EU Law provides Pension Equality

18 July 2017 by Martin Downs

EU Equality law had its moment in the sun in the week after London Pride with the UK Supreme Court Judgment in the case of Walker v Innospec – albeit that the front page treatment in The Metro was not exactly the same as that in The Telegraph.

Many commentators had feared that the ECJ decision in David Parris v Trinity College Dublin would  be a problem but Professor Rob Wintemute argued in this Blog earlier this year that it could be distinguished – and he was proved right. He also had quite a big walk on role in Supreme Court Judgment (see below).

When Parliament enacted the Marriage (Same Sex Couples) Act 2013, one of the few residual areas of inequality concerned occupational pensions. A good illustration of the problem is provided by the facts of Walker v Innospec, where the Claimant was required to become a member of his firm’s pension scheme whilst he was employed from 1980 to 2003.  Mr Walker had been in a relationship since 1993 and entered a civil partnership in January 2006 – within days of the new law coming into effect. He is now married. Mr Walker was informed however, that if he pre-deceased his husband, the latter would be entitled to a pension of about £1,000 a year – whereas if he had married a woman, his widow would have been entitled to a pension of nearly £50,000 a year. This inequality was permitted by Paragraph 18 of Schedule 9 of the Equality Act 2010. Mr Walker challenged this with the assistance of Liberty. The Employment Tribunal found that he had been the subject of direct or indirect discrimination on the grounds of sexual orientation – EJ Russell finding that she should read the Equality Act so it would be compliant with the EU Framework Directive. However, Mr Walker lost in the EAT and Court of Appeal on the basis that the Framework Directive did not have retrospective effect. The case then moved to the Supreme Court.

In a landmark ruling, the Supreme Court determined that Paragraph 18 of Schedule 9 is incompatible with the Directive and that non-discrimination on grounds of sexual orientation is now a principle of EU law and to deny a survivor’s pension to Mr Walker’s widower is similarly incompatible with the Framework Directive.

The Court noted that the legal status of lesbian and gay employees had been transformed by two measures – one domestic – the other EU wide, namely the introduction of Civil Partnerships in the UK (December 2005) and then the extension of marriage to same sex couples and the introduction of the EU Framework Directive (the deadline for which was December 2003). The effect of Paragraph 18 of Schedule 9 of the Equality Act 2010 was to provide an exception to the strictures of the Equality Act 2010 for rights accrued before the coming into force of the Civil Partnership Act.

This exception was defended on the basis of the ECJ Judgment in Defrenne II and Barber but the Supreme Court considered that these were just examples of a technique used by the CJEU in the most exceptional circumstances where the effect of a past reliance on a different understanding of the law would have an impact that was “catastrophic” but there was no general rule that immediate application of EU legislation at the point of enactment should normally be avoided. On the contrary, rights established by legislation should be activated at the time they were stated to exist.

The EAT and Court of Appeal had equated the time at which a right to a pension accrues with the time at which discrimination in the provision of benefits is to be judged. The UKSC agreed with the critique of this argument by Professor Rob Wintemute in an article in (2014) 43 ILJ 506, 510 when he said:

“The implication of the EAT’s analogy was that, from 1980 to 2003, Mr Walker had been paid the lower ‘gay wage’ (one with no expectation that a survivor’s pension would ever be paid to the employee’s surviving partner despite the employee’s equal contributions to the pension scheme), rather than the higher ‘heterosexual wage’ (one with an expectation that a survivor’s pension might be paid to the employee’s surviving spouse based on the employee’s contributions to the pension scheme).”

The Court found that the point of unequal treatment occurs at the time that the pension falls to be paid and there was no reason for the company to anticipate that it would not become liable to pay a survivor’s pension to his lawful spouse. The date when that pension will come due, provided Mr Walker and his partner remain married and his partner does not predecease Mr Walker, is the time at which denial of a pension would amount to discrimination on the ground of sexual orientation.

Comment

The differing headlines reflected contrasting responses to the Judgment. When shepherding the Marriage (Same Sex Couples) Act 2013 through Parliament, the government had been determined to defend the Pension exemption. One of its concessions was to set up a Review of Survivor Benefits in Occupational Pension Schemes. This was published in June 2014 – but three years later, the government had not responded to it. This is likely to have been on grounds of cost (the figures are complicated by the fact that pensions have a historic legacy of differential treatment between men and women before 1990). The fact that the UK made observations to the ECJ in David Parris v. Trinity College Dublin is revealing of its true view.

There is also a Brexit angle in that this is a stark illustration of the fact that – yet again – it has proved necessary to resort to EU law to ensure that the Equality principle is given full force. The European Union (Withdrawal) Bill has been discussed by David Hart on this Blog already. If it truly reflects EU law, the UK will have a domestic Super Law in the form of a transposed Framework Directive capable of striking down parts of statutes at the time we have left the EU. It will be interesting to see how long this survives.

Professor Rob Wintemute

The Judgment came 20 years after the publication of Professor Wintemute’s article, Recognising New Kinds of Direct Sex Discrimination: Transsexualism, Sexual Orientation and Dress Codes [1997] 60 Modern Law Review 334 – 359 which was so influential in cases like Smith v Gardner Merchant Ltd [1998] EWCA Civ 1207. This was all in the aftermath of the decision of the ECJ decision in Lisa Grant -v- South-West Trains Ltd [Case C-249/96].

Nice to see then twenty years later, the Supreme Court giving such prominence to a more recent Professor Wintemute Article, ‘Does EU Law Permit Unequal Survivor’s Pensions for Same-Sex Couples?’ (2014) 43 ILJ 506. Close observers will be struck by the fact that other parts of the Supreme Court’s analysis bear a striking resemblance to Professor Wintemute’s subsequent case note on the Court of Appeal Judgment: “Unequal Same-Sex Survivor’s Pensions: The EWCA Refuses to Apply CJEU Precedents or Refer” Industrial Law Journal, Vol. 45, No. 1, March 2016. It all goes to show there is no limit to the reach of any legal case note.