Slack & Ors v Cumbria County Council & Anor [2009] EWCA Civ 293

[2009] EWCA Civ 293Case No A2/2007/2863
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE ELIAS
UKEAT/1048/06/MAA
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 03/04/2009
Before
LORD JUSTICE MUMMERYLADY JUSTICE SMITHLORD JUSTICE GOLDRING
Between
JOYCE SLACK & ORSAppellantsCUMBRIA COUNTY COUNCILRespondentEQUALITY AND HUMAN RIGHTS COMMISSIONIntervener
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
MS JANE McNEILL QC and MS BETSAN CRIDDLE (instructed by UNISON Employment Rights Unit and Thompsons Solicitors) for AppellantsMR CHRISTOPHER JEANS QC and MS AMY ROGERS (instructed by Cumbria County Council Legal Services Unit) for RespondentMS KARON MONAGHAN QC (instructed by Sophie Buckley Principal Legal Officer) for Equality & Human Rights Commission interveningHearing Hearing dates: 14 th, 15 th and 16 th October 2008
Judgment
[1]These appeals are about the six months’ time limit for instituting equal pay proceedings in the employment tribunal (ET). The question is: when does the six months begin to run against the claimant? The ordinary litigant in an equal pay case could be forgiven for thinking that there is an easy answer to this straightforward question. Both sides in this case agree that there is an easy answer; but they disagree about what it is.[2]The general rule originally laid down by section 2(4) of the Equal Pay Act 1970 (the 1970 Act) was that no equal pay claim could be referred to the ET if the claimant has not been employed in the employment within the preceding six months. In other words, time began to run when the claimant ceased to be “employed in the employment.”[3]The time limit provision in section 2(4) was amended with effect from 19 July 2003. A new section 2ZA introduced the notion of a “qualifying date.” The ET proceedings must be instituted on or before the qualifying date; otherwise the ET can make no determination of the claim. In “the standard case”, which is all that need detain us at this point, the qualifying date is “the date falling six months after the last day on which the woman was employed in the employment.”[4]In many cases the time limit for instituting proceedings is not a problem. Take the case of the employee who has only ever worked for the employer under a single contract of employment. If that contract is subsisting at the date of the presentation of the claim, the limitation period has not been triggered by the ending of the employment. No “last day” in the employment has occurred. Time has not begun to run.[5]If that single contract has been terminated and the employment has come to an end, there is usually no difficulty in identifying the last day of the employment and the date by which the equal pay proceedings must be instituted.[6]Difficulties arise if there has been a succession of employment contracts between the same parties. An equal pay claim is brought in respect of the alleged contravention of the equality clause relating to the claimant’s employment. The equality clause is in the contract either because the parties expressly agreed upon it when making the contract, or because it was deemed to be included pursuant to the 1970 Act. Each separate successive contract of employment contains an equality clause, breach of which gives rise to a claim for equal pay. If there has been more than one contract, can the claimant wait until six months after the last contract has ended or does she have to bring proceedings in respect of each contract within six months of the termination of that individual contract?[7]The answer to this question may well affect the amount that a claimant can recover if successful. Under section 2(5) of the Act, as amended by section 2ZB, in a standard case, the woman will be entitled to recover arrears of pay going back for six years from the date on which proceedings are begun. But she can only do that in respect of the ‘employment’ in respect of which she has brought her successful equal pay claim.[8]In the present cases, another question arises which is one of contract law rather than of statutory employment protection. What is the legal effect of an agreed variation to the terms and conditions of employment on the contract itself? Does the existing contract remain in being on terms as varied? Or is the current contract brought to an end by express or implied agreement and is a new contract made in its place? What are the criteria for determining when a new contract has been formed in substitution for an existing contract?[9]Before any of these questions can be sensibly discussed or answered, the litigation scene must be set with accounts of the facts in the claimants’ cases, the tribunal proceedings and the legislation.

The litigation

[10]From 2002 onwards, a very large number of female employees of Cumbria County Council (the Council) lodged equal pay claims at the employment tribunal (ET). All the claimants either had worked or were still working under contracts of employment which included an equality clause. The terms of many of these contracts of employment had been altered (to use a neutral term) at some stage during the claimant’s overall period of employment. In those cases, the Council wanted to contend that at the time of the alteration, the existing contract of employment had been terminated and a new contract had been substituted. If that argument were to be successful, the Council would be able to limit the arrears payable to successful claimants to the period covered by the final contract of employment. In some cases, where the claimant was no longer working for it, the Council wanted to argue that the claims were simply time barred. It is estimated that these issues arose in about 1500 claims.[11]Accordingly, a group of 10 claims was selected as sample cases for the determination of these issues. On 21 December 2005, the ET gave judgment. It dismissed one claim simply because it was time barred. The remaining claims concerned alterations in the working arrangements. The ET found in favour of most of those claimants, including Mrs Joyce Slack and Mrs Rosalyn Elliott, two of the appellants before us. The ET found against Mrs Karen Athersmith, the third appellant in this court. In 2007, the Council appealed successfully to the EAT in the cases of Mrs Slack and Mrs Elliott. Mrs Athersmith’s appeal to the EAT failed. All three appeal to this court.

The three appellants

[12]To avoid confusion, we will continue to refer to the three appellants as claimants. Mrs Joyce Slack has been continuously employed by the Council as a cook at Edenside Residential Home since 25 January 1971. In 2000, she wanted to reduce her hours of work. There followed an agreement to vary her contractual hours from 37 to 30 hours, on 4 rather than 5 days, per normal working week with effect from 1 April 2000. In other respects her job remained the same. So did the terms and conditions of employment. She was supplied with a letter headed “Contract of Employment - Incorporating Statement of Written Particulars” and at the end of it there was this statement:
“This Contract of Employment supersedes any previous Contract of Employment. Please signify your acceptance of this appointment on the above terms and conditions by signing one copy of this Contract and returning it to me.”
Mrs Slack signed the copy contract dated 29 February 2000 and returned it to the Council, as requested.[13]Mrs Rosalyn Elliott has been continuously employed by the Council as a day care assistant at the Edington Centre since 1 October 1996. In 2000, she wished to reduce her hours of work and the Council agreed that they should be changed from 28 to 21 hours, on 3 days rather than 4 days per week with effect from 12 June 2000. She signed a document in similar form to the one signed by Mrs Slack.[14]Mrs Karen Athersmith was employed by the Council as relief home carer from 1 November 2000. From 1st April 2001, she accepted appointment as a permanent home carer. This resulted in a change of status and she became entitled to occupational sick pay. Otherwise her terms of employment were unchanged. She signed a contract document similar to Mrs Slack’s on 15 May 2001.[15]None of the three claimants had applied for a new appointment or position calling for a new contract. In no case was there any gap or break in the continuity of their work for the Council.[16]The claimants presented their claims in 2003. The Council took the preliminary point that the changes in their working arrangements amounted to termination of their old contracts and commencement of a new contract. Accordingly, the only ‘employment’ in respect of which the ET had jurisdiction was under the final contract. In the cases of Mrs Slack and Mrs Elliott, the ET rejected that argument and held that, notwithstanding the express provisions in the contractual documents the claimants had signed, there had been only one employment. In Mrs Athersmith’s case, the ET held that a new contract had been formed when she became a permanent employee. That was not because of the express term but because the nature of the change from relief to permanent was more fundamental. The EAT held that the express terms in the contract were determinative; the documents said that they created new contracts which superseded the old and that is what the parties must be taken to have intended.

