M MckEchnie v. Ubm Building Supplies (Southern) Ltd [1991] UKEAT 472_89_2404

EAT
M MckEchnie v. Ubm Building Supplies (Southern) Ltd
[1991] UKEAT 472_89_2404 · 1991-03-07
MR JUSTICE KNOX : Mrs McKechnie applied to the Industrial Tribunal at Reading by Originating Application presented on 20th April 1989 complaining of sex discrimination in that her redundancy payment was less than it would have been had she been a man. The Industrial Tribunal sat on 6th July 1989 and decided unanimously that her application failed. The decision was sent to the parties on 27th July 1989. Mrs McKechnie appealed within the time-limit to this Tribunal.The facts are simple and not in dispute. Mrs McKechnie was 61 years old when she was made compulsorily redundant by her employer UBM Building Supplies (Southern) Ltd ("the Company") from her employment as a showroom assistant. As a result of negotiations between the Company and Mrs McKechnie's Union an agreement ("the Agreement") was reached between them which provided (inter alia) for severance terms for those employees, of whom Mrs McKechnie was one, who were made redundant. It was accepted that Mrs McKechnie was indeed redundant. The relevant clause in the Agreement reads as follows:
"5. Severance Terms.

(a) date of dismissal (b) deduction free severance payments:

- payment in lieu of notice in line with Employee Handbook

- statutory redundancy payment in line with the appropriate Act

- an ex-gratia payment equal to the statutory redundancy payment

- a payment of one week's pay to the limit of that defined in the appropriate Act for every full year of service beyond 20 years- a payment of 2 weeks' pay to the limit defined in the appropriate Act for employees who do not qualify for a statutory redundancy payment- no employee with over 5 years' service will receive less than 6 weeks' pay to the limit defined in the appropriate Act when all the severance payments, excluding pay in lieu of notice are totalled ..."Notice was given to Mrs KcKechnie on 2nd March 1989 that her employment would terminate on 11 March 1989 and she was told that the payments that would be due to her on that date would be as follows:

a) Payment in lieu of notice: 12 weeks - £1,506.50

b) Statutory Redundancy Payment: (no entry)

c) An ex-gratia payment equal to (b) (no entry)

d) & e) not applicable

f) Minimum payment of 6 weeks pay to the statutory maximum for more than 5 years' service: 6 weeks - 753.24

