Barnes & Ors v Kodak Ltd [1996] UKEAT 105_96_2511

EAT
Barnes & Ors v Kodak Ltd
[1996] UKEAT 105_96_2511 · 1996-11-12

JUDGE PETER CLARK :

This is an appeal by Mr Barnes and others against a decision of the London (North) Industrial Tribunal (Chairman sitting alone) dismissing their claims of unequal pay contrary to Article 119 of the EEC Treaty . Extended reasons for that decision are dated 24th October 1995.The matter came before the tribunal on a hearing to determine a preliminary issue, namely, whether the claims were barred by the temporal restrictions imposed by the European Court of Justice in Barber v Guardian Royal Exchange Group [1990] ICR 616 .That hearing proceeded on the basis of agreed facts. There was no material difference between the cases of the applicants. Mr Barnes was employed by Kodak Ltd ["Kodak"] from 8th March 1960 until 30th June 1992. On 6th March 1991 he reached his 55th birthday.Kodak operated a "final salary" or "defined benefit" pension scheme ["the scheme"] of which Mr Barnes was a member.Until 1988 the normal retirement age for female employees was 60 years and for male employees 65 years. Consequently the fractions, that is the percentage of final salary representing each completed year of service, differed. For men it was 1/45th of pensionable salary for each year of service; for women 1/42nd.From 1988 the pension ages were equalised for new employees joining the company, at age 63. However, from then existing staff women were permitted to retain a retirement of 60 years if they so wished. Thus the inequality for existing staff members, including Mr Barnes, was perpetuated.

Barber

On 17th May 1990 the European Court of Justice handed down its judgment in that case. The Court held that benefits paid under a contracted-out occupational pension scheme were "pay" within the meaning of Article 119, and that, on the facts of Barber , it was contrary to the Article, which prohibited discrimination as regards pay between men and women, for a man who was made compulsorily redundant to be entitled only to a deferred pension when a woman of the same age was entitled to an immediate pension under the scheme's rules.The effect of the decision in Barber , if applied across the board, was likely to result in occupational pension schemes being seriously under-funded. Those responsible for such funds were, the Court found, reasonably entitled, until the Court's decision, to have considered that Article 119 did not apply to pensions under contracted-out schemes.In these circumstances, the Court imposed a limit on claims arising out of its decision. It expressed that limitation in these terms at paragraphs 44-45 of the judgment. See [1990] ICR 672G-673A.:
" 44. In those circumstances, overriding considerations of legal certainty preclude legal situations which have exhausted all their effects in the past from being called in question where that might upset retroactively the financial balance of many contracted-out pension schemes. It is appropriate, however, to provide for an exception in favour of individuals who have taken action in good time in order to safeguard their rights. Finally, it must be pointed out that no restriction on the effects of aforesaid interpretation can be permitted as regards the acquisition of entitlement to a pension as from the date of this judgment.
45. It must therefore be held that the direct effect of article 119 of the Treaty may not be relied upon in order to claim entitlement to a pension with effect from a date prior to that of this judgment, except in the case of workers or those claiming under them who have before that date initiated legal proceedings or raised an equivalent claim under the applicable national law."Precisely how the temporal limitation expressed in the Court's judgment in Barber was to be interpreted led to considerable debate and dispute. Various rival interpretations were considered by the European Court of Justice in a series of four cases reported in Part 2 of the 1995 of Industrial Cases Reports, [1995] ICR 73-237. We shall refer to those cases simply as Ten Oever (p. 74); Moroni (p. 137); Neath (p. 158) and Coloroll (p. 179).In the course of the Advocate General's joint opinion in relation to all four cases, he identified four possible interpretations derived from the arguments of the parties in those cases on the temporal limitation imposed in Barber . See pages 96G-97C.The second and third interpretations he formulated in this way:
" A second interpretation is that the principle of equal treatment should only be applied to benefits payable in respect of periods of service after 17 May 1990. Periods of service prior to that date would not be affected by the direct effect of article 119.
According to a third interpretation, the principle of equal treatment must be applied to all pensions which are payable or paid for the first time after 17 May 1990, irrespective of the fact that all or some of the pension accrued during, and on the basis of, periods of service completed or contributions paid prior to that date. In other words, it is not the periods of service (before or after the judgment in Barber ) which are decisive, but the date on which the pension falls to be paid."In his opinion, the Advocate General chose the second interpretation. See p. 105C. That opinion was adopted by the Court in its judgments in the four cases. Thus, in Ten Oever , the Court said this at p. 136E:
" 19. Given the reasons explained in Barber [1990] ICR 616 , 672, para 44, for limiting its effects in time, it must be made clear that a quality of treatment in the matter of occupational pensions may be claimed only in relation to the benefits payable in respect of periods of employment subsequent to 17 May 1990, the date of the judgment in Barber , subject to the exception in favour of workers or those claiming under them who have, before that date, initiated legal proceedings or raised an equivalent claim under the applicable national law."
Similar views were expressed by the Court in Moroni , Neath and Coloroll.Returning to the instant case, it is common ground that but for the temporal limitation, the effect of Barber is that Mr Barnes and his fellow applicants received unequal pay on termination of employment by reference to their pension entitlements when compared with women of the same age and length of service, contrary to Article 119. As the Industrial Tribunal Chairman found at paragraph 3(4) of the reasons:
"(4) All employees if they were 55 years of age and had served 30 years in the company could retire but the women could retire with no reduction in their pension but the men suffered a reduction in their pension because of their early retirement."
Are these claims nevertheless barred by the temporal limitation?None of these claims was launched before 17th May 1990.What Kodak did in this case was to take three periods. The first period, up to 17th May 1990; the second period, from 17th May 1990 until 1st January 1993; the third period, post 1st January 1993.As to years of service in the first period no alteration was made to the divisors or fractions; men were credited with 1/45th of pensionable salary for each year of service up to that date; women 1/42nd. For the second period, both men and women were credited with 1/42nd for each year of service; for the third period, following equalisation, both men and women were and are credited with 1/44th for each year of service.Before the Industrial Tribunal, and before us, Mr Barnes has argued under Kodak's final salary scheme the pension entitlement on leaving accrues on the date of leaving. That is, within period 2, at which time Barber requires equality with a comparable woman.He cites in support of that proposition two further judgments of the European Court of Justice, Smith v Avdel Systems Ltd and Van den Akker [1995] ICR 596 . However, those cases post-dated Ten Oever , et al, and nothing in those cases conflicts with the principles to which we have referred in Ten Oever .In our judgment the key to this case lies in the second and third interpretations of the Barber temporal limitation adverted to in the Advocate General's opinion in Ten Oever , et at. The second interpretation, which the European Court of Justice adopted in its judgments fits with the argument advanced on behalf of Kodak; Mr Barnes' contention equated to the third interpretation which the Court rejected.Accordingly, in our judgment, the Industrial Tribunal Chairman's reasoning was correct. This appeal must be dismissed.