member States". The Lord Justice then continued as follows:

"However, it does not follow that any "link" or "gearing" will suffice. If a Member State is to rely on that second limb, a sufficiently strong causative link must, in my judgment, be shown to exist between the (permitted) discriminatory provisions relating to old age or retirement pensions and the relevant discriminatory provisions relating to other benefits which are sought to be justified; the very word "consequences" presupposes cause and effect. Mr. Commissioner Monroe, in his decision in Thomas, in a passage adopted by Mr. Commissioner Hallett in his decision in Cooze, said:

"I have reached the conclusion that it is not sufficient to escape the directive simply to gear a different benefit to the differential pensionable ages if the resulting differentiation between sexes in that benefit cannot be shown to have some objective link with pensionable age. If it were it would make it all too easy to evade the provisions of the directive ... I have reached the conclusion that something more is needed than the mere reference to pensionable age with its inherent element of discrimination. There must be some objective link with the differentiation in pensionable ages."

I agree, but would go a little further in characterising the nature of that objective link. Construing the phrase "and the possible consequences thereof for other benefits" strictly and in accordance with the principle of proportionality, I conclude that it gives member states authority to prescribe or retain different age limits for men and women when defining the qualifications for entitlement to benefits other than old age and retirement benefits only when this is a necessary consequence of their having defined the qualifications for entitlement to old age or retirement benefits by reference to different age limits for men and women and only in a manner which is appropriate to meet this necessity. The need to avoid illogicality, unfairness or absurdity may well give rise to necessity in this context, but, as Mr. Lester submitted, I find it difficult to envisage other circumstances when the necessity will arise."

I must look at the questions before me in that way.

8. To a large extent Mr. Pannick's argument is a restatement of the case advanced on behalf of the Secretary of State in Thomas. The Court of Appeal rejected that argument and held that the sex discrimination involved in section 36(4)(d) and section 37(5) of the Act could not be justified by reference to the assumed working life of a woman as opposed to a man. Reference was made to the possibility of the Secretary of State having to allow a woman between 60 and 65, who qualified for both pension and invalid care allowance, to receive the full benefit of both which would be quite contrary to the purpose of invalid care allowance. It was pointed out by the Court that this problem could be dealt with by overlapping benefit regulations.

9. Like Mr. Drabble I have difficulty in accepting the concept of a deemed end of working life. It seems to me that the concept is one of need. Invalidity benefit is a continuation of sickness benefit and I can see no logical reason why it should be cut-off at different ages for men and women. Mr. Pannick argues that the rate of invalidity benefit after state pension age is of necessity linked to pension entitlement as part of an interlocking system of contributory benefits. I reject that argument. It does not seem to me that there is a sufficient causative link between the discriminatory provision relating to retirement pension and the discriminatory provision provided for in section 15 relating to invalidity benefit. A person under pensionable age does not have to satisfy onerous contribution conditions in order to receive invalidity pension. Such a person will have satisfied the minimum conditions for sickness benefit, but some who have progressed from sickness benefit to invalidity benefit will have received the former benefit despite the fact that they have not satisfied contribution conditions.

10. I have asked myself whether the fixing of pensionable ages, different ages for men and women, require a special rule relating to invalidity pension which would also discriminate. I cannot see that such is a necessary consequence of Parliament having defined the qualifications for entitlement to retirement pension by reference to different age limits for men and women. I see no objective link. I have considered whether there is a need to avoid illogicality, unfairness or absurdity. Mr. Pannick has suggested that to entitle women to continue to receive invalidity benefit after 60, without regard to their pension entitlement, would be grossly unfair and to entitle women to continue to receive invalidity benefit after 60 without regard to their pension entitlement would also be absurd. He contends that the only reason why the claimant receives a lower rate of invalidity benefit after the age of 60 than before is because she has a deficient contribution record for her retirement pension. He further argues that to entitle women to continue to receive invalidity benefit after 60 without regard to their pension entitlement would also be absurd. Consequently, he says, it was necessary to follow the concept of pensionable age rather than designating a uniform age. I do not think it was necessary. The difficulties which Mr. Pannick envisages might arise, if there was a uniform age, could be met by overlapping provisions. I am attracted by Mr. Drabble's argument that in the event of a common cut off age, say 65 years, for invalidity benefit then, where a woman qualified for a retirement pension at an earlier age, the difficulty of the double or excess payment could be dealt with by overlapping provisions. In my view it was not necessary to gear invalidity benefit to retirement age.

