MS B COPPLE & ORS v LITTLEWOODS PLC & ORS [2010] UKEAT 0116_10_2312

"14. The Community right to equal pay is provided by Article 141 (ex Article 119) as follows: '(1) Each Member State shall ensure that the principle of equal pay for male and female workers for equal or work of equal value is applied. (2) For the purpose of this Article, "pay" means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer.' 15. The Equal Pay Act 1970 was replaced in amended form before its implementation on 29 December 1975 as a schedule to the Sex Discrimination Act 1975. It provides for an equality clause where men and women do equal work (that is like work, work which is equally rated or work of equal value): '1. Requirement of equal treatment for men and women in same employment (1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one. (2) An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed (the "woman's contract"), and has the effect that – (a) where the woman is employed on like work with a man in the same employment – (i) if (apart from the equality clause) any term of the woman's contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman's contract shall be treated as so modified as not to be less favourable, and (ii) if (apart from the equality clause) at any time the woman's contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed, the woman's contract shall be treated as including such a term; (6) Subject to the following subsections, for purposes of this section – (a) "employed" means 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.' 16. Until it was modified with effect from 19 July 2003, the Act contained two constraints on the effectiveness of its provisions. Section 2(4) provided that no claim could be presented if the employee 'has not been employed in the employment within the six months preceding the date of the reference'. And s2(5) imposed a limit on the recovery of back pay, or a declaration relating to access to a pension scheme, to two years preceding the making of the claim. 17. From 6 April 1978 until 1988 (Social Security Act 1986 s15), the Equal Pay Act was modified by reg. 10 of the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 (SI 142 1976 made under s53 Social Security Pensions Act 1975). This regulation provided that references in the Act to 'less favourable terms of a contract' were to be read (so far as relevant) as referring to 'terms (or terms and conditions) which enable persons to have access to membership of a scheme … on a voluntary (as compared with an obligatory) basis'. A transitional scheme was permitted whereby persons who were employed but who were not members of a pension scheme as of 5 April 1978 could continue to be afforded membership on a voluntary basis (reg. 10(3) and (4)). 18. The precise terms of s53 are as follows: '53(1) The provisions of ss54 to 56 below shall have effect with a view to securing that the rules of occupational pension schemes conform with the equal access requirements. (2) Subject to subsection (3) below, the equal access requirements in relation to a scheme are that membership of the scheme is open to both men and women on terms which are the same as to the age and length of service needed for becoming a member and as to whether membership is voluntary or obligatory'. 19. Regulation 10, which has the cross-heading 'Modification in relation to the equal access requirements of the provisions of the Equal Pay Act as to equality clauses', provides, so far as material: '(1) .. the Equal Pay Act shall be so modified, in its application to the equal access requirements, as to have effect as if there were substituted, for references to less favourable terms of a contract and less favourable terms and conditions of employment, references to (a) terms …which do not enable persons to have access to membership of a scheme (as compared with terms … which do enable persons to have such access) and (b) terms .. which enable persons to have access to membership of a scheme at a higher age or … lower maximum age, after a greater length of service or on a voluntary (as compared with an obligatory) basis.' 20. The 'equal access requirements' did not apply in certain transitional circumstances for reg. 9 contained special provisions for membership of a scheme to be or remain voluntary. The Regulations were made on 3 February 1976 and came into operation on 6 April 1978, preserving the foregoing right in respect of persons who were employed in relevant employment up to that date. 21. Where there is a breach of the equal access requirements, powers are given to an employment tribunal by reg. 12, which provides as follows: '12(1) The Equal Pay Act shall be so modified as to provide that where a court or an industrial tribunal finds that there has been a breach of a term in a contract of employment which has been included in a contract, or modified, by virtue of an equality clause and which relates