British Gas Trading Ltd v Lock & Anor [2016] EWCA Civ 983

‘14. … the amount of work done by him in normal working hours did not vary in the sense that the payment was not based on the amount of work done. Rather, payment of commission was based on the outcome of that work, whether or not it was due to good performance. The amount of the commission was not based on the amount of work he carried out during any particular period. It was simply dependent on the outcome of his work: that is the number and type of new contracts which customers entered into.’

‘1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice. 2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’

‘(1) A worker is entitled to be paid in respect of any period of annual leave to which he is entitled under Regulation 13 … at the rate of a week’s pay in respect of each week of leave. (2) Sections 221 to 224 of the [Employment Rights Act 1996] shall apply for the purpose of determining the amount of a week’s pay for the purposes of this Regulation, subject to the modifications set out in paragraph (3). (3) The provisions referred to in paragraph (2) shall apply – (a) as if references to the employee were to the worker; (b) as if references to the employee’s contract of employment were references to the worker’s contract; (c) as if the calculation date were the first date of the period of leave in question; and (d) as if the reference to sections 227 and 228 did not apply. (4) A right to payment under paragraph (1) does not affect any right of a worker to remuneration under his contract (“contractual remuneration”) (and paragraph (1) does not confer a right under that contract). (5) Any contractual remuneration paid to a worker in respect of a period of leave goes towards discharging any liability of the employer to make payments under this Regulation in respect of that period; and, conversely, any payment of remuneration under this Regulation in respect of a period goes towards discharging any liability of the employer to pay contractual remuneration in respect of that period.’

‘221. General (1) This section and sections 222 and 223 apply where there are normal working hours for the employee when employed under the contract of employment in force on the calculation date. (2) Subject to section 222, if the employee’s remuneration for employment in normal working hours (whether by the hour or week or other period) does not vary with the amount of work done in the period, the amount of a week’s pay is the amount which is payable by the employer under the contract of employment in force on the calculation date if the employee works throughout his normal working hours in a week. (3) Subject to section 222, if the employee’s remuneration for employment in normal working hours (whether by the hour or week or other period) does vary with the amount of work done in the period, the amount of a week’s pay is the amount of remuneration for the number of normal working hours in a week calculated at the average hourly rate of remuneration payable by the employer to the employee in respect of the twelve weeks ending – (a) where the calculation date is the last day of a week, with that week, and (b) otherwise, with the last complete week before the calculation date. (4) In this section references to remuneration varying with the amount of work done includes remuneration which may include commission or similar payment which varies in amount. (5) This section is subject to sections 227 and 228.’

‘222. Remuneration varying according to time of work (1) This section applies if the employee is required under the contract of employment in force on the calculation date to work during normal working hours on days of the week, or at times of the day, which differ from week to week or over a longer period so that the remuneration payable for, or apportionable to, any week varies according to the incidence of those days or times. (2) The amount of a week’s pay is the amount of remuneration for the average number of weekly normal working hours at the average hourly rate of remuneration. (3) For the purposes of subsection (2) – (a) the average number of weekly hours is calculated by dividing by 12 the total number of the employee’s normal working hours during the relevant period of 12 weeks, and (b) the average hourly rate of remuneration is the average hourly rate of remuneration payable by the employer to the employee in respect of the relevant period of 12 weeks. (4) For the purposes of subsection (3) “the relevant period of 12 weeks” means the period of 12 weeks ending – (a) where the calculation date is the last day of a week, with that week, and (b) otherwise, with the last complete week before the calculation date. (5) This section is subject to sections 227 and 228.’

‘(1) Where an employee is entitled to overtime pay when employed for more than the fixed number of hours in a week or other period, there are for the purposes of this Act normal working hours in his case. (2) Subject to subsection (3) the normal working hours in such a case are a fixed number of hours. (3) Where in such a case – (a) the contract of employment fixes the number, or minimum number of hours of employment in a week or other period (whether or not it also provides for the reduction of that number or minimum in certain circumstances), and (b) that number or minimum number of hours exceeds the number of hours without overtime, the normal working hours are that number or maximum number of hours (and not the number of hours without overtime).’

