Appeals against decisions of the Employment Appeal Tribunal (EAT) concerning entitlement to pension benefits following changes to discrimination law affecting part-time workers and civil partners have been dismissed. We consider the implications.
The Court of Appeal has dismissed appeals against decisions of the EAT in Ministry of Justice v O'Brien and Walker v Innospec Limited concerning entitlement to pension benefits following changes to discrimination law affecting part-time workers and civil partners. The appeals were heard jointly, as they turned on the same principles of EU law.
The Court of Appeal held that occupational pension schemes do not have to provide same-sex civil partners with the same pension benefits as opposite sex married partners for all of their pensionable service. Further, when there is a subsequent change in legislation, it is not possible to claim pension benefits retrospectively.
Walker v Innospec Limited
The Court of Appeal unanimously rejected Mr Walker's appeal. It was held that Mr Walker's entitlement must be judged by reference to the EU law in force at the time of his service. The Court of Appeal relied on two principles of EU law, namely:
- The "no retroactivity" principle
- The "future effects" principle
Under the "no retroactivity" principle, EU legislation does not have retroactive effect apart from in exceptional circumstances, such as when retroactive effect was expressly intended. This principle of “no retroactivity” meant that conduct that was lawful whilst Mr Walker was in service cannot retroactively become unlawful (i.e. only allowing opposite sex partners to receive full pension benefits).
Under the "future effects" principle, it was held that the EAT was correct to conclude that because pension rights attributable to a period of service are acquired definitively during that term, a member's entitlement to any accrued benefits is permanently fixed on expiry of that term. It was decided that when Mr Walker retired on 31 March 2003, he ceased to accrue further pension rights as his entitlement to a pension was definitively established as at the date of his retirement.
As a result, the spouse's pension payable to a surviving civil partner can be restricted so that it reflects the period of the deceased member's pensionable service since 5 December 2005, the date on which the Civil Partnership Act 2004 came into force.
There are additional periods of entitlement for contracted out rights so long as the Scheme has been properly amended to allow for this, as legislation extending this to Civil Partners was not overriding.
Ministry of Justice v O'Brien
The Court of Appeal unanimously rejected Mr O'Brien's appeal. Lewison LJ quoted, in respect of pension benefits, van Gerven A-G in Ten Oever v Stichting Bedrijfspensioenfonds Voor Het Glazenwassers-en Schoonmaakbedrijf  ICR 74 ("Ten Oever") that the principle of legal certainty requires:
"... that the extent of those rights falls to be determined on the basis of the Community rule which applied at the time of the period of service on the basis of which those rights were acquired...(Emphasis added)"
In relation to Mr O'Brien, the Court held that his pension rights were determined by reference to the EU law which applied at the time of the period of service in respect of when those rights were acquired. On 7 April, 2000, the UK was required to transpose the Part-Time Workers Directive into national law. At the time of Mr O'Brien's service as a part-time worker (which was prior to 7 April 2000), he had not acquired any pension rights and could not do so retroactively.
In relation to Mr Walker’s appeal, the government has yet to make a decision on whether the law should be changed and no time-frame has been specified. It is likely that the government was waiting for the outcome of this appeal before coming to a conclusion on the issue. In the interim, this decision will no doubt come as a relief to those occupational pension schemes which take advantage of the ability to restrict survivors’ benefits for same sex couples. Please note however that some schemes have already decided not to make any distinction between same sex and opposite sex couples.
In relation to the decision in Ministry of Justice v O'Brien, thegeneral EU legal principles outlined above will apply to all part-time workers seeking to claim pension rights in relation to part-time service prior to 7 April 2000, who will be unable to do so retroactively. The effect of this decision is that part-time judges are only entitled to a pension calculated by reference to pensionable service from 7 April 2000.
For more information or if you have any questions, please contact our pensions specialists.This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.