MR J R QUIRK v (1) BURTON HOSPITALS NHS TRUST (2) SECRETARY OF STATE FOR HEALTH [2001] UKEAT 1031_99_1201

EMPLOYMENT APPEAL TRIBUNAL
BAILII case number: [2001] UKEAT 1031_99_1201Case No Appeal No. EAT/1031/99Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
MR J R QUIRKAPPELLANT(1) BURTON HOSPITALS NHS TRUST (2) SECRETARY OF STATE FOR HEALTHRESPONDENT
Before
His Honour Judge Peter Clark Mr J HoughamDate 12 January 2001
[1]APPEARANCES For the Appellant JACQUES ALGAZY (of Counsel) Equal Opportunities Commission Overseas House Quay Street Manchester M3 3HN For the First and Second Respondents ELEANOR SHARPSTON QC Secretary of State for Health The Solicitors Office The Department of Health New Court 48 Carey Street London WC2 2LF JUDGE PETER CLARK : The question in this appeal, brought by Mr Quirk the applicant before an Employment Tribunal sitting at Leicester on 19th-20th May 1999 chaired by Mr David Price, against that tribunal's decision promulgated with extended reasons on 16th June 1999, dismissing his claim for a declaration that he suffered discrimination contrary to Article 119 (now 141) of the Treaty of Rome in respect of his pension rights when compared with a female nurse, is whether the claim is caught by the temporal limitation contained in the European Court of Justice decision in Barber v GRE [1990] ECR 1-1889 and the Barber Protocol (Protocol (No.2) to the Treaty). What that comes down to, in short, is whether this is a complaint relating to access to benefits under a pension scheme, as the appellant contends, or as the respondents submit, a complaint about the level of benefit payable to him. Background The Employment Tribunal had before it a Statement of Agreed Facts.[2]The appellant was born on 1st July 1944. On 7th October 1963 he commenced employment as a nursing assistant at Rainhill Mental Hospital near Liverpool. From that date he has been a member of the NHS Occupational Pension Scheme ('the scheme').[3]He qualified as a nurse in February 1967 and held a number of positions in various hospitals until he moved to what is now the first respondent, the Burton Hospital NHS Trust, where he has been employed as a nursing officer. The Scheme[4]The starting point for present purposes are the National Health Service (Superannuation) Regulations 1980 SI 1980/362 ('the 1980 Regulations') made pursuant to the Superannuation Act 1972 .[5]Under the 1980 Regulations the Scheme provided that only female nurses were entitled to take early retirement with an immediate pension. By Regulation 54 females who, for the last five years of service were nurses, physiotherapists, midwives or health visitors were entitled to retire at 55 instead of the normal retirement age of 60 years. Regulation 55 made similar provision for Mental Health Officers (MHO), regardless of sex, allowing for each year of service beyond 20 years as an MHO to count double for the purposes of calculating length of pensionable (contributing) service.[6]Following the ECJ decision in Barber , promulgated on 17th May 1990 ('the relevant date') the 1980 Regulations were eventually replaced by the National Health Service Pension Scheme Regulations 1995 SI 1995/300 ('the 1995 Regulations').[7]Regulation R2 of the 1995 Regulations permitted nurses etc to retire at age 55, as opposed to 60 years, subject to certain conditions which this appellant met. The material provision in Regulation R2(4) is as follows:
"Where … a member become entitled to receive a pension before age 60, the amount payable shall- (a) in the case of a female member, be calculated by reference to all of her pensionable service under the scheme; and (b) in the case of a male member, be calculated only be reference to pensionable service on or after 17 May 1990."