‘10. For December 2011, his remuneration was composed of the basic pay of £1,222.50 and commission which he had earned over previous weeks amounting to £2,350.31. In 2011, Mr Lock earned on average monthly commission of £1,912.67. 11. Given that Mr Lock did not carry out any work during his period of annual leave, he was not able to make any new sales or follow up on potential sales during that period. Accordingly, he was not able to generate commission during that period. Since this had adverse effects on the salary Mr Lock received during the months following his annual leave, he decided to bring an action before the referring tribunal for outstanding holiday pay in respect of the period from 19 December 2011 to 3 January 2012.’

‘16. Although the wording of article 7 does not give any express indication as regards the remuneration to which a worker is entitled during his annual leave, the court has already stated that the term “paid annual leave” in article 7(1) means that, for the duration of “annual leave” within the meaning of that Directive, remuneration must be maintained and that, in other words, workers must receive their normal remuneration for that period of rest: see Robinson-Steele v. RD Retail Services Ltd (Joined Cases C-131/04 and C-257/04) [2006] ICR 932; [2006] ECR I-2531, para 50, and Stringer v. Revenue and Customs Comrs (Joined Cases C-350/06 and C-520/06) [2009] ICR 932; [2009] ECR I-179, para 58. 17. Directive 2003/88 treats entitlement to annual leave and to a payment on that account as being two aspects of a single right. The purpose of providing payment for that leave is to put the worker, during such leave, in a position which is, as regards his salary, comparable to periods of work: see Robinson-Steele, para 58, and Stringer, para 60.’

‘2. … whether … domestic law, in the form of the [WTR], can be read consistently with EU law and if not whether words can and should be added in interpreting those regulations so that the calculation of a week’s pay is in conformity with EU law.’

‘42. … having regard to the Court of Appeal’s judgment in Evans, domestic legislation cannot, in accordance with the normal rules of statutory interpretation, be read so as to require employers to take results-based commission payment into account when calculating pay for annual leave.’

‘Regulation 16(3) of the Working Time Regulations 1998 is to be interpreted and applied as if it had the following paragraph added to it: (e) as if, in the case of the entitlement under Regulation 13, a worker with normal working hours whose remuneration includes commission or similar payment shall be deemed to have remuneration which varies with the amount of work done for the purpose of section 221.’

‘… It follows that, in applying national law, whether the provisions in question were adopted before or after the directive, the national court called upon to interpret it is required to do so, so far as possible, in the light of the wording and the purpose of the directive in order to achieve the result pursued by the latter and thereby comply with the third paragraph of Article 189 EEC.’

‘30. From this it follows that the interpretative obligation decreed by section 3 is of an unusual and far-reaching character. Section 3 may require a court to depart from the unambiguous meaning the legislation would otherwise bear. In the ordinary course the interpretation of legislation involves seeking the intention reasonably to be attributed to Parliament in using the language in question. Section 3 may require the court to depart from this legislative intention, that is, depart from the intention of the Parliament which enacted the legislation. The question of difficulty is how far, and in what circumstances, section 3 requires the court to depart from the intention of the enacting Parliament. The answer to this question depends upon the intention reasonably to be attributed to Parliament in enacting section 3. 31. On this the first point to be considered is how far, when enacting section 3, Parliament intended that the actual language of a statute, as distinct from the concept expressed in that language, should be determinative. Since section 3 relates to the “interpretation” of legislation, it is natural to focus attention initially on the language used in the legislative provision being considered. But once it is accepted that section 3 may require legislation to bear a meaning which departs from the unambiguous meaning the legislation would otherwise bear, it becomes impossible to suppose Parliament intended that the operation of section 3 should depend critically upon the particular form of words adopted by the parliamentary draftsman in the statutory provision under consideration. That would make the application of section 3 something of a semantic lottery. If the draftsman chose to express the concept being enacted in one form of words, section 3 would be available to achieve Convention-compliance. If he chose a different form of words, section 3 would be impotent. 32. From this the conclusion which seems inescapable is that the mere fact the language under consideration is inconsistent with a Convention-compliant meaning does not of itself make a Convention-compliant interpretation under section 3 impossible. Section 3 enables language to be interpreted restrictively or expansively. But section 3 goes further than this. It is also apt to require a court to read in words which change the meaning of the enacted legislation, so as to make it Convention-compliant. In other words, the intention of Parliament in enacting section 3 was that, to an extent bounded only by what is “possible”, a court can modify the meaning, and hence the effect, of primary and secondary legislation. 33. Parliament, however, cannot have intended that in the discharge of this extended interpretative function the courts should adopt a meaning inconsistent with a fundamental feature of legislation. That would be to cross the constitutional boundary section 3 seeks to demarcate and preserve. Parliament has retained the right to enact legislation in terms which are not Convention-compliant. The meaning imported by application of section 3 must be compatible with the underlying thrust of the legislation being construed. Words implied must, in the phrase of my noble and learned friend, Lord Rodger of Earlsferry “go with the grain of the legislation”. Nor can Parliament have intended that section 3 should require courts to make decisions for which they are not equipped. There may be several ways of making a provision Convention-compliant, and the choice may involve issues calling for legislative deliberation.’