1. It is urged by Mr. Pannick that the general principles of construction in relation to the construction of Article 7(1)(a) established in Thomas's case is not to be applied in the instant case because invalidity benefit is a contributory benefit. While I accept that there is a distinction in that Thomas's case concerned non-contributory benefits and the case before me relates to a contributory benefit, it seems to me that that is a distinction without a difference in so far as the principles established by Thomas are concerned. I find therefore that by reason of the provisions of Council Directive EEC/79/7 the claimant's invalidity benefit is not to be reduced and invalidity pension is payable to her at the rate fixed by section 15(3). The correctness or otherwise of my decision may ultimately depend on the answer to the questions referred to the European Court of Justice under Article 177 of the Treaty of Rome by the House of Lords in Thomas.

12. Mr. Drabble has taken a further point. It concerns a question not considered by the adjudication officer. I think it right to determine it under the provisions of section 102 of the Act. He argues that if a man had become incapacitated at the same age as the claimant, he would have been entitled to an invalidity allowance under section 16(1) of the Act. He would have been more than five years away from male pensionable age of 65, whereas a woman, at that age, would not be more than five years away from female pensionable age of 60. I have already found that the claimant had an entitlement to invalidity pension and the question of whether she is entitled to the invalidity allowance again turns on the difference in treatment between men and women. Mr. Drabble's case is that the provisions in section 16(1) and section 16(2)(c), linking the payment of lower rate invalidity allowance to pensionable age, are in contravention of the directive. Mr. Pannick argues that the state is entitled to adopt the approach that those who become incapacitated within five years of the end of their working life should not receive any invalidity allowance as a proportion of their working life if they have contributions too small to be compensated. It does not seem to me that the directive allows the state to discriminate in that way rather than designating a uniform age from which the five years can run. I find therefore that an invalidity allowance is payable to the claimant at the lower rate specified in Schedule 4 from the qualifying date, namely 26 April 1989.

Date: 1 April 1992 (signed) Mr. J. J. Skinner

Commissioner


 


APPENDIX

COUNCIL DIRECTIVE

of 19 December 1978

on the progressive implementation of the principle of equal

treatment for men and women in matters of social security

(79/7/EEC)

THE COUNCIL OF THE EUROPEAN COMMUNITIES HAS ADOPTED THIS DIRECTIVE

Having regard to the Treaty establishing the European Economic Community, and in particular Article 235 thereof,

Having regard to the proposal from the Commission.

Having regard to the opinion of the European Parliament.

Having regard to the opinion of the Economic and Social Committee.

Whereas Article 1(2) of Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions provides that, with a view to ensuring the progressive implementation of the principle of equal treatment in matters of social security, the Council, acting on a proposal from the Commissioner, will adopt provisions defining its substance, its scope and the arrangements for its application; whereas the Treaty does not confer the specific powers required for this purpose;

Whereas the principle of equal treatment in matters of social security should be implemented in the first place in the statutory schemes which provide protection against the risks of sickness, invalidity, old age, accidents at work, occupational diseases and unemployment, and in social assistance in so far as it is intended to supplement or replace the above mentioned schemes.

Whereas the implementation of the principle of equal treatment in matters of social security does not prejudice the provisions relating to the protection of women on the ground of maternity; whereas, in this respect, Member States may adopt specific provisions for women to remove existing instances of unequal treatment.

Article 1

The purpose of this directive is the progressive implementation, in the field of social security and other elements of social protection provided for in Article 3, of the principle of equal treatment for men and women in matters of social security, hereinafter referred to as "the principle of equal treatment".