[8]Regulation R3 deals with MHOs. Qualifying members, regardless of sex, are entitled to retire at age 55 on full benefits and an enhanced calculation of benefits, as under Regulation 55 of the 1980 Regulations.[9]The Statement of Agreed Facts set out three options open to the appellant at age 55. On each calculation it is common ground that he will be financially worse off than a female nurse with the same length of pensionable service, both in relation to his lump sum and annual pension payments. Barber and the temporal limitation[10]In Barber the ECJ held that Article 119 required equal treatment in matters of pension benefits. However, the effect of that ruling was made subject to the temporal limitation subsequently expressed in the Barber Protocol in these terms:
"For the purposes of Article 119 of the Treaty, benefits under occupational social security schemes shall not be considered as remuneration if and in so far as they are attributable to periods of employment prior to 17 May 1990, ... subject to immaterial exception )"
[11]The temporal limitation has led to two lines of authority in the ECJ, the level of benefit cases, to which the temporal limitation applies and the access cases, to which it does not. The level of benefit cases[12]IN Ten Oever [1993] ECR 1 –4879 , the ECJ was asked (second question) to state the precise scope of the Barber limitation. The answer, at paragraph 19 of the judgment (4945), made it clear that equality of treatment in the matter of occupational pensions may be claimed only in relation to benefits payable in respect of periods of employment subsequent to the relevant date. That, say the respondents, is the effect of Regulation R2(4)(b) of the 1995 Regulations.[13]That principle was applied by the ECJ in Neath v Hugh Steeper Ltd [1993] ECR 1-6935 . Mr Neath was employed by the respondent company from 29th January 1973 until his dismissal by reason of redundancy on 29th June 1990. He was then 54 years and 11 months old. Under the rules of relevant pension scheme to which he belonged male employees could not claim a full pension until age 65; women at the age of 60. On dismissal he had the choice of transferring his acquired pension rights to another scheme or receiving a deferred pension at normal retirement age. He realised that if he opted for a transfer his position would be more favourable if he could have his pension recalculated on the same basis as his female counterpart in relation to the entire period of service. He brought a complaint before the Leeds Employment Tribunal relying on Article 119. The Employment Tribunal referred various questions to the ECJ.[14]The ECJ ruled (judgment, paragraph 17. 1-6959) that as regards transfer benefits and lump-sum options, the Barber limitation prevented him from invoking Article 119 to call into question the financial basis of pension rights accrued before the relevant date on the basis of different retirement ages for men and women. It followed that its capital equivalent was necessarily subject to the temporal limitation.[15]In the Coloroll case [1994] ECR 1-4389 the ECJ held that on the transfer of pension rights from one scheme to another, there is no obligation on the trustees of either scheme to bring about a situation of sex equality in relation to periods of service prior to the relevant date. The access cases[16]These cases concern the right to join a pension scheme.[17]In Vroege [1995] ECR 1-4541 the applicant worked on a part-time basis for her employer, NCIV, from 1st May 1975. Before 1st January 1991 the NCIV pension scheme rules provided that only men and unmarried women working at least 80% of the normal full working day could be members of the scheme. The applicant, although unmarried, never worked more than 80% of the full day. Consequently she was not allowed to join the scheme and never acquired any pension rights. On 1st January 1991 the scheme rules were altered so that the applicant could and did then join the scheme. She challenged the new scheme rules on the basis that she was not given the right to membership of the scheme prior to 1st January 1991 and that was indirectly discriminatory contrary to Article 119. On certain questions being referred by the national court the ECJ held that the right to join an occupational pension scheme fell within the protection afforded by Article 119 and that the Barber limitation did not apply to that right.