‘111. … In these circumstances, in the words of Lord Bingham of Cornhill [2003] 1 AC 837, 883, para 30: “To read section 29 as precluding participation by the Home Secretary, if it were possible to do so, would not be judicial interpretation, but judicial vandalism: it would give the sections an effect quite different from that which Parliament intended and would go well beyond any interpretative process sanctioned by section 3 of the 1998 Act …” The “judicial vandalism” would lie not in any linguistic changes, whether great or small, which the court might make in interpreting section 29 but in the fact that any reading of section 29 which negatived the explicit power of the Secretary of State to decide on the release date for murderers would be as drastic as changing black into white. It would remove the very core and essence, the “pith and substance” of the measure that Parliament had enacted – to use the familiar phrase of Lord Watson (in a different context) in Union Colliery Co of British Columbia Ltd v. Bryden [1899] AC 580, 587. Section 3(1) gives the courts no power to go that far. …’

‘121. For present purposes it is sufficient to notice that cases such as Pickstone v. Freeman plc [1989] AC 66 and Litster v. Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546 suggest that, in terms of section 3(1) of the 1998 Act, it is possible for the courts to supply by implication words that are appropriate to ensure that legislation is read in a way which is compatible with Convention rights. When the court spells out the words that are to be implied, it may look as if it is “amending” the legislation, but that is not the case. If the court implies words that are consistent with the scheme of the legislation but necessary to make it compatible with Convention rights, it is simply performing the duty which Parliament has imposed on it and on others. It is reading the legislation in a way that draws out the full implications of its terms and of the Convention rights. And, by its very nature, an implication will go with the grain of the legislation. By contrast, using a Convention right to read in words that are inconsistent with the scheme of the legislation or with its essential principles as disclosed by its provisions does not involve any form of interpretation, by implication or otherwise. It falls on the wrong side of the boundary between interpretation and amendment of the statute. 122. When Housman addressed the meeting of the Classical Association in Cambridge in 1921, he reminded them that the key to the sound emendation of a corrupt text does not lie in altering the text by changing one letter rather than by supplying half a dozen words. The key is that the emendation must start from a careful consideration of the writer’s thought. Similarly, the key to what it is possible for the courts to imply into legislation without crossing the border from interpretation to amendment does not lie in the number of words that have to be read in. The key lies in a careful consideration of the essential principles and scope of the legislation being interpreted. If the insertion of one word contradicts those principles or goes beyond the scope of the legislation, it amounts to impermissible amendment. On the other hand, if the implication of a dozen words leaves the essential principles and scope of the legislation intact but allows it to be read in a way which is compatible with Convention rights, the implication is a legitimate exercise of the powers conferred by section 3(1). Of course, the greater the extent of the proposed implication, the greater the need to make sure that the court is not going beyond the scheme of the legislation and embarking upon amendment. Nevertheless, what matters is not the number of words but their effect. For this reason, in the Community law context, judges have rightly been concerned with the effect of any proposed implication, but have been relaxed about its exact form. See, for example, Lord Keith of Kinkel and Lord Oliver of Aylmerton in Pickstone v. Freemans plc [1989] AC 66, 112D, 126A–B.’