The appeal to this court

[17]Initially, the appeal to this court was to comprise mainly a rerun of the arguments which had been advanced before the ET and the EAT. The claimants were still contending that the alterations to their terms and conditions had been mere variations of their contracts of employment and that each of them had only ever had one employment with the Council. The express terms in the contracts were (as the ET had held) only one factor to be taken into account when deciding whether the old contract had been varied or had been terminated and replaced with a new contract. We will call this the ‘New Contract Point’.[18]The grounds of appeal also included a point, which the Council opposed as a new ground, namely that, if there was a new contract, this was a case of successive contracts without a break between them and that there was “an overriding contract” governing the employment relationship. That contract would not come to an end until the employment relationship between the parties ceased; alternatively, time would not start to run until termination of the last contract in a series of contracts.[19]The claimants sought permission to pursue this point (the Overriding Contract Point) and another ground based on the decision of the House of Lords in Powerhouse Retail Ltd v. Burroughs [2006] ICR 606 (the Powerhouse Point). The judgments in that case, reported as Preston & Ors v. Wolverhampton Healthcare NHS Trust & Ors (No 3), were handed down on 8 March 2006, some four months after the closing submissions at ET hearing in these cases. They were not cited to the EAT. It was common ground in the ET and the EAT that “employment” in section 2(4) of the 1970 Act referred to the contract of employment. The appellants now wished to argue that “employment” means “employment to which the claim relates”, as explained in Powerhouse.

The intervention of the Equality and Human Rights Commission

[20]By the time these appeals came on for hearing, however, they had taken on a more complicated form. They have been transformed by the intervention of the Equality and Human Rights Commission (the Commission). The Commission, which took no part in the hearings below, has introduced a range of fresh legal arguments, principally on the interpretation and application of the 2003 amendments to the 1970 Act and on questions of EC Law.[21]The Commission is a statutory body established by section 1 of the Equality Act 2006. In exercising its relevant powers, it is under a duty to enforce and monitor the effectiveness of the equality enactments, including the 1970 Act, and to work towards the elimination of unlawful discrimination. It has power to intervene in litigation where “it appears to the Commission that the proceedings are relevant to a matter in connection with which the Commission has a function”: section 30.[22]The Commission determined that it should apply to intervene in these appeals for a variety of reasons. The appeals raise important issues affecting the rights of many women with equal pay claims; the court is likely to be assisted by arguments from the Commission on complex points of law raised by the appeal, including the impact of the various interpretations of the statutory provisions on the effectiveness of the 1970 Act and its compliance with EC law; and to raise arguments that have not yet been made concerning the impact of EC law on the proper interpretation of the 1970 Act and its compatibility with EC law.[23]In particular, the Commission wished to develop two points, which we will call “the Final Contract Point” and “the Stable Employment Point.”[24]The Final Contract Point is that, in order to comply with EC law on equal pay, the 1970 Act must be construed so as to ensure that, in cases where there has been a termination of a contract of employment and continuation of the employment under another contract of employment with the same employer for substantially the same work, the time limit is not triggered until the expiry of the final contract in the succession of contracts.[25]The Stable Employment Point is that, in order to comply with EC law on equal pay, cases in which there has been a termination of a contract of employment and continuation of employment under another contract of employment for substantially the same work, should be regarded as “stable employment” cases, as interpreted by the Court of Justice and within the meaning of the amendments made by section 2ZA and 2ZB of the 1970 Act. The importance of the point is that, if it is available, the time limit is not triggered until expiry of the stable employment.[26]The Commission also wished to contend that the decision of the EAT undermined the directly effective EC right to equal pay, as guaranteed by Article 141 of the Treaty, that it is incompatible with EC law and that it imposed a procedural rule which breached EC principles of effectiveness and equivalence and the requirements of clarity and certainty.

Raising new grounds

[27]The points raised by the Commission had not been argued before the ET or the EAT by the claimants or by the Council. The claimants gratefully received, agreed with and adopted the Commission’s arguments. The Council understandably opposed the introduction of new points into the grounds originally advanced on the appeals to this court.[28]The Council’s opposition to any fresh grounds of appeal meant that it was necessary for the court to hear a considerable amount of argument on them from the claimants, the Commission and the Council in order to decide whether the permission that was needed should be given.[29]In ordinary circumstances this court is reluctant to hear extended argument on a new ground or to grant permission to allow the appeal to be argued on a different basis, particularly where the relevant facts have not been investigated in the ET. In the interests of doing substantive justice to both parties, of saving legal costs and of achieving efficiency and finality in litigation in the public interest, the court will only exercise its discretion in exceptional circumstances to grant permission for new grounds of appeal to be added at a late stage, in these cases for the first time on a second appeal : Kumchyk v. Derby City Council [1978] ICR 1116 at 1123 (EAT); Jones v. Governing Body of Burdett Coutts School [1999] ICR 38 at 46-47(CA); Jones v. MBNA International Bank (Court of Appeal-30 July 2000) per May LJ at paragraph 52; and Leicestershire CC v. Unison [2006] IRLR 810 (permission to raise EC point on appeal refused).[30]The circumstances of this litigation cannot be described as ordinary or normal. The tribunals are bursting at the seams with thousands of equal pay cases. They have never been so congested. Some of the cases visiting this court bristle with difficult legal points of general application. Although these cases have not been formally described or set up as test cases or class actions for rulings which would be binding on all parties, it is agreed that these claimants were selected from a large number of employees as samples of the claims brought against the Council. They were chosen to obtain rulings of general application on the question whether, as to particular periods, the claims were brought in time or were out of time. The rulings will help to determine the outcome of many similar claims against many other local and public authorities at the receiving end of equal pay claims. We can confidently predict that, if the fresh grounds are not decided in these appeals, it will be necessary to decide them in other cases and on other appeals.[31]Moreover, the Council has had more than adequate notice of the fresh grounds in time to prepare a full legal response to the legal arguments. The Commission submitted a 38 page skeleton argument on 31 March 2008. Of course, permission should not be given if the points have no real prospect of success, or if raising them at a late stage would prejudice the Council in the conduct of its defence to the claims, such as where it might not be possible to decide the fresh ground on appeal which requires investigation and findings on disputed facts, which have not been made by the ET, because the point was not before it.[32]When dealing with the individual additional grounds we will bear the relevant discretionary considerations in mind and we will give reasons at an appropriate point in the judgment for either refusing permission to amend the notice of appeal or for granting permission and then deciding the point.