Article 2

This directive shall apply to the working population - including self-employed persons, workers and self-employed persons whose activity is interrupted by illness, accident or involuntary unemployment and persons seeking employment - and to retired or invalided workers and self-employed persons.

Article 3

1. This directive shall apply to:

(a) statutory schemes which provide protection against the following risks:

— sickness,

— invalidity,

— old age,

— accidents at work and occupational diseases,

— unemployment;

(b) social assistance, in so far as it is intended to supplement or replace the schemes referred to in (a).

2. This directive shall not apply to the provisions concerning survivors' benefits nor to those concerning family benefits, except in the case of family benefits granted by way of increases of benefits due in respect of the risks referred to in paragraph (1)(a).

3. With a view to ensuring implementation of the principle of equal treatment in occupational schemes, the Council, acting on a proposal from the Commission, will adopt provisions defining its substance, its scope and the arrangements for its application.

Article 4

2. The principle of equal treatment means that there shall be no discrimination whatsoever on ground of sex either directly, or indirectly by reference in particular to marital or family status, in particular as concerns:

— the scope of the schemes and the conditions of access thereto,

— the obligation to contribute and the calculation of contributions,

— the calculations of benefits including increases due in respect of a spouse and for dependants and the conditions governing the duration and retention of entitlement to benefits.

3. The principle of equal treatment shall be without prejudice to the provisions relating to the protection of women on the grounds of maternity.

Article 5

Member States shall take the measures necessary to ensure that any laws, regulations and administrative provisions contrary to the principle of equal treatment are abolished.

Article 6

Member States shall introduce into their national legal systems such measures as are necessary to enable all persons who consider themselves wronged by failure to apply the principle of equal treatment to pursue their claims by judicial process, possibly after recourse to other competent authorities.

Article 7

4. This directive shall be without prejudice to the right of Member States to exclude from its scope:

(a) the determination of pensionable age for the purposes of granting old age and retirement pensions and the possible consequences thereof for other benefits;

(b) advantages in respect of old age pensions schemes granted to persons who have brought up children; the acquisition of benefit entitlements following periods of interruption of employment due to the bringing up of children;

(c) the granting of old age or invalidity benefit entitlements by virtue of the derived entitlements of a wife;

(d) the granting of increases of long-term invalidity, old age, accidents at work and occupational disease benefits for a dependent wife;

(e) the consequences of the exercise, before the adoption of this directive, of a right of option not to acquire rights or incur obligations under a statutory scheme.

5. Member States shall periodically examine matters excluded under paragraph 1 in order to ascertain, in the light of social developments in the matter concerned, whether there is justification for maintaining the exclusions concerned.

Article 8

6. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this directive within six years of its notification. They shall immediately inform the Commissioner thereof.
7. Member States shall communicate to the Commission the text of laws, regulations and administrative provisions which they adopt in the field covered by this directive, including measures adopted pursuant to Article 7 (2).

They shall inform the Commission of their reasons for maintaining any existing provisions on the matters referred to in Article 7(1) and of the possibilities for reviewing them at a later date.

Article 9

Within seven years of notification of this directive, Member States shall forward all information necessary to the Commission to enable it to draw up a report on the application of this directive for submission to the Council and to propose such further measures as may be required for the implementation of the principle of equal treatment.

Article 10

This directive is addressed to the Member States.

Done at Brussels, 19 December 1978.

For the Council

The President

H. D. GENSCHER

Social Security Act 1975

Invalidity pension

15.- (1) Subject to the following provisions of this section, where in respect of any period of interruption of employment a person has been entitled to sickness benefit for 168 days (including, in the case of a woman, any day for which she was entitled to a maternity allowance), then-

(a) he shall cease to be entitled to that benefit for any subsequent day of incapacity for work falling within that period; and

(b) he shall be entitled to an invalidity pension for any day of incapacity for work in that period for which, by virtue only of paragraph (a) above, he is not entitled to sickness benefit if on that day either-

(i) he is under pensionable age, or

(ii) being over that age, but not more than five years over it, he satisfies either of the conditions of subsection (2) below;

and any day in the first three days of a period of interruption of employment which was a day of incapacity for work shall be treated for the purposes of this subsection as a day on which he was so entitled.

