UK Social Security and Child Support Commissioners' Decisions

[2004] UKSSCSC CI_1881_2003 (03 June 2004)

CI/1881/2003

DIRECTION OF THE SOCIAL SECURITY COMMISSIONER

1. I stay these proceedings until 3 May 2004.

REASONS

2. The claimant was in receipt of disablement pension, reduced earnings allowance and incapacity benefit before she reached the age of 60 on 27 June 2002. From the relevant paydays after that date, she continued to receive disablement pension but the reduced earnings allowance was replaced by retirement allowance and the incapacity benefit was replaced by retirement pension. The retirement pension was paid at more or less the same rate as the incapacity benefit had been, but the retirement allowance of £11.80 pw was significantly less than the reduced earnings allowance of £45.92 pw. The claimant appealed against the decision that she was no longer entitled to reduced earnings allowance. Her appeal was dismissed by the Lincoln appeal tribunal and she now appeals against the tribunal's decision with the leave of Miss Commissioner Fellner.
3. Paragraph 13 of Schedule 7 to the Social Security Contributions and Benefits Act 1992 provides:

"Subject to the provisions of this Part of this Schedule, a person who –

(a) has attained pensionable age;

(b) gives up regular employment on or after 10^th April 1989; and

(c) was entitled to reduced earnings allowance (by virtue either of one award or of a number of awards) on the day immediately before he gave up such employment,

shall cease to be entitled to reduced earnings allowance as from the day on which he gives up regular employment."

Regulation 2 of the Social Security (Industrial Injuries) (Regular Employment) Regulations 1990, as amended, provides:

"For the purposes of paragraph 13 of Schedule 7 to the Social Security Contributions and Benefits Act 1992, 'regular employment' means gainful employment –

(a) under a contract of service which requires a person to work for an average of 10 hours or more per week in any period of five consecutive weeks, …; or

(b) which a person undertakes for an average of 10 hours or more per week in any period of five consecutive weeks."

Regulation 3 provides:

"Unless he is entitled to reduced earnings allowance for life by virtue of paragraph 12(1) of Schedule 7 to the Social Security Contributions and Benefits Act 1992, a person who has attained pensionable age shall be regarded as having given up regular employment at the start of the first week in which he is not in regular employment after the later of –

(a) the week during which this regulation comes into force; or

(b) the week during which he attains pensionable age."

4. Pensionable age is 60 for a woman (see paragraph 1 of Schedule 4 to the Pensions Act 1995, as applied by section 122(1) of the 1992 Act) and it is not in dispute that the claimant reached that age on 27 June 2002. She was occupied in caring for her husband at that time and subsequently and she has now produced evidence that she would have been entitled to carer's allowance but for the fact that she was receiving incapacity benefit (see regulation 4 of the Social Security (Overlapping Benefits) Regulations 1979). However, she received no payment from him or anyone else in respect of the care she gave. Accordingly, her occupation was not "gainful employment" and so was not "regular employment" within the meaning of regulation 2 of the 1990 Regulations. She was not entitled to reduced earnings allowance for life by virtue of paragraph 12(1) of Schedule 7 to the 1992 Act (which applies only to people over pensionable age on 9 April 1989) and so, by virtue of regulation 3, she was treated as having "given up regular employment" after the week in which she attained pensionable age, even if in fact she had given up gainful employment before then (see Plummer v. Chief Adjudication Officer (reported as R(I) 2/99) in which it was also held that regulation 3 was intra vires). A "week" means a period of seven days ending on a Sunday (see section 122(1) of the 1992 Act). 30 June 2002 was a Sunday and so the claimant was to be treated as having given up regular employment on Monday 1 July 2002. Industrial injuries benefits are payable on Wednesdays in advance (see regulation 22 of, and paragraph 3 of Schedule 6 to, the Social Security (Claims and Payments) Regulations 1987). Accordingly, reduced earnings allowance was payable up to Tuesday 2 July 2002 and retirement allowance was payable from Wednesday 3 July 2002. It is quite usual for decisions as to entitlement to industrial injuries benefits to be expressed as being from a day other than a Wednesday but in fact a decision can really only take effect from a Wednesday, because there is no provision for payment of part-weeks, and I think that that explains the discrepancy in the dates to which the claimant has referred in her submissions. In any event, as a matter of domestic social security law, the Secretary of State's decision that the claimant became entitled to retirement allowance instead of reduced earnings allowance was plainly correct.
5. However, the claimant complains that the legislation is discriminatory. The argument has been put in various ways. In her most recent submission, the claimant says that there is "discrimination in treating people of the same age with a disablement differently, by allowing those that can work at pension age to keep their reduced earnings allowance when they have wages and pensions yet those who have no wages are reduced to retirement allowance when they need reduced earnings [allowance] more as [they] do not have wages". She submits that this discrimination is contrary to Article 14 of the European Convention on Human Rights which is, of course, enshrined in domestic law by virtue of the Human Rights Act 1998.
6. Article 14 provides:

"The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other social status."