Equal pay legislation and case law: domestic and EC

[33]The time limits applicable to instituting equal pay proceedings in the ET must be construed in the context of the statutory scheme conferring the right to equal pay. The context includes the fact that the 1970 Act is itself the domestic legislation giving effect to the EC principle of non-discrimination on the ground of sex in relation to pay pursuant to Article 141 of the EC Treaty, the Equal Pay Directive 75/117/EEC and the Equal Treatment Directive 76/207/ EEC. It is the duty of Member States to see that effective means are available to ensure that the paramount principle of equal pay for male and female workers for equal work or work of equal value is applied without discrimination based on sex. It is the duty of the national court to give full effect to the provisions of EC law by construing the domestic law, if it is possible to do so, so as to be compatible with the EC law to which it gives effect. If that is not possible, it is its duty not to apply the conflicting provisions in domestic legislation.[34]In the absence of EC rules governing the matter, it is for the domestic legal system of each Member State to lay down the detailed procedural rules for safeguarding rights derived by individuals from EC law. The rules, which include time limits, must not, however, be less favourable than those governing similar domestic actions (the principle of equivalence) and must not render the exercise of the right conferred by EC law virtually impossible or excessively difficult (the principle of effectiveness): Levez v. TH Jennings Ltd [1999] ICR 521 at 541 (ECJ) (paragraph 18) and page 545 (paragraphs 41 to 49).[35]Under section 1(1) of the 1970 Act the terms of a contract under which a woman is employed at an establishment in Great Britain are deemed to include an equality clause, if they do not already include one. The equality clause relates to the terms of the contract under which the woman is “employed” on like work, on work rated as equivalent or on work of equal value to that of a man in the “same employment.”[36]In section 1(6) “employed” is defined as meaning- “…employed under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly.”[37]The spotlight shines on the work of the woman, on the pay for the work and on its equivalence in terms of the same work, or its rated equivalent, or its value, with the work of a man. Equal pay is about reward for work regardless of the gender of the worker i.e. without discrimination on the ground of sex.[38]There is also the legal framework. The 1970 Act is a statutory structure built on the common law foundation of contract, in particular, as in these cases, a “contract of service.” Putting apprenticeship contracts and personal contracts on one side, the woman must be employed under a contract of service to do the work for which she is entitled to equal pay. A contract of service is a necessary condition for the operation of the equal pay legislation. The facts of work and pay are not in themselves sufficient conditions for that purpose. Although the contract of service is a creature of the common law, it is central to the equal pay legislation into which it is imported without further definition. A contract of service consists of agreed terms and conditions governing a relationship continuing over a period of time, during which it may be subject to agreed changes or variations. It may be classified as relational rather than a transactional agreement.[39]The 1970 Act also uses the legal mechanism of modifying or including an equal pay or equality clause in the contract of service. That is the legal peg on which the claimant must hang a claim of contravention of the equal pay obligation by the employer.[40]Thus section 2(1) refers to any claim in respect of a term modified or included by virtue of an equality clause and provides that it may be presented by way of complaint to the ET. It may include a claim for arrears of remuneration or back pay under the contract. There was originally a two year limit in section 2(5) barring recovery of arrears in respect of a time earlier than two years before the date on which the proceedings were instituted. That was amended with effect from 19 July 2003 to an “arrears date” which, in the standard case, is six years before the date on which the proceedings were instituted. There are special provisions identifying the “arrears date” in cases of disability and concealment.[41]The original time limit for referring a claim under the 1970 Act to the ET before 19 July 2003 was governed by section 2(4)- “No claim in respect of the operation of an equality clause relating to a woman’s employment shall be referred to an [employment tribunal] ..if she has not been employed in the employment within the six months preceding the date of the reference.”[42]With effect from the 19 July 2003 and following the rulings on EC law by the Court of Justice in Preston [2000] ICR 961 extensive amendments were made to section 2 (4) by the Equal Pay Act 1970 (Amendment) Regulations 2003 (the 2003 Regulations). They were made by the Secretary of State being a Minister designated for the purposes of section 2(2) of the European Communities Act 1972. The notes to the 2003 Regulations explained that they were amending the time limits within which a person must institute proceedings in respect of a breach of the 1970 Act. The notes stated that the changes were necessary to reflect requirements of EC Law, specifically Article 141 of the Treaty, as applied in a number of recent cases before the Court of Justice and domestic courts. Specific reference was made to the Preston and Levez litigation(see above).[43]Section 2(2) of the 1972 Act, the scope of which was considered by the Court of Appeal in Oakley Inc v. Animal Ltd [2006] Ch 337, confers power on the designated Minister by regulations to make provision “(a) for the purpose of implementing any Community obligation of the United Kingdom, or enabling any such obligation to be implemented, or of enabling any rights to be enjoyed by the United Kingdom under or by virtue of the Treaties to be exercised; or (b) for the purpose of dealing with matters arising out of or related to any such obligation or rights…”[44]The amended provisions in section 2 read:
“(4) No determination may be made by an employment tribunal in the following proceedings: (a) on a complaint under subsection (1) above [i.e. in respect of the contravention of a term modified or included by an equality clause] (b) …. (c) ….. …unless the proceedings are instituted on or before the qualifying date (determined in accordance with section 2ZA below).” (a) on a complaint under subsection (1) above [i.e. in respect of the contravention of a term modified or included by an equality clause] (b) …. (c) ….. …unless the proceedings are instituted on or before the qualifying date (determined in accordance with section 2ZA below).”
[45]Section 2ZA applies for the purpose of determining the qualifying date, in relation to proceedings in respect of a woman’s employment, for the purposes of section 2(4). The relevant “qualifying date” for the “standard case” is according to section 2ZA(3) – “…the date falling six months after the last day on which the woman was employed in the employment.”[46]In the ET and the EAT the cases were all argued as “standard cases” and on the basis that the general rule in section 2(4) applied unaltered after 19 July 2003. It was also common ground that the contracts were not sham and that the cases did not fall within the “stable employment” exception to the general rule in section 2ZA(2). However, the Commission, with support from the claimants, contends that the exception from the standard case made for stable employment does apply to the claimants and seeks to introduce it as a fresh ground of appeal.[47]In section 2ZA(2) “a stable employment case” is defined as meaning- “a case where the proceedings relate to a period during which a stable employment relationship subsists between the woman and the employer, notwithstanding that the period includes any time after the ending of a contract of employment when no further contract of employment is in force.”[48]In a stable employment case the qualifying date is defined in section 2ZA(4) as- “ …the date falling six months after the day on which the stable employment relationship ended.”[49]The amendments were preceded by the decisions of the House of Lords and the Court of Justice in the Preston litigation. Citations to this court have been made generally providing the context of the amendments to section 2 of the 1970 Act and specifically supporting submissions on the application of time limits to cases where there is a succession of contracts between the woman and her employer.[50]Preston v. Wolverhampton Healthcare NHS Trust wasa case of a succession of contracts of part time workers (teachers and lecturers), but with breaks in between for vacations or courses. In his opinion in Preston (No 1) Lord Slynn at [1998] ICR 227 at 237G-H noted that there was no provision in the 1970 Act that different contracts of employment were to be treated as continuous employment. He continued- “…section 2(4) as amended, refers to a claim in respect of the operation of ‘an equality clause relating to a woman’s employment.’ That equality clause is a clause in a contract of employment which as we see it can only be the specific contract in respect of which the claim is made and which for the purposes of the industrial tribunal’s jurisdiction must cover employment which has ended within six months of his claim before the industrial tribunal. The ‘woman’s employment’ in line 2 is referable to ‘the employment within [the] six months’ period in lines 4 and 5 of the subsection; the latter refers back to employment under a contract which contained, or which by statute had read into it, an equality clause. Where there are breaks between separate contracts, at any rate where there is no umbrella contract under which periodically and regularly work must be given and accepted, the time to bring a claim expires six months from the end of each contract. That conclusion, contrary to the applicants’ contention, does not involve putting a gloss on or reading words into section 2(4). It is the natural meaning of the words in their context. Where there is a continuing succession of contracts without break, in principle the position should be the same but we would not rule out the possibility that on particular facts the existence of a succession of such contracts might lead to the conclusion that there was an overriding contract in respect of which a claim might be made when all employment came to an end. On the statement of facts agreed by counsel in the first case that question does not arise on this appeal.”[51]An equal pay claim could thus only be made in respect of specific contracts and could be time barred even though the employment relationship continued in existence under another contract. The House of Lords made a reference to the Court of Justice. The questions included the following- “3. In circumstances where:(a) an employee has served under a number of separate contracts of employment for the same employer covering defined periods of time and with intervals between the periods covered by the contracts of employment;(b) after the completion of any contract, there is no obligation on either party to enter into further such contracts; and(c) she initiates a claim within six months of the completion of a later contract or contracts: is a national procedural rule which has the effect of requiring a claim for membership of an occupational pension scheme from which the right to pension benefits flows to be brought within six months of the end of any contract or contracts of employment to which the claim relates and which, therefore, prevents service under an earlier contract or contracts from being treated as pensionable service compatible with: (1) the right to equal pay for equal work in article 119 of the EC Treaty; and (2) the principle of Community law that national procedural rules for breach of Community law must not make it excessively difficult or impossible in practice for the claimant to exercise her rights under article 119.”[52]Article 119 is now article 141 and pension benefits fall within the concept of “pay” in that article.[53]The stable employment concept emerged first from the judgment of the Court of