(2) The conditions of this subsection are that on that day-

(a) the person would be entitled to a Category A retirement pension (section 28) if his entitlement had not been deferred or if he had not made an election under section 30(3) below; or

(b) the person would be entitled to a Category B retirement pension by virtue of the contributions of his deceased spouse, but for any such deferment or election.

(3) Subject to subsection (4) below, an invalidity pension shall be payable at the rate specified in section 14 of the Pensions Act.

(4) In the case of a person entitled to an invalidity pension under subsection (2)(a) or (b) above (being over pensionable age), the pension shall be payable at the weekly rate at which, apart from any increase to be disregarded for the purposes of this subsection, the retirement pension referred to in the applicable paragraph of subsection (2) would have been payable; and the increases to be so disregarded are-

(a) any increase under section 10(2) of or Schedule 1 to the Pensions Act;

(aa) any increase under section 63(1)(d) of the Social Security Act 1986; and

(b) any increase (for dependants) under section 41, 45 and 46; and

(c) if he is also entitled to an invalidity allowance, any increase under section 28(7) or 29(8) of this Act (increase in Category A or B retirement pensions by an amount equal to invalidity allowance).

(5) The amount payable by way of invalidity pension shall for any day of incapacity for work be ¹/₆ th of the appropriate weekly rate.

(6) Regulations may make provision in relation to entitlement to invalidity pension-

(a) corresponding to that made by or under section 50A of this Act in relation to sickness benefit for persons who have attained pensionable age;

(b) restricting entitlement to invalidity pension in cases where in respect of one or more of the 168 days mentioned in subsection (1) above the person claiming invalidity pension (whether or not he has attained pensionable age) would not have been entitled to sickness benefit but for the provisions of section 50A(1) of this Act.

16.- (1) If a person is more than 5 years below pensionable age on the qualifying date in any period of interruption of employment then, subject to the following provisions of this section, in respect of every day of that period in respect of which he is entitled to an invalidity pension, he shall also be entitled to an invalidity allowance at the appropriate weekly rate specified in relation thereto in Schedule 4, Part I, paragraph 3; and "the qualifying date" means the first day in that period (whether before the coming into force of this section or later) which is a day of incapacity for work or such earlier day as may be prescribed.

(2) An invalidity allowance shall be payable-

(a) at the higher rate specified in relation thereto in Schedule 4, Part I, if-

(i) the qualifying date fell before 5th July 1948; or

(ii) on the qualifying date the beneficiary was under the age of 35; or

(iii) on the qualifying date the beneficiary was under the age of 40 and had not attained pensionable age before 6th April 1979;

(b) at the middle rate so specified if paragraph (a) above does not apply and either-

(i) on the qualifying date the beneficiary was under the age of 45; or

(ii) on the qualifying date the beneficiary was under the age of 50 and had not attained pensionable age before 6th April 1979;

(c) at the lower rate so specified if paragraphs (a) and (b) above do not apply, and on the qualifying date the beneficiary was a man under the age of 60 or a woman under the age of 55.

(2A) No payment shall be made by virtue of subsection (2)(a)(iii) or (b)(ii) above in respect of any period before 6th April 1979.

(2B) Where for any period-

(a) the weekly rate of the invalidity pension to which the beneficiary is entitled includes an additional component such as is mentioned in section 6(1)(b) of the Pensions Act; or

(b) the beneficiary is entitled to one or more guaranteed minimum pensions,

for that period the relevant amount shall be deducted from the appropriate weekly rate of invalidity allowance and h-e shall be entitled to invalidity allowance only if there is a balance after the deduction and, if there is such a balance, at a weekly rate equal to it.