‘In my view section 3 does not entitle the court to supply words which are inconsistent with a fundamental feature of the legislative scheme; nor to repeal, delete or contradict the language of the offending statute. …’

‘37. We were referred in the parties’ respective written arguments and orally to a number of reported cases on the principles to be observed in looking for a conforming interpretation in either the European Community or Human Rights contexts. In chronological order they are Pickstone v. Freemans plc [1989] AC 66; Marleasing SA v. La Comercial Internacional de Alimentacion SA [1990] ECR I-4135; Litster v. Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546; Imperial Chemical Industries plc v. Colmer (No 2) [1999] 1 WLR 2035; Ghaidan v. Godin-Mendoza [2004 2 AC 557; R (IDT Card Services Ireland Ltd) v. Customs and Excise Comrs [2006] STC 1252; Revenue and Customs Comrs v. EB Central Services Ltd [2008] STC 2209 and the Fleming/Condé Nast cases [2008] 1 WLR 195. The principles which those cases established or illustrated were helpfully summarised by counsel for HMRC in terms from which counsel for V2 did not dissent. Such principles are that: “In summary, the obligation on the English courts to construe domestic legislation consistently with Community law obligations is both broad and far-reaching. In particular: (a) it is not constrained by conventional rules of construction (per Lord Oliver of Aylmerton in the Pickstone case, at p. 126B); it does not require ambiguity in the legislative language (per Lord Oliver in the Pickstone case, at p. 126B and Lord Nicholls of Birkenhead in Ghaidan’s case, at para 32); (c) it is not an exercise in semantics or linguistics (per Lord Nicholls in Ghaidan’s case, at paras 31 and 35; per Lord Steyn, at paras 48–49; per Lord Rodger of Earlsferry, at paras 110–115); (d) it permits departure from the strict and literal application of the words which the legislature has elected to use (per Lord Oliver in the Litster case, at p 577A; per Lord Nicholls in Ghaidan’s case, at para 31); (e) it permits the implication of words necessary to comply with Community law obligations (per Lord Templeman in the Pickstone case, at pp 120H–121A; per Lord Oliver in the Litster case, at p 577A); and (f) the precise form of the words to be implied does not matter (per Lord Keith of Kinkel in the Pickstone case, at p 112D; per Lord Rodger in Ghaidan’s case, at para 122; per Arden LJ in the IDT Card Services case, at para 114).” 18. Counsel for HMRC went on to point out, again without dissent from counsel for V2, that: “The only constraints on the broad and far-reaching nature of the interpretative obligation are that: (a) the meaning should ‘go with the grain of the legislation’ and be compatible with the underlying thrust of the legislation being construed’: see per Lord Nicholls in Ghaidan v. Godin-Medoza [2004] 2 AC 557, para 53; Dyson LJ in Revenue and Customs v. EB Central Services Ltd [2008] STC 2209, para 81. An interpretation should not be adopted which is inconsistent with a fundamental or cardinal feature of the legislation since this would cross the boundary between interpretation and amendment (see per Lord Nicholls, at para 33, Lord Rodger, at paras 110–113 in Ghaidan’s case; per Arden LJ in R (IDT Card Services Ireland Ltd) v. Customs and Excise Comrs [2006] STC 1252, paras 82 and 113); and (b) the exercise of the interpretative obligation cannot require the courts to make decisions for which they are not equipped or give rise to important practical repercussions which the court is not equipped to evaluate: see the Ghaidan case, per Lord Nicholls, at para 33; per Lord Rodger, at para 115; per Arden LJ in the IDT Card Services case, at para 113.’

‘The amount of work done in the period of normal working hours did not vary in the sense that payments were not based on the amount of work done. Rather payment of commission was based on the outcome of that work, whether fortuitous or due to good performance. Therefore, as these three [subsections] stand, one would have thought that the natural meaning was that commission would not be included as part of the payment, so that the averaging out provisions of subsection (3) would not apply.’

‘23. I am unable to accept Mr Cohen’s submission. The distinction between subsection (2) and subsection (3) of section 221 turns on whether or not the employee’s remuneration does or does not vary with the amount of work done in the normal working hours. I am unable to conclude that it does. Work is done and the amount of work does not depend on the number of contracts obtained. Time spent unsuccessfully to persuade a client to sign a contract is as much work as a successful encounter with a client. I am not able to read the expression “amount of work done” as meaning that amount of work and that part of the work which achieves a contract. The amount of work resulting in a contract may vary, but the result achieved by the work is a different concept from the act of working. 24. In my judgment subsection (4) does not bear upon the issue whether a contract falls within subsection (2) or (3). That must first be determined in accordance with the test plainly stated in the section and already identified. Subsection (4) is not relevant to that decision. What subsection (4) and its predecessors achieve is to make clear that once the categorisation is made, the relevant remuneration may include commission or similar payments such as a bonus. It is not otiose because it is easy to envisage situations in which remuneration does vary with the amount of work done, once a specified level of productivity has been achieved. The reference to commission in subsection (4) does not require or permit all contracts in which commission is a part of the remuneration to be placed within subsection (3). … 26. What the use of the averaging method does tend to confirm, however, is the fit between subsection (3) and pieceworking in the traditional sense. Where there are marked variations in the amount of work done as between one week and another fairness can be achieved by calculating the amount of holiday pay by reference to an average. That objective is a fair but limited one. Its inclusion in the statute does not require that contracts such as the present should be forced into the subsection (3) category.’