TOTAL (FREE OF DEDUCTIONS) £2,259.74

In fact the payment in lieu of notice was later increased but nothing turns on that at this stage. What was disputed and remains in dispute were the nil payment under items b) and c), described in the Agreement as the statutory redundancy payment in line with the appropriate Act and the ex-gratia payment equal to the statutory redundancy payment.The appropriate Act was then the Employment Protection (Consolidation) Act 1978 ("the 1978 Act") which, besides providing for statutory redundancy payments, also, in the form in which it stood at the relevant date for Mrs McKechnie's dismissal, included as section 82(1) the following provision:
"(1) An employee shall not be entitled to a redundancy payment if immediately before the relevant date the employee (a) if a man, has attained the age of 65 or (b) if a woman, has attained the age of 60."
The amendment to that provision by section 116(1) of the Employment Act, 1989, is irrelevant to Mrs McKechnie's claim because it only applies if the "relevant date" for the employee's dismissal fell on or after 16 January 1990, which it clearly did not do as regards Mrs McKechnie.It is plain that under the 1978 Act as it stood in 1989 Mrs McKechnie was not entitled to a redundancy payment. The issue and the only issue which now subsists is whether the provisions of European law, notably Article 119 of the Treaty of Rome, confers a right on Mrs McKechnie enforceable in the Industrial Tribunal in this country against the Company to recover the difference between what she did receive and what she would have received had she been a man of the same age and service.It was common ground that no claim could be enforced directly against the Company, which has no status as a governmental or state organ, under any Directive of the EEC and more especially under the Equal Treatment Directive 76/207/EEC of 9 February 1976, see Marshall v Southampton and South-West Hampshire Area Health Authority [1986] ICR 335 .Article 119 so far as material reads:
"Each Member State shall ... maintain the application of the principle that men and women should receive equal pay for equal work.
For the purposes of this Article, pay means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or kind, which the worker receives, directly or indirectly, in respect of his employment from his employer."It was not disputed before us that the provisions of the Agreement regarding both statutory redundancy payment and the ex-gratia payment equal to it both were properly to be regarded as coming within the definition of "pay" quoted above from Article 119. The decision in Barber v Guardian Royal Exchange [1990] IRLR 240 removes any possible doubt there might have been on that score.It is also abundantly clear that the provisions of section 82(1) of the 1978 Act in their unamended form are discriminatory on grounds of sex. Moreover it was not argued that such discrimination was not in breach of Article 119. What was argued on behalf of the Company was that Article 119 is not in the circumstances of this case directly enforceable in the national courts of this country so as to confer a remedy on Mrs McKechnie.This argument was advanced on a broad and a narrow basis. The broad argument was that an issue of Parliamentary sovereignty was raised in that the question for decision was not susceptible of solution in Mrs McKechnie's favour by a process of construction of an English statute. What had to be done if Mrs McKechnie was to succeed was for English Parliamentary sovereignty to be treated as over-ridden by holding that Article 119 conferred rights in contradiction of a Westminster statute, the 1978 Act.We accept the first part of that submission but not the second. It is clear that no process of construction however purposive or indeed violent, of section 82(1) of the 1978 Act in its 1989 form is capable of producing an interpretation which confers a right on Mrs McKechnie to a statutory redundancy payment. It is not therefore possible to solve the argument in Mrs McKechnie's favour in the way in which the House of Lords was able to decide such cases as Garland v BR Engineering [1983] 2 AC 751 and Pickstone v Freemans plc [1988] AC 697. Conversely we accept that what is involved is the question whether European law in the shape of Article 119 can confer a right in a situation where English domestic statutory law provides that there is to be no entitlement in the employee. We do not consider that such new fundamental constitutional issue as was suggested to us arises in this case. In the first place the European law remedy supplements rather than contradicts domestic law. There is no such head on conflict as would be occasioned by a requirement of European law that in certain circumstances an employee should be paid a sum by his or her employer and a prohibition by English domestic law on the payment of any sum in those circumstances. What we have here is a situation where there is no claim in domestic law supplemented by a claim in European law. Secondly the European Communities Act, 1972, by section 2 in terms requires all such rights from time to time created or arising by or under (inter alia) the Treaty of Rome as in accordance with that Treaty are without further enactment to be given legal effect in the United Kingdom to be recognised and available in law and enforced accordingly. The European Court of Justice whose decisions under section 3 of that Act are to be treated as determinative on such questions, has in a series of decisions held that Article 119 does confer rights directly enforceable between individuals within its limits. There is therefore the possibility that a right may exist in European law under Article 119 which is enforceable directly within this jurisdiction notwithstanding that it is not a right existing under domestic statute or common law. Thirdly even as a matter of domestic law this Tribunal is bound by the Court of Appeal decision in Pickstone v Freemans plc [1987] IRC 867 where it was held that Article 119 created a personal right enforceable directly in national courts notwithstanding restrictions on such rights imposed by national legislation. The House of Lords did not deal with this issue in affirming the result of the Court of Appeal's decision by an entirely different route. The Court of Appeal decision was not dissented from although Lord Oliver of Aylmerton at [1988] ICR 723 recorded doubts whether if, contrary to what the House of Lords ultimately decided as a matter of construction, the national legislation, the Equal Pay Act 1970, conferred no right, it was nevertheless directly enforceable in the particular circumstances of that case. This doubt was based on the fact that there is an area of claims within Article 119 where there is no right of direct enforcement. Lord Oliver said in this connection that the case appeared to indicate that the article (scil. Article 119) might not be directly applicable in an equal value claim, at any rate where there was no machinery in the domestic law by which the criterion of what was work of equal value could be readily ascertained. Whatever the precise ambit of that area of doubt may be it cannot in our view extend to the present claim which is not an equal value claim and plainly needs no machinery of domestic law whereby to test the question whether there has been discrimination on grounds of sex.The narrower basis upon which it was argued that Article 119 was not in the circumstances directly enforceable in this jurisdiction was connected with the last mentioned area of doubt identified by Lord Oliver. The argument was based upon a passage in the European Court of Justice's decision in Barber v Guardian Royal Exchange [1990] IRLR 240 at 258 where paragraph 37 includes the following passage:
"As for Article 119, it is appropriate to refer to the established case law, which was reviewed by the Court in particular in its judgment of 31 March 1981 in case 96/80/Jenkins [1981] IRLR 228 and according to which that provision applies directly to all forms os discrimination which may be identified solely with the aid of the criteria of equal work and equal pay referred to by the Article in question, without national or Community measures being required to define terms with greater precision in order to permit their application."
On a linguistic level it was suggested to us that if, as occurs in the present case, it is only possible to discover the discriminatory treatment as a result of a resort to national legislation, rather than to the terms of the allegedly offending contract itself, the requirement that the discrimination should be identifiable without resort to national or Community measures is not met. That is in our view an unjustifiably mechanistic view of the law. It would lead to the conclusion that Article 119 would not be directly enforceable here because the Agreement refers to and incorporates the provisions of the 1978 Act regarding statutory redundancy payments whereas it would be directly enforceable if the Agreement had written out the statutory provisions in full instead of incorporating them by reference. We should be sorry to find that such a distinction had any legal validity, and indeed we are quite unpersuaded that it has. On a substantive level, for the reasons given above regarding the area concerning which Lord Oliver felt doubt in Pickstone v Freemans plc , supra, we are of the opinion that what the European Court of Justice was identifying was that area of the law, such as equal value claims where machinery of one sort or another is necessary to establish discrimination on grounds of sex. The distinction goes back to Defrenne v Sabena [1976] ICR 547 at 566 where the European Court of Justice said in paragraph 18:
"For the purposes of the implementation of these provisions a distinction must be drawn within the whole area of application of Article 119 between, first, direct and overt discrimination which may be identified solely with the aid of the criteria based on equal work and equal pay referred to by the Article in question and, secondly, indirect and disguised discrimination which can only be identified by reference to more specific implementing provisions of a community or national character."
Although later formulations of the distinction by the European Court of Justice have varied slightly, the basic distinction remains valid and is, we are satisfied, still the same in the passage quoted above from the Barber decision. As already stated, the present case falls squarely in our view in what is in the Defrenne decision called "direct and overt discrimination".We were referred to Rinner-Kuhn v FWW Spezial Gebraudereinigung [1989] IRLR 493 to illustrate the proposition that an employer's scheme, in that case for sickness benefits, which is in conformity with national legislation can nevertheless be in breach of Article 119. That proposition was not in itself disputed save on the grounds already discussed and it is not necessary therefore to investigate that aspect further.An alternative submission was made to us that the Industrial Tribunal was correct in holding as it did that the present case was governed by Burton v British Railways Board [1982] IRLR 116. What the Industrial Tribunal said was this:
"In Burton v British Railways Board [1982] IRLR 116, the European Court of Justice held that, in determining whether it was discriminatory under EEC Law to require men to be aged 60 before they become eligible for payment of a voluntary redundancy benefit, whereas women were eligible at age 55, the point at issue was not the benefit itself but the conditions of access to the benefit. The Court held that it was therefore a matter which fell to be considered under the Equal Treatment Directive (76/207) and not under either Article 119 or the Equal Pay Directive (75/117).
We adopt that decision in the present case; Mrs McKechnie objected that she did not have access to the benefits of the agreed redundancy scheme on equal footing to a man of the same age as herself. We therefoe hold that Article 119 and the Equal Pay Directive do not apply."In Burton 's case the distinction between access to benefit on the one hand and benefit on the other could be justified on the basis that what was in issue was an optional scheme and not a compulsory redundancy scheme where there was no question of access separate from benefit. Mrs McKechnie was in the scheme under consideration willy nilly and the only issue was how much she received under the various heads. On that ground alone we consider that it was not right to treat the Burton case as governing the present one. As Advocate General Walter van Gerven observed in Barber 's case, supra, at page 248 no problem of "access" to redundancy payments arises in connection with compulsory redundancy. More fundamentally however it is in our view not possible in relation to payments under a compulsory redundancy to reconcile the principle in Burton 's case with the later decision of the Europeqan Court of Justice in Barber . The latter decision does not in terms discuss or a fortiori overtly depart from the decision in Burton 's case. But it is clear that Burton 's case was relief upon in the debates in Barber 's case. It received extended consideration in the opinion of Advocate General Walter van Gerven who advanced three possible ways of reconciling Burton 's case with the later European Court of Justice Decision in Bilka-Kaufhaus GmbH v Weber von Hartz [1986] IRLR 317 where a contractual scheme was held to contain direct discrimination on grounds of sex contrary to Article 119 because a supplementary occupational pension wasmade unavailable to part-time employees, who were predominantly female. It is not possible to deduce from the decision of the European Court of Justice which of three ways (if any) suggested by the Advocate General of overcoming the impasse created by the apparent conflict between the Burton and Bilka decisions the European Court of Justice espoused. Upon the third way, which was the one which the Advocate General himself preferred, there is no doubt that the Burton case would not be held to govern this case. This solution was to draw a distinction between on the one hand working conditions (including conditions governing redundancy) which directly gave access to, that is to say the grant of, remuneration (including a redundancy payment) which would be within Article 119 and on the other hand conditions precedent thereto which governthe inception, continuation or termination of the employment relationship even though attended by financial consequences, which would be outside Article 119. There can be no doubt that the redundancy scheme in the present case lies in the former category. Perhaps more significant is the consideration that it is in our view not possible to reconcile the decision of the Industrial Tribunal with that of the European Court of Justice in Barber 's case that a pension paid under a contracted-out private occupational scheme on a compulsory redundancy is within the ambit of Article 119 so as to allow direct enforcement at the suit of an employee who can show discrimination on the grounds of sex in its application. We can discern no significant difference for this purpose between a pension under a contracted-out private occupational scheme, as in Barber , and a redundancy payment which is what is in issue in the present case. We are also unable to discern any way of distinguishing Barber 's case from Burton 's case which would result in Mrs McKechnie's claim falling into the Burton side of the distinction.For these reasons the appeal will be allowed but it should in fairness to the Industrial Tribunal be recorded that their decision was given before the decision in the European Court of Justice in Barber 's case was published.