to membership of a scheme, or where it makes an order declaring the right of an employee to admission to membership of a scheme in pursuance of the equal access requirements, it may declare that the employee has a right to be admitted to the scheme in question with effect from such date ("the deemed entry date") as it may specify, not being earlier than whichever is the later of the following dates, namely – (a) 6 April 1978; and (b) the date two years before the institution of the proceedings in which the order was made. (2) The Equal Pay Act shall be so modified as to require that if the deemed entry date is earlier than the date of the declaration, the employer shall provide any such resources as are specified in para (3) below.' 22. By reg. 13, an employer found to be in breach of the equal access requirements may be ordered to make additional resources available so that the obligation may be met. 23. Public policy in relation to occupational pension schemes changed and was embodied in the Social Security Act 1986, as follows: '15(1) Subject to any such exceptions as may be prescribed – (a) any term of a contract of service (whenever made) or any rule of a personal or occupational pension scheme to the effect that an employed earner must be a member of a personal or occupational pension scheme, of a particular personal or occupational pension scheme or of one or other of a number of particular personal or occupational pension schemes shall be void; and (b) any such term or rule to the effect that contributions shall be paid by or in respect of an employed earner to a particular personal or occupational pension scheme of which the earner is not a member, or to one or other of a number of personal or occupational pension schemes of none of which he is a member, shall be unenforceable for so long as he is not a member of the scheme or any of the schemes.' The Pension Schemes Act 1993 s160(1) continued that policy. 24. The 1976 Regulations continued in force until they were replaced by the 1995 Equal Treatment Regulations, with effect from 1 January 1996. Hence the 1976 Regulations can be relied upon in these proceedings, which were, in the main, commenced in 1994. Under powers given by the Pensions Act 1995, further Regulations were made modifying the Equal Pay Act where an employee claimed the equality clause was connected to pension rights. Regulation 9 of the Occupational Pension Schemes (Equal Treatment) Regulations 1995 provides that s2(5) of the Equal Pay Act does not apply and damages could not be awarded. Instead, reg. 10 inserts s2(6D) into the Equal Pay Act which provides as follows: '(6D) Where a court or employment tribunal finds that there has been a breach of an equality clause which relates to the terms on which persons become members of the scheme – (a) the court or tribunal may declare that a person has a right to be admitted to the scheme in question with effect from such date ("the deemed entry date") as it may specify provided that such date may not be earlier than two years before the institution of the proceedings in which the order was made, and (b) when the court or tribunal so declares and the deemed entry date is earlier than the date of the declaration, the employer shall provide any such resources to the scheme as are specified in subsection (7D) below.' 25. It will be seen that that provision replicates the two-year backdating limitation contained in s2(5) of the Equal Pay Act for ordinary claims of breach of the equality clause. Further temporal limitation is imposed by reg. 11, restricting backdating of any declaration to 17 May 1990 which was the date of the judgment of the European Court of Justice in Barber v Guardian Royal Exchange Assurance Group [1990] IRLR 240 ECJ. 26. Although not directly relevant for these proceedings, the Sex Discrimination Act 1975 has been alluded to for its concepts of direct and indirect discrimination and 'detriment'. In its form relevant to these proceedings, which were commenced before 12 October 2001, ss1 and 6(2) provides as follows: '1. Direct and indirect discrimination against women (1) In any circumstances relevant for the purposes of any provision of this Act, other than a provision to which subsection (2) applies, a person discriminates against a woman if - (a) on the ground of her sex he treats her less favourably than he treats or would treat a man, or (b) he applies to her a requirement or condition which he applies or would apply equally to a man but – (i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and (ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and (iii) which is to her detriment because she cannot comply with it. 6. Discrimination against applicants and employees (2) It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her – (a) in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them; (b) by dismissing her, or subjecting her to any other detriment.'"