‘35. Mr Evans was of course expected to work conscientiously, and if he did it was hoped, both by him and his employers, that he would be successful in obtaining contracts. For these efforts he was paid his basic salary, which was due to him whether he succeeded in obtaining any contracts or none. If by working conscientiously he also achieved what it was hoped that he would achieve, he would then, but not otherwise, have earned commission in addition to his salary. Therefore the payment of commission did not depend on the length of his working week, and his remuneration for his employment was linked, not with the amount of work which he did, but with its success. Naturally it was hoped, indeed anticipated, that harder work and more skilful salesmanship would increase the number of contracts obtained by Mr Evans and so increase his resulting commission. But taken on their own, admirable though they are, hard work and skill which produced no contracts entitled him to no more than his basic salary. 36. For the purposes of section 221 of the Employment Rights Act 1996 Mr Evans’s remuneration did not vary with the amount of work he did during his working week. Any commission due to him was payable by virtue of earlier success, usually many months previously. It was unconnected with the amount of work he did during the 12-week period before his employment came to an end, which forms the basis of any calculation under section 221(3), and on which the decision of the Employment Appeal Tribunal was founded. 37. Unlike the appeal tribunal, I do not believe that section 221(4) overrides section 221(3) or, as seems to be implicit in its decision and was supported in argument by Mr Cohen, that cases in which commission forms part of a remuneration package must automatically be treated as falling with section 221(3). Rather, section 221(4) amplifies section 221 and, where remuneration does in fact vary with the amount of work done, enables commission and bonuses and similar payments to be included in the calculation of an employee’s week’s pay.’

‘43. There are several good reasons to conclude that although this remuneration varied it did not vary “with the amount of work done”: (i) “work done” would ordinarily mean tasks undertaken, such as researching potential clients, making telephone calls, writing letters, meeting potential clients: it would not mean “success achieved”. Mr Cohen quite rightly says that work done leads to success achieved: but that does not mean that the words have the same meaning. (ii) The ordinary meaning of the “amount” of work done would refer to its quantity and not to its quality or its results. (iii) The variation in remuneration in this case was not “with” the amount of work done in the period but with success achieved as a result of work done in a completely different period, usually nine months earlier. (iv) The concept of averaging over 12 weeks is difficult to fit with the concept of success fees relating to a completely different period.’

‘45. There is nothing in section 221(4) to change that. This is clearly defining remuneration for the purpose of what is included as remuneration but that still has to be within the overall criterion of varying with the amount of work done.’

‘39. … common sense also points to the conclusion that the Directive had to leave it to member states to decide how to calculate the amount of remuneration payable in respect of the absolute entitlement to four weeks’ paid annual leave. The pay systems of different employers across the European Union differ; a workable common definition would, therefore, be difficult to achieve. In the United Kingdom alone, sections 221-224 illustrate the range of issues that would need resolution, for example where pay varies according to the amount of work done, or time worked or where there are no normal working hours, questions as to what benefits are to be included in pay for this purpose and whether pay should be calculated at basic or enhanced overtime rates. It follows, in my view, that, unless the conditions of entitlement laid down by regulation 16, as I have construed it, are such that they can be said to negate or frustrate the very purpose of the Directive, the court must look at the regulations unassisted in this respect by the Directive. 40. In my view, there is nothing in regulation 16 on which the Marleasing [1990] ECR I-4135 principle of construction can bite, especially where, as I have concluded, the content and framework of the 1998 Regulations, when read with the 1996 Act, show that their draftsman clearly intended to apply the Act’s well established domestic definition of “a week’s pay” save in the immaterial respects for which he specifically provided in regulation 16(3). In particular, there is no basis for reading article 7 of the Directive as requiring a broad equivalence of pay for work done, namely overtime, which the employer was not bound to provide under the contract of employment, with payment on annual leave for overtime work not done at all. And, in any event, sections 221 to 224, with or without section 234, will not necessarily achieve that. As I have mentioned, section 223 is capable of producing in individual cases as “week’s pay” that may be more or less than an employee actually earned over the 12-week period. 41. Further, although the Directive was intended to have the effect of encouraging workers, for the sake of their health, to take their full leave entitlement, which they might not if their holiday pay is significantly less than their normal working pay, it could equally be said that it was not intended to encourage them to enter into contractual arrangements in which they submitted themselves to obligatory long and unhealthy working hours for 11 months of the year by the additional carrot of a level of holiday pay to match such hours when they were not actually working them. There was no evidence before the appeal tribunal or other basis upon which it could have found that employees would or might as a generality be discouraged from exercising their entitlement to paid annual leave where their weekly pay for the purpose is calculated by reference to section 234 of the Act.’