Justice and its answer to question 3 as follows at [2000] ICR 961 at 1002C-D:

“6. Community law precludes a procedural rule which has the effect of requiring a claim for membership of an occupational pension scheme (from which the right to pension benefits flows) to be brought within six months of the end of each contract of employment to which the claim relates where there has been a stable employment relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme applies.”
[54]In its judgment the Court of

Justice referred to the order for reference and the written submissions and continued:

“67. ….the court has held that the setting of reasonable limitation periods is compatible with Community law inasmuch as the fundamental principle of legal certainty is therefore applied. Such limitation periods cannot therefore be regarded as capable of rendering virtually impossible or excessively difficult the exercise of rights conferred by Community law. 68. Whilst it is true that legal certainty also requires that it be possible to fix precisely the starting point of a limitation period, the fact nevertheless remains that, in the case of successive short term contracts of the kind referred to in the third question, setting the starting point of the limitation period at the end of each contract renders the exercise of the right conferred by article 119 of the EC Treaty excessively difficult. 69. Where, however, there is a stable relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme applies, it is possible to fix a precise starting point for the limitation period. 70. There is no reason why that starting point should not be fixed as the date on which the sequence of such contracts has been interrupted through the absence of one or more of the features that characterise a stable employment relationship of that kind, either because the periodicity of such contracts has been broken or because the new contract does not relate to the same employment as that to which the same pension scheme applies. 71. A requirement, in such circumstances, that a claim concerning membership of an occupational pension scheme be submitted within the six months following the end of each contract of employment to which the claim relates cannot therefore be justified on grounds of legal certainty.”
[55]The House of Lords then held a further hearing of the appeal in the light of the rulings of the Court of Justice. In Preston (No 2) [2001] 2 AC 455 at 474 A Lord Slynn said in relation to the stable employment relationship point- “33. Accordingly, it is clear that where there are intermittent contracts of service without a stable employment relationship, the period of six months runs from the end of each contract of service, but where such contracts are concluded at regular intervals in respect of the same employment regularly in a stable employment relationship, the period runs from the end of the last contract forming part of that relationship.”[56]As Lord Slynn explained in the previous paragraph the employees in that litigation were variously employed: some under consecutive but separate contracts with breaks in between; some were regularly employed over a long period on that basis; others were not regularly employed but were employed from time to time; and in that category some had an “umbrella” contract carrying with it an ongoing contractual relationship in contrast to the cases of separate contracts of employment. In the present cases the Council rely strongly on the fact that none of the employees in Preston was employed under a succession of separate contracts of employment without breaks in between.[57]We turn to the separate points taken by the claimants on their appeals and by the Commission on its intervention.