(2C) In this section "the relevant amount" means-

(a) in a case where paragraph (a) of subsection (2B) above applies but paragraph (b) does not apply, an amount equal to the additional component;

(b) in a case where paragraph (b) applies but paragraph (a) does not apply, an amount equal to the weekly rate of aggregate weekly rates of the guaranteed minimum pension or pensions; and

(c) in a case where both paragraphs apply, an amount equal to the aggregate of the amounts referred to in paragraphs (a) and (b) above,

reduced by the amount of any reduction in the weekly rate of invalidity pension made by virtue of section 29 of the Pensions Act.

(2D) In this section-

(a) references to an additional component are references to that component after any increase under section 9(3) of the Pensions Act but without any increase under Schedule 1, paragraphs 1 and 2, to that Act; and

(b) references to the weekly rate of a guaranteed minimum pension are references to that rate without any increase under section 35(6) of that Act.

(3) The amount payable by way of invalidity allowance shall for any day of incapacity for work be ¹/₆ of the appropriate weekly rate or, where subsection (2B) above applies, of the weekly rate payable under that subsection.


 


DECISION OF THE EUROPEAN COURT OF JUSTICE

Mr. R. Drabble, Barrister, instructed by Mr. P. Shiner, Solicitor, London, for Mrs. Graham.

Mr. D. Pannick QC and Mr. M. Shaw, Barrister, instructed by Mr. S. L. Hudson of the Treasury Solicitor's Department, agents, for the United Kingdom.

Mr. M. Wolfcarius and Mr. N. Khan, of its Legal Service, agents, for the Commission of the European Communities.

The Opinion of the Advocate General was delivered on 15 June 1995 and is reported at [1995] ECR I-2523.

Judgment

8. By order of 18 January 1994, received at the Court on 17 March 1994, the Court of Appeal (Civil Division) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty a number of questions on the interpretation of Article 7(1)(a) of Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security (OJ 1979 L 6, p. 24, hereafter "Directive 79/7").
9. Those questions were raised in proceedings between Mrs. Graham, Mrs. Connell and Mrs. Nicholas and the Chief Adjudication Officer concerning the limitation applied to the rate of their invalidity pension upon their reaching the age of retirement (hereafter "pensionable age") and, in the case of Mrs. Graham, a refusal to grant her an invalidity allowance.
10. In the United Kingdom, section 33 of the Social Security Contributions and Benefits Act 1992 (hereafter "the 1992 Act") provides, in essence, that where a person has received sickness benefit for a period of 168 days due to incapacity for work, or has received maternity allowance, or has received statutory sick pay throughout the same period whilst satisfying the contribution conditions for sickness benefit, that person is to be entitled to invalidity pension for each subsequent day of incapacity for work if he or she is under pensionable age, set at 65 for men and 60 for women, or is not more than five years over pensionable age and would have been entitled to a retirement pension but for deferral of its payment or election for other benefits.
11. For those under pensionable age, the rate of invalidity pension is the same as that of a full State retirement pension. For those over pensionable age who have opted to defer payment of their retirement pension, invalidity pension is paid at the actual retirement pension rate for the person concerned, calculated according to the number of years of working life for which that person has paid the requisite contributions.
12. Under section 34 of the 1992 Act, invalidity allowance is paid in addition to invalidity pension throughout the period of interruption of employment to a person who was more than five years below pensionable age on the first day of incapacity for work. The lower the age of the claimant at that date, the higher the rate of invalidity allowance.
13. Mrs. Graham, Mrs. Connell and Mrs. Nicholas were all obliged, because of ill health, to cease working before reaching pensionable age. They initially received sickness benefit, and thereafter invalidity pension at the full retirement pension rate. Upon reaching pensionable age, they all opted to continue receiving their invalidity pension rather than a retirement pension, which, unlike an invalidity pension, is taxable. As none of them fulfilled the contribution conditions for the grant of a fun retirement pension, the amount of their invalidity pensions was reduced to the rate of the retirement pension which would have been paid to them but for their election not to receive it. Mrs. Graham, who was aged over 55 when she became incapacitated for work, was in fact refused invalidity allowance on that ground.
14. The Court of Appeal, before which the proceedings were ultimately brought, considered that the legality of the decisions reducing the rate of the invalidity pensions and, in the case of Mrs. Graham, refusing invalidity allowance was dependent on the interpretation of Article 7(1)(a) of Directive 79/7 and on the compatibility with that provision of sections 33 and 34 of the 1992 Act; it consequently decided to stay the proceedings pending a preliminary ruling by the Court of Justice on the following questions:

"Under the relevant provisions of the Social Security Contributions and Benefits Act 1992:

(a) Invalidity pension and invalidity allowance are long-term social security benefits for the disabled.

(b) They are contributory social security benefits paid only to those who have satisfied the relevant contribution conditions.

(c) Invalidity pension is paid to men and women under pensionable age (65 for men and 60 for women) and to men and women not more than five years over that age who have deferred their State pension or elected not to receive it.

(d) For those under pension age, the rate of invalidity pension is the same rate as the basic rate of retirement pension. Entitlement to invalidity pension in most cases follows on from entitlement or deemed entitlement to sickness benefit, a short term benefit However, the contribution conditions for sickness benefit and retirement pension are different.

(e) For those over pensionable age, but not more than five years over pensionable age, who receive invalidity pension, the amount of that benefit is limited to the amount of the State pension which they would have received (by reason of their contributions) but for the deferral or election.

(f) Invalidity allowance is paid only to those who were more than five years below pensionable age (that is under 60 if male, and under 55 if female) on the qualifying date, that is when their period of incapacitation began.

In those circumstances:

(1) What criteria should the national court adopt in order to decide whether the differences in treatment of men and women outlined above are lawful pursuant to Article 7(1)(a) of Directive 79/7/EEC?

(2) In the circumstances of the present case, are the relevant criteria satisfied in the case of:

(a) the difference in the rate of invalidity pension payable to men and women aged between 60 and 65; and

(b) the difference in the qualifying dates for invalidity allowance?"