"Miss Morris before us conceded that the claim could in fact only run from when her employment commenced to the point when she was given the right to join the scheme which was from 1 April 1987. Thereafter, she would not of course have been treated differently to any of the full-time employees."

"8. Both parties submitted that the Appellant's case is to be considered under the principles established in the case of Preston v Wolverhampton Healthcare NHS Trust (No. 3) [2004] IRLR 96 , although in fact that case did not determine the point in issue in this case. The Judgment in that case was given HHJ McMullen. He set out at the beginning of that Judgment an admirably concise statement of the principal features of the law in relation to access to pension benefits. The essential feature is that the right of access to a pension scheme of this kind falls under the terms of Article 141 of the Treaty of the European Union (formerly Article 119 of the Treaty of Rome). That was established in a number of decisions of the European Court of Justice, including Bilka-Kaufhaus GmbH v Weber von Hartz [1986] IRLR 317 and Vroege v NCIV Instituut voor Volkshuisvesting BV [1994] IRLR 651 . 10. The Chairman subsequently provided certain guidance for those concerned with these part-time pension cases, which has in fact proved extremely valuable to employment tribunals. One of the paragraphs of the information bulletin No. 9 is highly pertinent to this decision, paragraph 7.2 which is as follows: '7.2 Membership for full time employees not compulsory – part-timers excluded Your claim will not succeed in respect of this period of time if you do not join the scheme when the rules later changed to allow you to do so or you only did so after significant delay. This is because your failure to join the scheme when you were allowed to, suggests that had you been a full-timer you would not have joined the scheme during this earlier period of time anyway and therefore you have lost nothing. However, there is an exception for applicants who can satisfy a tribunal that they would have joined during the earlier period had they been eligible. This is to allow for special cases such as those where by the time the rules were changed to enable part-timers to join, an applicant was so near to retirement that joining was pointless, or she had already taken out a private pension plan.' 15. Plainly, an employee has no complaint if she would not have joined the scheme even if eligible to do so. The fact that when she becomes eligible she does not join will be powerful and often very powerful evidence from which a Tribunal will readily draw the inference that she would not have joined even had she been notified of her eligibility at an earlier stage. But it is not necessarily conclusive and the tribunal must always focus on the crucial question whether she would have joined the scheme at the earlier stage or not. There may be explanations as to why she did not join later but would nonetheless have joined earlier. Paragraph 7.2 recognises that this is a clear possibility. A potential special case which identified in paragraphs 7.2 is where she has taken out a private pension and it may have been more sensible for one reason or another to maintain that arrangement in place rather than to go into the employer's scheme. But there may be other explanations, good or bad, as to why she did not join when she became eligible to her knowledge and yet will still be able to establish that she would have joined at an earlier date. 21. We have come to the conclusion that the Appellant's contention is correct and that the Tribunal did err in its approach in this case. 22. But we accept that the Tribunal here should have focused on the fundamental question whether the employee would have joined the scheme at the earlier stage, had she thought that she was eligible to do so. There was in this case evidence which the Tribunal could properly consider would be material to that issue, namely the fact that she had made enquiries and she had indeed taken out her own private pension arrangements. 23. Looking at this Tribunal decision, we do not think that the Tribunal did focus on that key question and assess the significance of the evidence when taken as a whole. Had they done so, they might have reached a different conclusion. We are not prepared to say, as Miss Morris urges upon us, that they would inevitably have taken the view that she would have joined at the earlier stage. We are not confident that that was the only inevitable result that they could reach on the evidence before them, but we do accept that they need to focus on that issue and we are not satisfied that they did in this case."

"29. I am satisfied that the Tribunal fell into error. Despite referring to Dennison it appears to have fallen into the same error as the Tribunal in that case in that it failed to focus on whether or not the claimant could establish that had she been afforded access to the NHS pension Scheme when she should have been, she would, on a balance of probabilities, have joined it. Her case was: when she was interviewed in 1983, she asked whether she would be able to join the scheme. She would, as the Tribunal appears to have accepted, have joined the scheme at that stage had she been allowed to do so. Within three years of commencing employment, not being able to join the NHS Scheme, she had taken out a private pension policy. By January 1991, she had taken out three such policies and was paying a significant sum into them each month. She understood, however, that the NHS Scheme was a better pension scheme than her private policies. She could not afford both to pay into her private policies and to take up her entitlement to join the NHS Scheme when she first got to know about it. If she had ceased making her private policy payments, she would have suffered a penalty on that investment. When she could afford to pay into both the NHS Scheme and her private policies, she opted into the former. This was not, accordingly, a case of a woman who would not have bothered about securing a pension for herself; nor is it a case of a woman who was opposed in principle to joining her employers' pension scheme. It is hard to see what more would be required to persuade a Tribunal that she would have joined the Scottish NHS Pension Scheme in September 1983 had she not been denied the opportunity to do so on account of her part-time status. I can only think that the Tribunal here has focussed unduly on the fact of the delay between eligibility and joining in 1996, overlooking the need to ask what would have happened at the earlier stage."

"146. I do not accept Mr Cavanagh's interpretation of the compensatory provisions of the Equal Pay Act. Indeed, apart from section 2(5), which limits the award of compensation to the two year period immediately preceding the commencement of proceedings, there is nothing in the Act which touches upon how compensation is to be calculated, from which I can only conclude that, the cause of action being a breach of the equality clause implied into the contract of employment by section 1(1), the normal rules with regard to the assessment of damages for breach of contract apply. That would include, as Miss McNeil concedes, the possibility of an award of purely nominal damages. It is clear from Regulations 12(2) and (3) that once a declaration is made the employer is required to pay into the pension scheme the resources necessary to fund the applicant's pension which suggests that, if Mr Cavanagh is right, it would not be possible to make the declaratory equivalent of an award of nominal damages."