New Contract Point and Final Contract Point

[58]These two points can be conveniently taken together.[59]In its judgment sent to the parties on 21 December 2005, the ET held (paragraph 3.4) that the cases of Mrs Slack and Mrs Elliott, judged objectively and without reference to the subjective intentions and beliefs of the parties, were instances of the consensual variation of a continuing contract of employment rather than a new contract of employment. Their equal pay claims were not out of time in respect of the period before the agreed changes in hours of work took effect.[60]The ET regarded the issuing of a new contractual documentation as no more than one of the factors to be considered in the overall assessment whether there was a new contract. It was not conclusive. The ET considered that it was “entirely unrealistic” to treat the time limit as triggered at the date of the issue of the new contractual documentation. The Council appealed.[61]In the case of Mrs Athersmith, the ET held that her claim was out of time: paragraph 8(a). She signed a contractual document accepting a permanent carer appointment instead of being a relief carer. The change was not a mere variation but was fundamental. It did not significantly affect her hours of work but did affect her sick pay entitlement. The written terms of the relief contract as to working hours were substantially the same as in the permanent contract, but the terms as to sick pay and holiday pay were significantly different. The ET did not consider whether there was “a stable employment relationship” between her and the Council as it was not argued that there was such a relationship. Having been refused a review by the ET chairman, she appealed to the EAT.[62]In the EAT, the majority disagreed with the ET. As we have said, they held that all three claimants were out of time in relation to the period of employment before the agreed changes in terms of employment. The time limit of six months ran from the end of the particular contract of employment alleged to contain the equality clause in respect of which the equal pay claim was raised. The practical consequence of the EAT’s decision is that, in standard cases, where the employment relationship continues without a break, but is governed by a succession of contracts during the course of the relationship, equal pay claims in respect of a particular contract must be brought within six months of the termination of that particular contract, otherwise they are statute barred. Ms Slack could not pursue her claim for equal pay in relation to periods before 1 April 2000, 12 June 2000 in the case of Mrs Elliott and 1 April 2001 in the case of Mrs Athersmith.[63]The Council’s appeal was allowed in the cases of Mrs Slack and Mrs Elliott. Mrs Athersmith’s appeal was dismissed for the same reasons as applied to the other two, namely she signed an agreement which made the new contract the mechanism for effecting the changed terms. The EAT gave permission to appeal to this court.[64]The EAT summarised the relevant legal principles governing the variation, rescission or termination of contracts by agreement or by conduct and the making of a new contract. Its conclusion was that the question was ultimately a matter of the intention of the parties determined objectively by reference to the express or implied agreement between them.[65]The EAT also cited the leading authority on the construction of section 2(4), Preston v. Wolverhampton NHS Trust (No 1) [1998] ICR 227 at 237F-H and 239B-C in which the House of Lords approved the judgment of Otton LJ in the Court of Appeal that the time limit under the section runs “from the end of the contract of employment alleged to contain the equality clause in respect of which claim is made”: see [1997] ICR 199 at 922A.[66]The majority in the EAT agreed with the Council that this was not simply a case of the unilateral issuing of a fresh contract. It was clear from the contractual documents that the parties had agreed to effect changes by a fresh contract. That was decisive. The tribunal must give effect to the mechanism chosen by the parties. There was nothing to prevent the express written agreement of the parties from determining the new contract issue. The EAT concluded as follows- “36. The task in each case is to determine the intention of the parties. This involves establishing whether there is evidence objectively to show that there was an agreement as to the mechanism to be adopted. If the change is not of a fundamental nature, the only proper inference is that there was a variation unless we are satisfied that there was, objectively viewed, an express agreement that the mechanism to be adopted was the termination and new contract route. 37. In determining that issue the reasoning of the majority is as follows. First, in our judgment, where there is clear evidence that both parties have signed what is stated in terms to be a new contract, that is conclusive evidence that the termination route has been chosen. We do not accept that other factors can detract from the plain language of the agreement. That was the position in the case of Ms Slack who signed a new contract on 29 February to take effect on 1 April.”[67]In this appeal, the claimants sought to uphold the ET decision. They contended that, as a matter of law, account should be taken not only of the new documentation but also the other terms of the new agreement and all the surrounding circumstances. The object of the exercise was to ascertain the ordinary understanding of the reasonable person about the new document and to see whether the new agreement was entirely or fundamentally inconsistent with the old agreement so as to rescind, abrogate or extinguish it. The leading cases of Carmichael v. National Power plc [1999] 1 WLR 2042 at 2047B-C and 2049A-C, and Investors Compensation Scheme Ltd v. West Bromwich BS [1998] 1 WLR 896 at 912-913Ewere cited in support of the approach that, when considering the formation and interpretation of contracts, the true intentions of the parties should be ascertained objectively from all the surrounding background circumstances, and not just from the wording of the documents themselves.[68]It was submitted that all that happened in the cases of Mrs Slack and Mrs Elliott was an agreed reduction of hours towards the end of a long and continuous period of employment. There was no break in the employment of any of the claimants. All the other terms of employment remained the same. There was no discussion about how the change in hours of work was to be effected, whether it was to be by the issue of a new contract containing a standard term about the new contract superseding the previous contract, or by a variation letter. The claimants were not told that their employment would be terminated or that there would be fresh contracts. The Council did not specifically draw the unusual new contract term to their attention.[69]While accepting that the issue of new contract or varied contract was ultimately one of the parties’ intentions, Ms Jane McNeill QC contended that the parties did not form the requisite intention that the mechanism for effecting the change in terms should be by way of terminating the existing contract and substituting a new contract. Any reasonable person considering the circumstances of the alterations would have concluded that, in the context of a continuing employment relationship involving the same job, the parties only intended a variation of the existing contract and not a new contractual arrangement effected simply by signing the letters sent to them.[70]The ET’s decision was one which, it was argued, it had reasonably reached on the available evidence and without any legal misdirection. The ET had the full factual background. It had applied an objective test, not one of subjective intentions and had properly considered the question of the mechanism of a new contract in its context. It was the EAT which had committed a legal error by failing to consider all the circumstances of the consensual change in terms. Instead the EAT had focused on a matter of administrative convenience, namely the Council’s choice of mechanism for effecting the changes. It had fastened on the particular terms at the end of the document as conclusive evidence that the claimants’ contracts had been terminated and replaced by fresh contracts.