[18]That approach was followed by the ECJ in Fisscher [1995] ECR 1-4583 , which emphasised that the Barber limitation concerned only those kinds of discrimination which employers and pension schemes could reasonably have considered to be permissible before the judgment in Barber . It did not cover discrimination in respect of membership of occupational pension schemes held to be unlawful under Article 119 in Bilka-Kaufhaus [1986] 1607 . In that case the ECJ held that an occupational pension scheme based on an agreement between employer and employee representatives fell within the scope of the protection against discrimination afford by Article 119. Thus such a scheme which excluded part-time employees, absent justification, indirectly discriminated against women contrary to Article 119.[19]In Fisscher the court made it clear that, since it is in general terms, the Barber protocol applied to the benefits paid under an occupational pension scheme, but it applied only to benefits and not to the right to belong to a scheme. The question of membership is governed by the judgment in Bilka .[20]That distinction was subsequently affirmed by the ECJ in Dietz [1996] ECR 1-5223 . There it was pointed out that there is no justification for the Barber limitation in cases where discrimination in the payment of benefits is the consequence of discrimination as regards the right to membership, following Bilka . Dietz was a case, on its facts, where part-time workers were excluded from the relevant scheme until that restriction was lifted on 1st January 1991. The court held that the applicant was entitled to a pension based on her continuous service dating back 8th April 1976, the date of the ECJ judgment in Defrenne v Sabena [1976] ECR 455 .[21]That brings us to most recent ECJ decision, one heavily relied on by Mr Algazy, Magorrian [1998] ECR 1-7153 . In that case the two female applicants, nurses who were members of a pension scheme regulated by Northern Ireland statutory regulations equivalent to the 1980 and 1995 Regulations, complained to a tribunal that they had been denied access to the additional benefits afforded to MHOs on the basis that they could not comply with a requirement for whole-time employment as MHOs. In particular, they were not entitled to double-count each year of service over 20 years. The ECJ held that the applicants were excluded from access to a special scheme which conferred additional entitlement to benefits. That was a breach of Article 119. The Barber limitation did not apply.[22]That approach has since been followed by the Birmingham Employment Tribunal in a case involving applicants who were excluded from MHO status when working part-time. Stirzaker (Case No. 14164/96 and others. 22nd April 1999. Unreported) . The Employment Tribunal decision[23]The tribunal sitting at Leicester had the advantage of the same representation which is before us. They were taken to the cases and identified the distinction between the level of benefit and access cases in the ECJ. The question, on the facts of this case, was on which side of the line does it fall? In accepting the respondents' case that it was a level of benefit case they expressed their conclusions at paragraph 15 of their reasons thus:
"15. The applicant in this case is in a different position from Mrs Magorrian and Mrs Cunningham. He has membership of the Pension Scheme, he has access to the special arrangements for retirement at age 55 conferred on nurses and he has entitlement to benefits under the scheme. The respondents accept that the discrimination to which the applicant would have been subject prior to the date of the Barber judgment was discrimination concerning access to a special Scheme which confers entitlement to additional benefit because, at the time, all male nurses were excluded from the special rights given to certain members of the Scheme, including all female nurses, to retire at age 55. This inequality was allowed to continue because, prior to the decision in Barber , the respondents thought they were entitled to discriminate in that way. They were wrong so to think but, for the reasons set out in Barber , it was reasonable for them to be wrong. As soon as the Barber decision was given (17 May 1990), the respondents amended the scheme and the applicant was no longer excluded from the special rights. As a result, in respect of his service after 17 May 1990, the applicant is to be treated in exactly the same way as a female nurse. He therefore has membership of the special scheme and access to the benefits thereunder. The only difference between the applicant and a female nurse lies in the calculation of the level of benefits to which he is entitled if he chooses to retire at age 55. This limited adverse effect was expressly recognised and endorsed as lawful by the ECJ in Barber and was subsequently incorporated in the Barber Protocol. The applicant is not therefore entitled to the declaration he seeks."