"24. In the first of its questions the national court asks whether a staff policy pursued by a department store company excluding part-time employees from an occupational pension scheme constitutes discrimination contrary to article 119 where that exclusion affects a far greater number of women than men. 25. In order to reply to that question reference must be made to the judgment of 31 March 1981 in Jenkins –v- Kingsgate (Clothing Productions) Ltd (case 96/80) [1981] IRLR 228 . 26. In that judgment the Court considered the question whether the payment of a lower hourly rate for part-time work than full-time work was compatible with Article [141]. 27. Such a practice is comparable to that at issue before the national court in this case: Bilka does not pay different hourly rates to part-time and full-time workers, but it grants only full time workers an occupational pension. Since, as was stated above, such a pension falls within the concept of pay for the purposes of the second paragraph of Article 119 it follows that, hour for hour, the total remuneration paid by Bilka to full time workers is higher than that paid to part-time workers. 28. The conclusion reached by the Court in its judgment of 31 March 1981 is therefore equally valid in the context of this case. 29. If, therefore, it should be found that a much lower proportion of women than of men work full time, the exclusion of part-time workers from the occupational pensions scheme would be contrary to Article 119 of the Treaty where, taking into account the difficulties encountered by women workers in working full time, that measure could not be explained by factors which exclude any discrimination on grounds of sex. 30. However if the undertaking is able to show that its pay practice may be explained by objectively justified factors unrelated to any discrimination on grounds of sex there is no breach of Article 119. 31. The answer to the first question referred by the national court must therefore be that Article 119 of the EEC Treaty is infringed by a department store company which excludes part time employees from its occupational pension scheme, where that exclusion affects a far greater number of women than men, unless the undertaking shows that the exclusion is based on objectively justified factors unrelated to any discrimination on grounds of sex."

"Member States shall introduce into their national legal systems such measures as are necessary to enable all employees who consider themselves wronged by failure to apply the principles of equal pay to pursue their claim by judicial process…"

"For the purposes of calculating the date of the less favourable treatment or detriment … (a) Where a term in the contract is less favourable, that treatment shall be treated … as taking place on each day of the period during which the term is less favourable."

"47. It is important to note in our case the following: (a) It is conceded that the applicants were excluded because they were part timers (b) This has a disparate impact on women (c) Justification is not advanced (d) The relevant scheme is contributory, whereas if it were non-contributory there can be no question but that it constituted less favourable treatment. 48. It seems to me that in those four cases before the Luxembourg Court (including Barber ) the court was prepared to conclude that, subject to justification, mere exclusion from an occupational pension scheme was a breach of Article 141. It was not suggested that further examination of any particular candidate's personal circumstances was required. In other words it is less favourable treatment to exclude a person from a pension scheme… 49. ..For the purpose of the debate in this case, it is assumed in the electricity supply industry that, broadly speaking, employers pay substantially more than employees by way of contributions to the scheme. Where that kind of relationship exists, it seems to me that the European Court did not require a national court to weigh the relative burden and benefit to any given employee, nor did it require an individuated assessment of their choice…it seems to me therefore that the answer to Mr Jean's submissions is found in those European Court judgments. 50. It is of course true that the applicant has to succeed by way of Article 141, because in domestic law at the relevant time she could not complain of indirect discrimination, and she was precluded by the two-year limit on backdating from obtaining any relief in domestic law. I accept at once that the essence of Article 141 is to outlaw 'less favourable treatment'.. 52. Mr Jeans argued that less favourable treatment means the same as a detriment … Mr Jeans relied on Shamoon –v- Chief Constable of the RUC [2003] IRLR 285 HL . 53. Those cases are all brought under either the Sex Discrimination Act/Order or the Race Relations Act and involve consideration of 'detriment' as well as 'less favourable treatment'. I accept Mr Cavanagh's submission that, authoritative as they are, they do not assist in examining whether or not there has been a breach of contract, ie a breach of the equality clause. As he put it, the central question is whether there has been a breach of the clause, resulting in less favourable treatment, not whether the applicant considers there to have been less favourable treatment. When examining whether there has been a breach of contract, the result cannot be different for the group of workers affected by the Electricity test cases according to their personal circumstances and imputed intentions looked at retrospectively. In so far as the speeches in Shamoon are instructive on this issue, they point to an objective rather than a subjective approach to the resolution of this issue. Both Lord Scott and Lord Hope expressly refer to what is 'reasonable' and the references in Barclays Bank Plc –v- Kapur .. to 'unjustified' by the Court of Appeal also injects objectivity into the discussion. 54. Further Mr Cavanagh is correct when he relied on Mr Paines's submission as follows: '… The ECJ has consistently held since case 170/84 Bilka [1986] IRLR 317 that Article 141 is infringed where part-time employees are excluded from an occupational pension scheme, where that exclusion affects a far greater number of women than men and where the scheme and employer cannot show that the exclusion is based on objectively justifiable factors unrelated to any discrimination on grounds of sex. The whole of the case law of the ECJ on pensions has concerned substantive inequality between part-timers and full-timers, not differences in the administrative procedures for gaining access to schemes'"