‘64 … First, the Working Time Regulations 1998 were specifically made to implement the Working Time Directive. It can be presumed that the intention of Parliament was to fulfil its obligation to do so fully and accurately. If, seen through a modern lens, the words do not achieve that, then to adopt a conforming interpretation is not doing violence to the intention of Parliament but instead respecting it.’

‘109. The requirement for national law to be interpreted in conformity with Community law is inherent in the system of the Treaty, since it permits national courts, for the matters within their jurisdiction, to ensure the full effectiveness of Community law when they determine the disputes before them (see, inter alia, Pfeiffer and others, paragraph 114). 110. It is true that the obligation on a national court to refer to the content of a Directive when interpreting and applying the relevant rules of domestic law is limited by general principles of law, particularly those of legal certainty and non-retroactivity, and that obligation cannot serve as the basis for an interpretation of national law contra legem (see, by analogy, case C-105/03 Pupino [2005] ECR I-5285, paragraphs 44 and 47). 111. Nevertheless, the principle that national law must be interpreted in conformity with Community law requires national courts to do whatever lies within their jurisdiction, taking the whole body of domestic law into consideration and applying the interpretative methods recognised by domestic law, with a view to ensuring that the Directive in question is fully effective and achieving an outcome consistent with the objective pursued by it (see Pfeiffer and others, paragraphs 115, 116, 118 and 119).’

‘68. The Latin expression “contra legem” literally means “against the law”. A contra legem interpretation must, to my mind, be understood as being an interpretation that contradicts the very wording of the national provision at issue. In other words, a national court is confronted by the obstacle of contra legem interpretation when the clear, unequivocal wording of a provision of national law appears to be irreconcilable with the wording of a directive. The Court has acknowledged that contra legem interpretation represents a limit on the obligation of consistent interpretation, since it cannot require national courts to exercise their interpretative competence to such a point that they substitute for the legislative authority. … 72. An obstacle that is presented by the case-law is thus not comparable to an obstacle consisting in the existence of a provision of national law whose very wording is irreconcilable with a rule of EU law. In the latter case, the obstacle cannot be overcome by the national courts without their substituting themselves for the legislative authority and re-writing the provision in question. 73. I would add that to recognise the existence of a national case-law that is contrary to EU law as an obstacle to the interpretation by national courts of a provision of national law in conformity with EU law would greatly diminish the potential of the technique of consistent interpretation in resolving conflicts between EU law and national law.’