15. Before those questions are answered, it should be noted that, according to the national court, legislation such as that at issue in the main proceedings is discriminatory inasmuch as, first, the rate of invalidity pension for women is limited to the rate of the retirement pension to which they would have been entitled had they not opted to defer payment of that pension from the age of 60, whereas that is not the position for men until they reach the age of 65, and, second, women are not entitled to invalidity allowance in addition to invalidity pension if their incapacity commenced after they reached the age of 55, whereas, in the case of men, that is the position only if their incapacity commenced after they reached the age of 60.
16. It must also be remembered that Article 7(1)(a) of Directive 79/7 allows Member States to exclude from its scope not only the setting of pensionable age for the purposes of granting old age and retirement pensions but also the possible consequences thereof for other benefits.
17. In those circumstances, the questions referred for a preliminary ruling must be understood as seeking to ascertain whether, in the event that a Member State, pursuant to Article 7(1)(a) of Directive 79/7, has set the pensionable age for women at 60 and that for men at 65, that provision also allows it, first, to provide that the rate of invalidity pension payable to persons becoming incapacitated for work before they reach pensionable age is to be limited to the actual rate of retirement pension from the age of 60 in the case of women and from the age of 65 in the case of men and, second, to reserve entitlement to invalidity allowance, paid in addition to invalidity pension, to those persons who are aged under 55, in the case of women, and under 60, in the case of men, at the time when they first become incapacitated for work.
18. In its judgment in Case C-328/91 Thomas and Others [1993] ECR I-1247, the Court ruled that where, pursuant to Article 7(1)(a) of Directive 79/7, a Member State prescribes different pensionable ages for men and women for the purposes of granting old age and retirement pensions, the scope of the permitted derogation, defined by the words "possible consequences thereof for other benefits", contained in Article 7(1)(a), is limited to the forms of discrimination existing under the other benefit schemes which are necessarily and objectively linked to the difference in pensionable age.
19. That is the position where such forms of discrimination are objectively necessary in order to avoid disturbing the financial equilibrium of the social security system or to ensure coherence between the retirement pension scheme and other benefit schemes (para. 12 of the judgment in Thomas and Others, cited above).
20. As regards the forms of discrimination at issue in the main proceedings, the Court finds that they are objectively linked to the setting of different pensionable ages for women and men, inasmuch as they arise directly from the fact that that age is fixed at 60 for women and 65 for men.
21. As to the question whether the forms of discrimination are also necessarily linked to the difference in pensionable age for men and women, it should be noted, first, that since invalidity benefit is designed to replace income from occupational activity, there is nothing to prevent a Member State from providing for its cessation and replacement by a retirement pension at the time when the recipients would in any case stop working because they have reached pensionable age.
22. Further, to prohibit a Member State which has set different pensionable ages from limiting, in the case of persons becoming incapacitated for work before reaching pensionable age, the rate of invalidity benefit payable to them from that age to the actual rate of the retirement pension to which they are entitled under the retirement pension scheme would mean restricting to that extent the very right which a Member State has under Article 7(1)(a) of Directive 79/7 to set different pensionable ages.
23. Such a prohibition would also undermine the coherence between the retirement pension scheme and the invalidity benefit scheme in at least two respects.
24. First, the Member State in question would be prevented from granting to men who become incapacitated for work before reaching pensionable age invalidity benefits greater than the retirement pensions which would actually have been payable to them if they had continued to work until reaching pensionable age unless it granted to women over pensionable age retirement pensions greater than those actually payable to them.
25. Second, if women did not have their invalidity pension reduced to the level of their retirement pension until they reached the age of 65, as in the case of men, women aged between 60 and 65, thus over pensionable age, would receive an invalidity pension at the rate of a full retirement pension if their incapacity for work commenced before they reached pensionable age and a retirement pension corresponding to the rate actually payable if it did not.
26. Having regard to the foregoing, it must be concluded that the derogation provided for in Article 7(1)(a) of Directive 79/7 also extends to differences between the rates of invalidity pension payable to men and women from the time when they reach pensionable age.
27. Owing to the link between invalidity pension and invalidity allowance, which is paid in addition to invalidity pension and thus only to persons entitled to that pension, that conclusion must also apply with regard to the difference between the qualifying dates for the grant of invalidity allowance.
28. Accordingly, the answer to be given to the questions from the Court of Appeal should be that where, pursuant to Article 7(1)(a) of Directive 79/7, a Member State has set the pensionable age for women at 60 and that for men at 65, that provision also allows it, first, to provide that the rate of invalidity pension payable to persons becoming incapacitated for work before they reach pensionable age is to be limited to the actual rate of retirement pension from the age of 60 in the case of women and from the age of 65 in the case of men and, second, to reserve entitlement to invalidity allowance, paid in addition to invalidity pension, to those persons who are aged under 55, in the case of women, and under 60, in the case of men, at the time when they first become incapacitated for work.

Costs

29. The costs incurred by the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Sixth Chamber),

in answer to the questions referred to it by the Court of Appeal (Civil Division) by order of 18 January 1994, hereby rules:

Where, pursuant to Article 7(1)(a) of Council Directive 79/7/EEC of 19 December 1975 on the progressive implementation of the principle of equal treatment for men and women in matters of social security, a Member State has set the pensionable age for women at 60 and that for men at 65, that provision also allows it, first, to provide that the rate of invalidity pension payable to persons becoming incapacitated for work before they reach pensionable age is to be limited to the actual rate of retirement pension from the age of 60 in the case of women and from the age of 65 in the case of men and, second, to reserve entitlement to invalidity allowance, paid in addition to invalidity pension, to those persons who are aged under 55, in the case of women, and under 60, in the case of men, at the time when they first become incapacitated for work.