Discussion

[71]In our judgment, the majority in the EAT was right to conclude that the ET had erred in law on this point. Each claimant signed a document containing detailed terms and conditions of employment. The document included terms which differed from the previous contracts. Each document expressly stated it superseded any previous contract of employment. The provision was flagged up to the recipients. The documents which each claimant has signed are not alleged to be shams, or to have been obtained by improper pressure, or to offend public policy. Nor do they contain terms that are so unusual or onerous (such as exclusion or penalty clauses) that it can be argued that the Council was under a positive duty to draw them specifically to the attention of the claimants.[72]The signed documents are new contracts. They are valid and binding, even though the claimants may not have appreciated the effect that the documents would have on the triggering of the time limits for referral of the operation of the equality clause to the ET. No good legal grounds have been advanced for setting the signed documents aside, or for holding them to be unenforceable, or lacking in legal effect according to their express terms.[73]In those circumstances the case law in this court, as affirmed by the House of Lords in Preston, is that the time limit for referring the operation of the equality clause to the ET was triggered by the termination of the particular contract containing that clause. In our judgment, that is so in principle whether the termination of one contract is followed by another contract, either immediately, as in these cases, or after a break, as in Preston.[74]The claimants sought to distinguish Preston on this point. Their argument was that, in the case of a succession of contracts without a break, time does not begin to run until the termination of the last or final contract in the series. This argument was not put to the tribunals below. It is a pure point of law which can be argued and decided without further evidence. We would not, however, grant permission to raise it on the appeal, because it has no real prospect of success. It is completely contrary to the general proposition laid down by this court and affirmed by the House of Lords in Preston (No 1) that time begins to run from the end of the contract of employment, in respect of which the equal pay claim is made, not from the ending of the employment relationship.[75]Following the ruling of the Court of Justice in Preston [2000] ICR 961, consideration of that ruling by the House of Lords in Preston (No 2) [2001] ICR 217 and the making of the amendments to section 2(4) by the 2003 Regulations, it is difficult to maintain the final contract point as a head of argument distinct from the exception to the standard case which is now characterised as a stable employment relationship. As explained in more detail later, if there is a succession of contracts in respect of the same employment “within a stable employment relationship,” the six month time limit runs from the end of the last contract in that relationship. If the case is not within that exception to the standard case, the rule is that the time limit is triggered on the termination of the particular contract which contains the equality clause.[76]In our judgment there is no room for an argument that the parties should not be taken to have intended to exercise their freedom of contract in the way that they did. Nor is there any scope for the application of those cases, such as Morris v. Barron & Co [1918] AC 1and Marriott v. Oxford and District Cooperative Society [1969] 1 WLR 254 at 258, on whether the parties have by implication impliedly rescinded a contract or have only varied it. The cases on implied rescission show that the contractual changes were so fundamental that nobody could say that the original contract was still in being. It must have been rescinded. They are cases in which, on a consideration of the nature of agreed variations and the intention of the parties objectively ascertained, it is held that the variations are either consistent with the continuation of the existing contract as varied or they are inconsistent and impliedly rescind the existing contract and replace it by a new contract.[77]In the instant cases there are clear express contractual terms on the new contract issue. They leave no room for implications. We agree with Mr Christopher Jeans QC, who appeared for the Council, that these are cases in which the parties have so acted as to regulate their legal relationship by terminating one contract of employment and replacing it with another. The claimants signed up to and agreed to express wording rescinding the previous contracts of employment and replacing them with new contracts issued by the Council. The cases of Carmichael and West Bromwich do not assist in ascertaining the intentions of the parties in the context of the factual matrix where, as here, there is an unambiguous express and comprehensive contract document recording the parties’ intentions.[78]The result is that, if these claims are to be regarded as standard cases (as they were before the ET and EAT) the claims were time barred in respect of the period before the new contracts of employment took effect. On the arguments advanced before it, the EAT’s decision was correct.[79]However, it is apparent that the EAT was troubled by the effect of this decision, in particular because the result meant that those employees who had signed the new contractual documents were held to have accepted a new contract, whereas those employees who had been sent a new contractual document but had not – for whatever reason - signed it, had been held to be subject only to a variation in their terms and conditions. The EAT said:
“ 52. …there is a considerable degree of artificiality in distinguishing between these claimants on the grounds that some have signed written contracts and others have not. It is highly unlikely that any of the parties gave any thought whatsoever to the question whether there was a new contract or not; subjectively it is extremely unlikely that they would have had an intention either to terminate or to vary. To analyse the cases in this way, as we readily recognise, involves adopting legal distinctions remote from the minds of the contractual parties and which make little sense in the world of work. But we are required by Parliament to focus on when a particular contract, rather than the relationship, terminates, and the majority consider that this must be done in accordance with traditional contractual principles. In this case their adoption works against the interest of the unsuccessful claimants, but in other contexts they could benefit from applying the usual contractual rules.”
[80]Ms Karon Monaghan QC for the Commission strongly submitted that the effects of the EAT’s legal analysis were far worse than artificial. She pointed to the consequences. It meant that a woman, who is employed on successive permanent contracts without a break over a long period of time, could find herself deprived of a remedy otherwise available to her under the 1970 Act. This would be the consequence of her employer effecting agreed variations to her terms of employment, even minor variations, by the simple device of issuing a new contract of employment instead of a letter of variation. This is not fair. The reality is that a woman in the position of these claimants is extremely unlikely to appreciate that the impact of the employer issuing a new contract is that she has to institute proceedings within six months if she is to make an equal pay claim against the employer and obtain the benefits and rights conferred by the 1970 Act and Article 141 of the Treaty.[81]There is force in these criticisms, but, as will appear later, the concept of the stable employment relationship, developed in the ruling on EC law by the Court of Justice in Preston and now in the 1970 Act in consequence of the amendments made by the 2003 Regulations, provides a more satisfactory and legally sound solution than acceptance of the claimants’ submissions on the New Contract Point. As indicated earlier, this route was not relied on in the EAT where it was common ground that the exception for stable employment did not apply.

Overriding Contract Point

[82]As a fresh ground of appeal each claimant sought permission to argue that, even if she entered into a new contract of employment when her terms of employment were varied, there was in existence throughout an implied overriding or global contract governing her relationship with the Council. It survived the termination of the previous contract of employment and continued and could not come to an end until the claimant’s employment with the Council ceased on the termination of the overriding contract.[83]Preston (No 1) at page 238 was cited for Lord Slynn’s recognition of the possibility of a continuing succession of contracts without a break giving rise to the implication of an overriding or global contract. In such cases there was no break in the mutuality of obligation at the heart of the employment relationship, as there was in the case of a succession of contracts with breaks in between.[84]In our judgment, there are two good reasons why the claimants should not be granted permission to raise this ground for the first time in the Court of Appeal. The first is that, if it had been raised in the ET, additional evidence might have been given of the circumstances in which the changes were made to the claimant’s contract of employment. That evidence would have been potentially relevant to the issue whether or not an overriding or global contract was made or could be inferred from the circumstances. Secondly, on the facts actually found by the ET, there is insufficient material in law from which to imply an overriding contract. The existence of a contract will only be implied where it is necessary to do so to give efficacy to the relationship between the parties. Here there were express contracts of employment in place. They comprehensively governed and adequately explained the legal relations between the parties. It was not necessary to imply the existence of another contract over and above the uninterrupted succession of express contracts. There was no gap to fill by the process of implication. Indeed, an implication of another contract would not be compatible with what the parties had expressly agreed.

Powerhouse Point

[85]The claimants sought permission to raise another new ground of appeal by relying on a House of Lords decision handed down after the judgment in the ET. The new ground relies on the decision in Powerhouse [2006] ICR 606 (aka Preston v. Wolverhampton Health NHS Trust (No 3)), which dealt with another aspect of the claims by part-time female employees excluded from membership of their employers’ occupational pension schemes. The case was concerned with the effect of the transfer of an undertaking in which the claimants were employed on the time for bringing a claim under the 1970 Act. Did time run from the end of the employment with the transferee or the end of employment with the transferor who provided the occupational pension scheme? If the latter, the claims were out of time. The House of Lords held that the claims were out of time.[86]Before us, the claimants submitted that Powerhouse is authority for the proposition that “employment” in section 2(4) should be construed as “employment to which the claim relates.” On that basis it is argued that the six month time limit is linked to a continuing relationship between the parties under an unbroken succession of contracts rather than to separate contracts of employment, the termination of each of which would trigger the operation of the six month time limit for referring the operation of the equality clause to the ET.[87]As Lord Hope pointed out in his opinion, with which other members of the Appellate Committee agreed, the word “contract” does not appear anywhere in section 2(4). In those circumstances it was argued on behalf of the claimants that the test of employment within the meaning of section 2(4) of the 1970 Act is not contractual and that time should not start to run until the end of the relationship on the termination of the last contract in the series. Support for this submission was also drawn from the EAT decision in Sodexo v. Gutridge [2008] IRLR 752.[88]It was therefore contended that the ET and the EAT had erred in law in applying the end of contract test in order to determine whether the claims were referred to the ET in time. Time should only have begun to run after the end of the last contract. That marked the end of the employment to which the equal pay claim related. This construction would give real meaning and effect to the right to equal pay under the 1970 Act and Article 141 of the Treaty. If the legal position was as the EAT held, the claimants and other employees would be placed in the virtually impossible position of having to institute proceedings under the 1970 Act every time they were issued with and signed a fresh contract.[89]On this point the earlier decision of the House of Lords in Preston (No 1) on the triggering of time limits by the termination of one contract followed by a new contractshould be distinguished. It dealt only with the cases of a succession of contracts with breaks between them, not with a succession of contracts with no breaks.[90]This was a pure point of law and it was an important point which could be decided in favour of the claimants without requiring any new facts to be found.