‘111. It is the responsibility of the national courts in particular to provide the legal protection which individuals derive from the rules of Community law and to ensure that those rules are fully effective. 112. That is a fortiori the case when the national court is seised of a dispute concerning the application of domestic provisions which, as here, have been specifically enacted for the purpose of transposing a Directive intended to confer rights on individuals. The national court must, in the light of the third paragraph of article 249 EC [now article 288 TFEU], presume that the member state, following its exercise of discretion afforded to it under that provision, had the intention of fulfilling entirely the obligations arising from the Directive concerned: see Wagner v. Fondo de garantia salarial (Case C-334/92) ECR I-6911, 6932, para 20. 113. Thus, when it applies domestic law, and in particular legislative provisions specifically adopted for the purpose of implementing the requirements of a Directive, the national court is bound to interpret national law, so far as possible, in the light of the wording and the purpose of the Directive concerned in order to achieve the result sought by the Directive and consequently comply with the third paragraph of [article 288]. 115. Although the principle that national law must be interpreted in conformity with Community law concerns chiefly domestic provisions enacted in order to implement the Directive in question, it does not entail an interpretation merely of those provisions but requires the national court to consider national law as a whole in order to assess to what extent it may be applied so as not to produce a result contrary to that sought by the Directive: see, to that effect, Carbonari [1999] ECR I-1103, 1134–1135, paras 49 and 50. 114. The requirement for national law to be interpreted in conformity with Community law is inherent in the system of the Treaty, since it permits the national court, for the matters within its jurisdiction, to ensure the full effectiveness of Community law when it determines the dispute before it: see, to that effect, Mau v. Bundesanstalt fur Arbeit (Case C-160/01) [2003] ECR I-4791, 4829, para 34. … 116. In that context, if the application of interpretative methods recognised by national law enables, in certain circumstances, a provision of domestic law to be construed in such a way as to avoid conflict with another rule of domestic law or the scope of that provision to be restricted to that end by applying it only in so far as it is compatible with the rule concerned, the national court is bound to use those methods in order to achieve the result sought by the Directive.’

‘The Government and Parliament of the United Kingdom must have considered that [both Acts] complied with the obligation of the United Kingdom to observe Community law and Community intentions including article 119 and the Equal Pay Directive, so far as Community law was understood in the United Kingdom and so far as Community intentions were discernible.’

‘… article 5(1) of [the Equal Treatment Directive] must be interpreted as meaning that a general policy concerning dismissal involving the dismissal of a woman solely because she has attained the qualifying age for a state pension, which age is different under national legislation for men and for women, constitutes discrimination on grounds of sex, contrary to that Directive.’

‘… The Acts [of 1970 and 1975] were not passed to give effect to the Equal Treatment Directive and were intended to preserve discriminatory retirement ages. Proposals for the Equal Treatment Directive dated 9 February 1976 were in circulation when the Bill for the Sex Discrimination Act 1975 was under discussion but it does not appear that these proposals were understood by the British Government or the Parliament of the United Kingdom to involve the prohibition of differential retirement ages linked to differential pensionable ages. … … [the full argument before this House] has satisfied me that the Sex Discrimination Act 1975 was not intended to give effect to the Equal Treatment Directive as subsequently construed in the Marshall case [1986] ICR 335 and that the words of section 6(4) are not reasonably capable of being limited to the meaning ascribed to them by the appellant. Section 2(4) of the European Communities Act 1972 does not in my opinion enable or constrain a British court to distort the meaning of a British statute in order to enforce against an individual a Community directive which has no direct effect between individuals. Section 2(4) applies only where Community provisions are directly applicable.’

‘This is not beyond the bounds of permissible interpretation because there is no indication that Parliament specifically intended to depart from the Sixth Directive in this respect. The provisions of Sch 10A are equally consistent with Parliament not having foreseen the particular problem that has arisen in this case. It follows from the Ghaidan case that the court’s duty arises even if Mr Lasok is correct in submitting that the correct interpretation of Sch 10A is that VAT is not imposed on the United Kingdom distributors of ICSIL’s phonecards in the circumstances of this case. It also arises even if Parliament did not intend to limit relief in any way for which Customs and Excise now contend. The provisions of Sch 10A do not contain any fundamental feature inconsistent with reading into para 3(3) a further disapplication of the disregard in para 3(2) to make para 3 conform to the objectives of the Sixth Directive: it is simply a case of widening the existing provision in para 3(3) …’

‘56. … First, it is inevitable that a conforming interpretation will be retrospective in its operation. Unless and until it is averred that the legislation is inconsistent with some enforceable Community right there is no occasion to consider a conforming interpretation. The fact that the effect of such an interpretation is felt retrospectively is no more an objection in the field of conforming interpretation than it is in the case of domestic statutory construction. 57. Second, it is not a requirement of a conforming interpretation that it should be capable of precise formulation. That is precisely the point summarised in sub-paragraph (f) quoted in para 37 above [see para 38 above in this judgment]. The dicta there referred to were made in such widely diverse situations as equal pay, right to succession of a protected tenancy and the imposition of a liability to VAT. It is inevitable that the conforming interpretation will lack the crispness to be expected of properly considered legislation; but, that cannot be a sufficient objection.’