The Appeal[24]Mr Algazy's principal submission is, he contends, determinative of this appeal in the appellant's favour.[25]He points to the way in which the case for the respondents was put below in paragraph 19 of Miss Sharpston QC's written closing submissions. She there accepted that the discrimination to which the appellant would have been subject, prior to the relevant date, was indeed "discrimination concerning access to a special scheme which confers entitlement to additional benefit" ( Magorrian . Paragraph 34), because all male nurses were excluded from the special rights given to certain members of the scheme, including all female nurses, to retire at 55. That 'concession' is repeated in paragraph 15 of the tribunal's reasons, set out above.[26]Mr Algazy submits that in these circumstances the appellant was denied access to full membership of the scheme before the relevant date and that is not remedied by Regulation R2(4)(b) of the 1995 Regulations, which limits reckonable service back to the relevant date as opposed to the 8th April 1976 ( Defrenne ). The Barber limitation has been impermissibly applied.[27]Miss Sharpston replies that until Barber it could not reasonably be known that a contracted-out scheme, such as the instance scheme, was subject to the protection of Article 119. The case of Magorrian is distinguishable. There, the applicants were excluded from MHO status which would have given them access to a special scheme. Here, Mr Quirk was a member of the relevant scheme. The difference is that he did not have access to the special right to retire early at age 55. That was discriminatory as in the case of Barber , but such direct discrimination arose out of an excusable mistake. The inequality of treatment was put right. With effect from the relevant date Mr Quirk was no longer excluded by virtue of the 1995 Regulations. He is entitled, in respect of service from 17th May 1990, to be treated in exactly the same way as a female nurse. However, he is not entitled to the benefit of service prior to that date for the purpose of providing the same level of benefit as his female counterpart precisely because of the Barber limitation which was designed to cover just such a case as this. Conclusion[28]We accept Mr Algazy's submission that if this was truly an access case prior to the relevant date, that unlawful discrimination cannot be remedied by applying the Barber limitation. However, we must not be blinded by semantics.[29]It is we think significant that the access line of cases, from Bilka to Magorrian , were concerned with scheme rules which denied membership in circumstances which were indirectly discriminatory. Conversely, the cases in which different retirement ages were provided for, from Barber onwards, being cases of direct discrimination, allow the limitation provided for in Barber . We do not think that that is coincidental. In each of the access cases denial of a necessary status disentitled the applicant from membership of the scheme as a whole or, on the particular facts of Magorrian , access to a special scheme. In the present case, as in the level of benefit cases generally, it is the directly discriminatory provision for different retirement ages according to sex which offends Article 119. In order to restore complete equality it would be necessary for both male and female members of the scheme to be able to count the same period of service for the purpose of calculating their pension entitlement on retirement. However, in order to ameliorate the impact of the Barber judgment on contracted-out schemes the ECJ imposed the temporal limitation. It applies to the facts of the present case and is properly reflected in Regulation R2(4)(b) of the 1995 Regulations.[30]We return to the underlying principle to be found in the ECJ cases. Is this a Bilka case or a Barber case? In our judgment it is a Barber case. Compare the facts. In Barber the applicant was made redundant at the age of 52. Under the GRE pension scheme, in the event of redundancy, members were entitled to an immediate pension at age 55, women at age 50. Thus a woman made redundant at age 52 would have been entitled to an immediate pension; Mr Barber was not. That was unlawful discrimination on the grounds of sex contrary to Article 119. However, the ECJ recognised that parties were, until the judgment in Barber , reasonably entitled to consider that Article 119 did not apply to pensions paid under contracted-out schemes and that derogations from the principle of equality between men and women were still permitted in that sphere (judgment. paragraph 43). It was in these circumstances that the Barber limitation was formulated.[31]We can see no material distinction between the circumstances giving rise to the ruling in Barber and those arising in the instant case. Here, a contracted-out scheme (cf. Bilka ) provided for women to retire early with an immediate pension at 55, but not men, who must wait until normal retirement age 60. Men leaving at 55 will suffer a reduction in the level of benefit payable to them under the scheme when compared with women. That inequality has been remedied from the relevant date, but subject to the Barber limitation. The level of benefit received by Mr Quirk is permissibly less favourable than that received by his female comparator.[32]For these reasons we uphold the tribunal decision and shall dismiss this appeal. Permission to appeal[33]This is a reserved judgment. At the close of oral submissions both parties made protective applications through counsel for permission to appeal in the event that they were unsuccessful.[34]The issue of the width of application of the Barber temporal limitation is of general public importance. It affects a large number of workers in pensionable employment and involves very large sums of money. It is essential that the statutory regulations applicable to pension schemes such as this properly reflect Community Law. So far as we are aware the two strands of ECJ authority to which we have referred have not yet been directly considered at Court of Appeal level. In these circumstances we shall grant the appellant, who is supported by the Equal Opportunities Commission, permission to appeal to the Court of Appeal in this case.