Discussion

[91]In our judgment, the claimants should not be given permission to amend to introduce this fresh ground on the appeal. There is a valid reason why the point was not raised in the ET. Powerhouse had not then been decided. We also agree that it is a point of statutory construction which does not require any further factual findings. We would refuse permission on the ground that the point has no real prospect of success. The Powerhouse decision is clearly distinguishable.[92]Powerhouse was a decision on the interpretation of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) Regulation 5(2) and its effect on the time limit for a claim by a part-time worker in relation to a pension scheme where there had been a transfer of an undertaking. Regulation 5(2) of TUPE provided that, on the completion of the relevant transfer - “ (a) all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract, shall be transferred by virtue of this regulation to the transferee .”[93]If the time ran from the time of the transfer of the undertaking by the transferor, the claim was out of time. It was held that time began to run from the end of the employment to which the claim related, which was the end of the claimant’s employment with the transferor. As Lord Hope said in paragraph 26 on page 615- “….The only question is: to which employment does the claim relate? The answer, where the claim is in relation to the operation of an equality clause relating to an occupational pension scheme before the date of the transfer, was that it relates to the woman’s employment with the transferor.”[94]The TUPE context governing the transfer of contracts on the transfer of an undertaking is different from the application of the time limit provisions in section 2(4) of the 1970 Act to a succession of contracts with the same employer. That was recognised by Lord Hope: paragraph 22 on page 614, where he referred to the opinion of Lord Slynn in Preston (No 1). The time limit in such a case was affected by the fact that the contract in respect of which the claim was made in respect of the operation of the equality clause was the relevant contract. Lord Slynn had rejected the argument that a succession of contracts with the same employer should be treated as a single contract for time limit purposes. Lord Hope did not cast any doubt on the correctness of what Lord Slynn had said. His comment at the end of paragraph 22 was that Lord Slynn’s analysis - “… does not provide the answer to the quite different question that has been raised in this case about the operation of the time limit where there has been a TUPE transfer”[95]He added:
“23. The second point is that the word used that the subsection [2(4)] uses to identify the moment which starts the running of the time limit is the word ‘employment’. The question which it asks is whether the woman was ‘employed in the employment’ within the six months preceding the reference of the claim to the tribunal. The claim to which the time limit is to be applied is, of course, the claim in respect of the operation of an equality clause relating to the woman’s employment: see the opening words of the subsection. When the subsection is read as a whole, its plain and natural meaning is that the claim must be brought within six months of the end of the employment to which it relates.”
[96]As will appear later, some of the general submissions made in support of this point are relevant to other new points on stable employment and the application of EC law.

Stable Employment Point

[97]As explained above, the concept of “a stable employment relationship” in the context of time limits for equal pay claims emerged in the judgment of the Court of Justice in Preston. That was a case of a succession of contracts with breaks between the contracts. The Council emphasised that that was the context in which there was room for the concept and that it was not necessary for the Court of Justice to consider the operation of time limits in case like this of an unbroken succession of contracts. It was argued that the stable employment case does not cover these cases either by reason of the ruling of EC law or as a result of the 2003 Regulations implementing the ruling of the Court of Justice into the provisions of domestic law.[98]The claimants disagreed. They submitted that there is no logic in a distinction confining the concept of a stable employment to cases in which there are contract-free breaks in the succession of employment contracts. The irresistible logic of the reasoning of the Court of Justice and of the purpose of the 2003 Regulations is that an uninterrupted succession of contracts is an a fortiori case of a stable employment relationship.

Discussion

[99]We agree with the claimants. In our judgment, on the facts found by the ET, the relationship between the Council and both Mrs Slack and Mrs Elliott was a case of stable employment. They did the same work for the Council over very many years without any break in the work they did or in the succession of contracts. The only variation made in the new contracts in 2001 was in the reduction of working hours.[100]However, the facts found in Mrs Athersmith’s case are not clear enough to enable this court to say it was a stable employment case. She started as a relief carer. A new contract was issued by the Council and signed by her when she became a permanent carer. She also acquired the right to sick pay. It will be necessary for her case to be remitted to the ET to find all the facts relevant to a stable employment relationship. It is for the ET to investigate and to decide that issue, which was not raised before it first time round.