The right that the claimant submits is not secured without discrimination is the protection of property set forth in Article 1 of Protocol 1 to the Convention. Article 1 provides:

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

7. Much has been written on the issue whether a social security benefit can be a possession but it seems to me that that is not the exact question that should be asked. When a benefit is paid, the money obviously becomes part of one's possessions. The question that really arises in a case like this is whether, in the particular case being considered, the claimant has a right to future payments of the benefit. The answer must be that there is only a right to future payments to the extent that the scheme under which the benefit is, or might be, awarded allows them. But if the rules of the scheme under which an indefinite award of benefit is terminated or under which an award is refused involve discrimination that is potentially within the scope of Article 14, there may be a breach of that Article. That seems to me to be the import of Gaygusuz v. Austria (1997) 23 EHRR 364, a decision that has recently been considered by the Court of Appeal in Regina (Carson) v. Secretary of State for Work and Pensions [2003] EWCA Civ 797; [2003] 3 All ER 577. Furthermore, it is now clear from the decision of the European Court of Human Rights in Poirrez v. France (No. 40892/98) that the fact that a benefit is contributory is not in itself decisive and that there may be breach of Article 14, read with Article 1 of Protocol 1, where entitlement to an otherwise universal benefit payable to those severely disabled is made subject to a limitation based on social status. However, the fact that a benefit is contributory or non-contributory may be highly relevant when consideration is give to the question whether unequal treatment is justifiable, because those who have contributed on an equal footing may reasonably expect to be entitled to benefit on a similarly equal basis. Were it not for the facts in Poirrez, I might also have suggested that Article 1 of Protocol 1 was engaged in relation to a refusal of an award, as opposed to the termination of an award, only where a claimant could demonstrate a prima facie right to benefit through the payment of contributions, but that distinction now appears to be unimportant because the prima facie right may be established by pointing to legislation making provision for universal benefits.
8. The question that then arises is whether, in the present case, there is discrimination within the scope of Article 14 read with Article 1 of Protocol 1 on the grounds suggested by the claimant. There is undoubtedly unequal treatment but unequal treatment amounts to discrimination under Article 14 only if it cannot be justified. In my view, the unequal treatment of which the claimant complains is plainly justifiable. It is perfectly reasonable to pay a benefit in respect of a reduction of earnings caused by an industrial disease only during the period when the claimant would not have had reduced earnings but for the disease and, as it is impossible to know for certain when a person who is unable to work would have given up work, it is also perfectly reasonable to make provision for presuming such people to have given up work at a certain age. A reduction of income is to be expected on retirement and the claimant was, in effect, deemed to have retired because she had no gainful employment from which she could actually retire.
9. However, there is a far stronger argument that the claimant is discriminated against on grounds of sex. That is because, under paragraph 1 of Schedule 4 to the Pensions Act 1995, as applied to reduced earnings allowance by section 122(1) of the 1992 Act, pensionable age is 65 for a man and only 60 for a woman born before 6 April 1950. Consequently, regulation 3(b) of the 1990 Regulations deems women who are not actually in gainful employment to have retired at an earlier age than men whose circumstances are the same.
10. As that unequal treatment arises by virtue of legislation, it is not rendered unlawful by the Sex Discrimination Act 1975. However, consideration must be given to Directive 79/7/EEC and, again, to Article 14 of the European Convention on Human Rights, read with Article 1 of Protocol 1. As regards the Convention, the unequal treatment on grounds of sex arises from regulation 3 of the 1990 Regulations, rather than from primary legislation, and so I am not prevented by section 3 of the Human Rights Act 1998 from considering the validity of the domestic legislation in the light of the Convention. I will do so after I have considered its validity in the light of the Directive.
11. Directive 79/7/EEC prohibits all discrimination on grounds of sex in relation to benefits within its scope, subject to exceptions allowed by Article 7. Article 7(1)(a) permits Member States to exclude from the scope of the Directive "the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits". In Case C-196/98 Hepple v. Adjudication Officer [2000] E.C.R. I-3701 (also reported as R(I) 2/00), the European Court of Justice held that the discrimination involved in linking the termination of reduced earnings allowance to pensionable age was objectively necessary in order to maintain coherence between the retirement pension scheme and the industrial injuries benefit scheme and therefore fell within the scope of Article 7(1)(a). The Court said:

"30. As regards, second, coherence between the retirement pension scheme and other benefit schemes, it must be considered whether it is objectively necessary for different age conditions based on sex to apply to the benefit at issue in this case.