"17. When the case returned to the EAT [2004] IRLR 96 , Judge McMullen QC adopted a limited view of the scope of the new principle. He thought it was intended "to rescue employees who do not have a permanent job" and that it was confined to cases of the kind considered by the ECJ; that is those relating to Applicants who - "work regularly but periodically or intermittently for the same employer under successively but legally separate contracts." (Para 113 to 114) 18. In Thatcher v Middlesex University [2005] All ER(D) 82, BAILII: [2005] UKEAT 0134_05_1006 (quoted at length in Minister for Health v Rance [2007] IRLR 665 para 52) he introduced a further refinement. Basing himself on some comments of the Employment Tribunal in Preston itself, he said, (para 7) a stable employment relationship ceases where the terms of the contract or (and I emphasise the word "or") the work done under it radically differs … 19. For a time, this approach appears to have been accepted as orthodoxy by the profession. However, in Slack v Cumbria CC [2009] IRLR 463 , the Court of Appeal had occasion to consider the application of the principle on facts rather different from those of Preston ."

"The Claimants disagreed. They submitted 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 Courts of Justice under the purpose of the 2003 Regulations is that an uninterrupted succession of contracts is an a fortiori case of a stable employment relationship. ... "26. It would probably be enough to say that we are bound by the judgment in Slack , and that there is no reason to distinguish it. However, since the message of that case seems to have taken a little time to sink in with the profession, it may be helpful to add some supporting explanation… 28. Although the ECJ adopted the new concept with reference to a case in which there was "a succession of short-term contracts" (reflecting the facts of the cases before it) their language does not confine it to that factual situation. On the contrary; if stability of the relationship is the guiding principle, it would be perverse to hold that a succession of long-term contracts cannot achieve the same result. 29. Thirdly, it is significant that the concept of a "stable employment relationship" as adopted by the ECJ in Preston appears to have been entirely new. 31. By adopting an entirely new expression, the court was, as I read the judgment, signalling a wish to distance itself from all these various formulations… 32. In particular, as I understand it, the word "employment" in this phrase was intended to refer to the nature of the word, rather than the legal terms under which it is carried out. Thus in stipulating that a "succession of contracts" must be in respect of "the same employment", the court cannot have intended to use the word "employment" in the legal sense of a contract in employment , since the word would make nonsense of the sentence. The natural alternative is a reference to the type of work, or job."

"Upon an application made to an industrial tribunal under section 2 – where we think there is a power to grant a declaration, or to order the payment of arrears of remuneration, or damages in respect of contravention – the situation is that the industrial tribunal, if it so applies section 1(2)(a)(i), will find that the contracts of the appellants when modified contain a clause under which they are entitled to remuneration at the rate of 97½p. In other words, once the section is applied and the contract is modified, there is then a contract providing remuneration at that rate. It seems to us that the true way of looking at it is that that contract remains so modified until something else happens, such as a further agreement between the parties, a further collective agreement or a further statutory modification by reason of a further operation of the equality clause…it seems to us that when making the order under section 2 the [employment] tribunal has to take the contract of employment as so modified, with the consequence in this case that after December 29, unless and until there is some further change, the remuneration continues at the rate of 97½p."

"61. ..if correct, it would mean that a woman would lose her right to the enhanced pay she had secured under the Equal Pay Act if the comparator is promoted or leaves the company… 62. I have no doubt at all that this analysis is wholly misconceived…. once the discrimination is established, the woman is entitled to receive what the man is paid. That is the proper non-discriminatory rate for the job. She does not just receive that increase for the period for which the man receives it, only to have her pay reduced again to the 'woman's rate' if and when he ceases to be a comparator. 63. ..of course, a woman cannot continue to compare herself with the man once he ceases to be a comparator, but she does not lose such enhanced rights as have already been incorporated into her contract. Those rights are by then crystallised and she remains entitled to enforce them as a term of the contract."

"28. It was not immediately clear to me whether the correct law to be applied to the offending rule ("

"(2) In any circumstances relevant for the purposes of a provision to which this subsection applies, a person discriminates against a woman if – (a) on the ground of her sex, he treats her less favourably than he treats or would treat a man, or (b) he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but – (i) which puts or would put women at a particular disadvantage when compared with men, (ii) which puts her at that disadvantage, and (iii) which he cannot show to be a proportionate means of achieving a legitimate aim."