Incompatibility with EC law points

[101]As Mrs Slack and Mrs Elliott have succeeded on the Stable Employment Point it is unnecessary in their cases to consider the incompatibility issues raised by the Commission.[102]Those issues could, however, affect Mrs Athersmith. Further investigation of the facts is needed before it can be decided whether hers is also a Stable Employment case. If it is, no question of incompatibility would arise and so it would be premature to decide the EC issues now and it may never be necessary to decide them. There is a lot to be said for not deciding legal points unless and until it is necessary for the purpose of deciding the particular case.[103]However, Mrs Athersmith might fail on the Stable Employment point, in which case it would then become necessary to decide the EC issues. If the Commission is right on the incompatibility issues raised by it, there would be no need to remit Mrs Athersmith’s case. So why put off a decision on the EC issues?[104]The Council objected to the EC points on incompatibility being raised at all by the Commission on the appeals, as they were not raised by the parties in the tribunals below. We have some sympathy with the Council’s reaction to being confronted with these points for the first time on a second appeal. We also think that the court should tread very carefully when invited to decide points of law which, when all the facts are known, do not have to be decided in order to dispose of the claimants’ cases.[105]On the other hand, as mentioned in the discussion above, Mrs Athersmith’s case was selected as a sample case in order to obtain a decision on time limits for equal pay cases. The Council was given ample warning of the EC points to have time to prepare its response to them. The intervention of the Commission almost certainly means that if the points, which have been fully argued by the parties to these appeals, are not decided now it will not be long before they surface on an intervention in another case and have to be decided then. We are also encouraged to decide the point now by the fact that, at the end of the day, there is quite a short answer to the Commission’s submissions.[106]Its main new point is that the EAT’s judgment based on a contractual analysis of the claimants’ employment history gave a meaning to section 2(4) and also to the standard case covered by section 2ZA(3) of the 1970 Act which is incompatible with EC law principles of clarity, legal certainty, effectiveness and equivalence.[107]The objections to the EAT’s contractual analysis, which we have accepted as correct, can be stated quite briefly in the light of the points covered earlier in the judgment.[108]First, its effect is to trigger the six months’ time limit in circumstances in which it is very unlikely to be apparent to a claimant adversely affected by it. This offends against the requirements of clarity and certainty.[109]Secondly, the effectiveness of the 1970 Act is undermined by the construction placed on the running of the time limit. It does not give proper effect to the decision of the Court of Justice in Preston. The practical effect of requiring a claimant to issue proceedings within six months of the termination of a contract of employment, even if followed immediately by a new contract on substantially the same terms, is that it is likely in many cases to deprive the claimant of the right to equal pay for the whole of or a substantial part of the period of the relevant work. This is at odds with the intention behind the ruling of the Court of Justice in Preston. The aim of the ruling was to ensure that claimants, who were regularly employed in substantially the same employment, during which employment an equality clause operated, should not be prevented by a time limit from pursuing an equal pay claim in respect of all that work done by them during the currency of those employment contracts. It would frustrate a claimant’s entitlement to back pay extending over a period of six years, if an employer was able to issue new contracts of employment which triggered a new time limit in the case of each particular contract.[110]Thirdly, the principle of equivalence was breached by giving this effect to this time limit. That would not be the effect in discrimination cases under the Race Relations Act 1976 or the Disability Discrimination Act 1995, which contained provisions that, in the case of discrimination extending over a period, time did not start to run until the end of that period. Time limits for claims under section 23 of the Employment Rights Act 1996 in respect of unlawful deductions from wages were not dependent on a contractual analysis of the kind applied to time limits in section 2 of the 1970 Act. The proper approach to ensure compliance with the principle of equivalence is to construe the time limit provisions so that time only begins to run from the last occasion on which the equality clause operated. Thus, in cases like the instant cases, where there has been a termination of a contract of employment and continuation of employment under a new contract with the same employer for substantially the same work, the time limit is not triggered until the end of the last contract in the series.[111]The underlying theme of the points on incompatibility is that the construction placed on section 2(4) of the 1970 Act by the House of Lords in Preston (No1) before the reference to the Court of Justice was wrong in the light of the ruling of the Court of Justice. It followed that the EAT was wrong in this case in its reliance on Preston and that the Council’s submissions on the construction of section 2ZA(3), which materially replicates section 2(4) in the use of the phrase “ employed in the employment”, were also wrong. The error was in the contractual analysis of “employed in the employment” in such a way that the termination of a specific contract triggered the period of the time limit.[112]It was necessary to render domestic law compliant with EC law by two possible ways of construing section 2ZA(3).[113]The first was that the expression “employed in the employment” in section 2ZA(3) should not be construed as referring to the particular contract of employment, as that phrase then appearing in section 2(4) was construed by the House of Lords in Preston (No 1). To be compliant with EC law that phrase should be construed as referring to the work in respect of which the equality clause in the contract operates, that work being the same or substantially the same work. Although the 1970 Act requires that there should be a contract of employment in which the equality clause is implied and operates, it does not require that it be the same contract throughout the relevant period of work. The focus of the 1970 Act and of Article 141 is on work and equal pay for work.[114]The second was that the provision should be construed so that the time limit is not triggered until the expiry of the final contract in cases where there is a succession of contracts between the same parties for substantially the same work.

Discussion

[115]We see the sense of the Commission’s submissions in principle, but they do not take sufficient account of what has been achieved by court decision and amending legislation. The English courts, the Court of Justice and the legislators have been over this ground, productively. The Commission’s submissions seem to us to be a futile exercise in plunging an EC law dagger into a domestic law corpse.[116]There has been no suggestion by the Commission or by the parties that this court should refer to the Court of Justice questions on the interpretation of EC law relevant to time limits and await a ruling before a decision can be made on these appeals.[117]In our judgment, there is now no incompatibility between domestic law and EC law on the point of the six months’ time limit for bringing an equal pay claim. The EC law objections to the consequences of the contractual analysis from which the Commission and the claimants say the court should now depart have been met by the ruling of the Court of Justice and the 2003 Regulations. We note the following points.[118]First, the Court of Justice in Preston did not treat the six month time limit as such as incompatible with the principles of EC law. As was said at paragraph 24 [2000] IRLR 506:
“ …the imposition of a limitation period of six months, as laid down in section 2(4) of the [1970 Act], even if, by definition, the expiry of that period entails total or partial dismissal of their actions, cannot be regarded as constituting an obstacle to obtaining sums to which, albeit not yet payable, the claimants are entitled under Article 119 [now Article 141] of the Treaty. Such a limitation period does not render impossible or excessively difficult the exercise of rights conferred by the community legal order and is not therefore liable to strike at the very essence of those rights.”
[119]Secondly, the contractual analysis deployed by the House of Lords in Preston in the construction of s. 2(4) of the 1970 Act to ascertain when time began to run in an equal pay case was not as such treated by the Court of Justice as incompatible with EC law either on the ground that it offended the principle of effectiveness or the principle of equivalence. What was treated as incompatible was the consequence of that analysis for stable employment cases. The Court of Justice ruled accordingly and the 2003 Regulations amended s. 2 of the 1970 Act by making special provision for time limits in the stable employment cases.[120]Express provision has now been made in the 2003 Regulations to cater for the area of incompatibility identified by the Court of Justice in Preston. In the context of time limits for equal pay claims, the stable employment ruling and the amended legislation have rendered the domestic law treatment of a succession of employment contracts (with or without gaps) compliant with EC law. In our judgment, it is not necessary that the domestic law should, in the case of more than one contract of employment, abandon the contractual analysis of the House of Lords in Preston: for example, by simply taking the ending of the final contract in the series as the trigger point for the time limit, or by treating a succession of contracts as a single continuous contract.[121]If Mrs Athersmith fails on the time limit issue, it will be because she has not established a stable employment relationship with the Council, not because the time limits for instituting equal pay proceedings are incompatible with EC law.

Conclusion

[122]We would allow the appeals. We would re-instate the decision of the ET that the equal pay claims of Mrs Slack and Mrs Elliott were presented to the ET in time in respect of both of their contracts of employment because both of those contracts were part of stable employment. Thus, we would restore the decision of the ET for different reasons, the cases having been argued in this court on a new, successful point.[123]We would also allow Mrs Athersmith’s appeal and remit her case to the ET to investigate the facts and consider whether hers is a stable employment case within the meaning of section 2ZA(2) of the 1970 Act and the ruling of the Court of Justice in Preston.

Cited in 14 later judgments

and 5 more of the most senior