31. In that respect, the principal aim of the successive legislative amendments mentioned in paragraphs 12 and 13 of this judgment was to discontinue payment of REA – an allowance designed to compensate for an impairment of earning capacity following an accident at work or occupational disease – to persons no longer of working age by imposing conditions based on the statutory retirement age.

32. Thus, as a result of those legislative amendments, there is coherence between REA, which is designed to compensate for a decrease in earnings, and the old-age pension scheme. It follows that maintenance of the rules at issue in the main proceedings is objectively necessary to preserve such coherence.

33. That conclusion is not invalidated by the fact that REA is replaced, when the beneficiary reaches retirement age and stops working, by RA, the rate of which is 25% of REA, since RA is designed to compensate for the reduction in pension entitlement resulting from a decrease in earnings following an accident at work or occupational disease.

34. It follows that discrimination of the kind at issue in the main proceedings is objectively and necessarily linked to the difference between the retirement age for men and that for women, so that it is covered by the derogation for which Article 7(1)(a) of the Directive provides."

12. That decision is binding upon me. It is true that the finding that the discrimination was necessary did not find its way into the final ruling of the Court and that the Advocate General had suggested leaving the question of the necessity of the link to pensionable age to be determined by the national court – i.e., the Commissioner – within whose jurisdiction that issue would normally fall (see Case C-328/91 Secretary of State for Social Security v. Thomas [1993] ECR I-1247; [1993] Q.B. 747 (also reported as R(G) 2/94) at paragraph 13), but I cannot ignore what was said in paragraphs 30 to 34 of the judgement. The Court is entitled to give clear guidance in order to promote consistency in the approaches taken by national courts and it is necessary for national courts to follow that guidance if that consistency is to be achieved. Accordingly, as matters stand, I must conclude that the unequal treatment required by regulation 3 of the 1990 Regulations is not inconsistent with Directive 79/7/EEC.
13. Article 14 of the Convention is expressed in broad terms similar to those of Article 4 of Directive 79/7/EEC but the two provisions have been approached in different ways by the European Court of Human Rights and the European Court of Justice respectively, because the contexts of the provisions are different. Subject to Article 7, Article 4 of the Directive is taken to prohibit all unequal treatment on grounds of sex in respect of those benefits that are within the scope of the Directive by virtue of Article 3 and also to exclude all unjustifiable indirect discrimination. Article 14 of the Convention prohibits all unjustifiable direct discrimination and probably does not prohibit indirect discrimination at all. The present case involves direct discrimination.
14. Matters excluded from the scope of the Directive may give rise to unjustified discrimination in breach of Article 14 of the Convention (see Willis v. United Kingdom (No. 36042/97) in respect of survivors' benefits which are excluded under Article 3(2)). However, it has not been argued that the maintenance of unequal pensionable ages for the purpose of retirement or old-age pensions, which may be excluded from the scope of the Directive by a Member State under Article 7, is not justifiable for the purposes of Article 14 of the Convention for the time being. In the past, it was widely regarded as desirable in many countries in the light of prevailing social conditions and attitudes and, although now an anachronism, it is generally recognised that it is not possible to equalise pensionable ages overnight. If they are to be equalised at the lower age, there are huge financial implications for the pension scheme and, if they are to be equalised at a higher age, there are financial and social implications for those pensioners affected. In either event, it is necessary for there to be time adequately to prepare for the equalisation. Under the Pensions Act 1995, pensionable age in Great Britain will be equalised gradually over the ten years between 2010 and 2020. That is not an unreasonable programme for change.
15. Different considerations apply where benefits other than retirement or old-age pensions are linked to unequal pensionable ages. That is no doubt why, in cases under Directive 79/7/EEC, the European Court of Justice has required Member States to justify such a link when a Member State has relied upon the "possible consequences [of unequal pensionable ages] for other benefits" and has in some cases found the link not to be justified (see, for example, Thomas). Justification is therefore in issue in such cases both under the Directive and under the Convention. The arguments are, in practical terms, the same under both the Directive and the Convention so that, if the link is justified for the purposes of Article 7(1)(a) of the Directive, it must also be justified for the purpose of Article 14 of the Convention. Although a decision of the European Court of Justice in a case arising under Article 7 of the Directive may not strictly be binding on me in a matter arising under Article 14 of the Convention, I take the view that, as a matter of judicial comity, I should follow such a decision when I am considering Article 14, where the decision has been made on what is essentially the same issue. Accordingly, Hepple appears to conclude the case against the claimant under the Convention as well as under the Directive.
16. However, in CIB/4497/02, I have stayed the case because there is a possibility of proceedings being brought the result of which might suggest that the European Court of Justice should be given the opportunity to reconsider the approach taken in Hepple. I doubt whether it would be appropriate for a Commissioner, rather than a higher court, to refer to the European Court of Justice a case on an issue upon which the Court has already expressed a view, save in unusual circumstances, but I will stay this case too until 3 May 2004. I will issue a further direction then.

(Signed) MARK ROWLAND

Commissioner

3 February 2004

DIRECTION OF THE SOCIAL SECURITY COMMISSIONER

17. I extend the stay of these proceedings until the case of Hepple (Application No. 6573/01) is concluded in the European Court of Human Rights. I direct the Secretary of State to make a further written submission within a month of either a declaration of inadmissibility or a decision of the Court being given in that case.

REASONS

18. My view of the current state of the law relevant to this case was set out in my Direction dated 3 February 2004. In essence, I decided when giving my Direction that domestic law was against the claimant and that the decision of the European Court of Justice in Case C-196/98 Hepple v. Adjudication Officer [2000] E.C.R. I-3701 (also reported as R(I) 2/00) concluded the case against the claimant both in relation to Directive 79/7/EEC and, for practical purposes, in relation to the European Convention on Human Rights. I deferred giving a final decision to await developments related to the pending appeal in CIB/4497/02. Since then, I have dismissed the appeal in CIB/4497/02 because no further proceedings were brought by the claimant in that case which might have resulted in the European Court of Justice being invited to reconsider the approach taken in Hepple. However, on 30 March 2004, I further stayed this case because I had been led to believe that Mrs Hepple herself was taking her case to the European Court of Human Rights. I invited further submissions as to whether the present case should be stayed until those proceedings are concluded.
19. The Secretary of State has responded to the effect that cases brought before the European Court of Human Rights by Mrs Hepple and her co-litigants in the proceedings before the European Court of Justice have not yet, as far as his lawyers know, reached even the stage of a declaration of admissibility, despite the case of Mrs Hepple herself and three of the others having been registered over three years ago. The Secretary of State submits that I should not stay the present case when it is still possible that the cases before the European Court of Human Rights will be declared inadmissible and when a decision of the European Court of Human Rights is not binding in the same way as a decision of the superior courts of the United Kingdom or a decision of the European Court of Justice. The claimant, who is unrepresented, has not made any submission.
20. It is true that a decision of the European Court of Human Rights is not binding in the same way as a decision of the superior courts of the United Kingdom – or at least, in relation to this case, the superior courts of England and Wales – or of the European Court of Justice, but I am bound by section 2(1) of the Human Rights Act 1998 to take such a decision into account and, if the decision in Mrs Hepple's case were to be favourable to the claimant in the present case, I might well be inclined to follow it and determine this case in the claimant's favour on the ground that the subordinate legislation in issue was ultra vires because it was incompatible with the Convention. Alternatively, the effect of such a decision of the European Court of Human Rights might well be to remove my inhibitions about inviting the European Court of Justice to reconsider its own decision in Hepple.
21. The arguments for and against a stay are familiar. On the one hand, there is an advantage in there being finality. On the other hand, there is no cost to the parties during the period of a stay and the grant of a stay at this level prevents superior courts from being cluttered up with unnecessary cases. The reality may be that the claimant in the present case, not being represented, would not take this case any further but I do not consider that she should be disadvantaged by the fact that she is not represented. Sections 25 and 26 of the Social Security Act 1998 appear to be based on the presumption that where proceedings are pending in another claimant's case other claimant should be able to take advantage of any decision in that other case without having to take their own case on appeal with inconvenience not only to themselves but also to the Secretary of State and appellate tribunals and courts. "Court" is not defined for the purposes of those sections but I do not see why proceedings before the European Court of Human Rights should be treated differently from proceedings before superior courts in the United Kingdom in a case like the present where primary legislation is not a bar to the decision of the European Court of Human Rights being given direct effect. No notice has been issued under section 26(2) in relation to this case but staying the proceedings will have the same practical effect. The answer to the Secretary of State's point about no declaration of admissibility having been made is that, if Mrs Hepple's case is declared inadmissible, the stay in this case will be lifted that much sooner and the claimant's appeal dismissed, with the declaration being taken into account as an additional reason for the dismissal.
22. Accordingly, my judgment is that the balance of justice favours continuing to stay these proceedings.

(Signed) MARK ROWLAND

Commissioner

3 June 2004