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Preston and Others v. Wolverhampton Healthcare NHS and Others (Second Appeal)
Fletcher and Others v. Midland Bank Plc (Conjoined Appeals)
(RESPONDENTS) (SECOND APPEAL)
LORD GOFF OF CHIEVELEY
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Slynn of Hadley, I agree with him that the three questions which he has set out at the end of his speech should be referred to the European Court of Justice, and I would make the same order as he has proposed.
LORD SLYNN OF HADLEY
On 28 September 1994 the European Court of Justice ruled that the right to membership of an occupational pension scheme, as well as benefits payable under the scheme, fell within the scope of Article 119 of the EC Treaty; that the exclusion of married women from membership of such a scheme entailed discrimination based on sex; and that the exclusion of part time workers from membership could amount to a contravention of that Article if it affected a much greater number of women than men unless the employer showed that exclusion was explained by objectively justified factors unrelated to discrimination on the ground of sex. The court further held that the right to join an occupational pension scheme was not limited to employment subsequent to the court's judgment in Barber v. Guardian Royal Exchange Assurance Group (Case C-262/88  ECR I-1889) but that Article 119 could be relied on to claim equal treatment in the right to join an occupational pension scheme as from 8 April 1976, the date of the court's judgment in Defrenne v. Sabena (Case 43/75  ECR 455). (Vroege v. NCTV Instituut voor Volkshuisvesting B.V. and Another (Case C-57/93  ECR I-4541) and Fisscher v. Voorhuis Hengelo B.V. and Another (Case C-128/93  ECR I-4583).
At the same time the court applied the principle in Rewe-Zentralfinanz e.G. v. Landwirtschaftskammer für das Saarland (Case 33/76  ECR 1989) that time-limits under national law applied to the assertion of such rights so long as the rules were not less favourable for that type of action than for similar actions of a domestic nature and that they did not render the exercise of rights conferred by Community law impossible in practice.
As a result of these decisions a large number of part-time workers (estimated by now at around 60,000 and mainly, but not exclusively, women) began proceedings before Industrial Tribunals throughout the country, variously claiming that as part-time workers they had been excluded from occupational pension schemes or that their part-time service had not been credited for pension purposes. Some claimants had been employed in the private sector, others in the public sector.
These cases covered a wide range of different employments and were likely to raise difficult and detailed questions of fact, inter alia, as to whether the distinction between full-time and part-time workers could be justified on objective factors other than sex. A number of cases also raised distinct questions as to the position of men in such employment.
Sensibly, it was arranged that a group of claims by women employees in the public sector (employed by the Wolverhampton Healthcare NHS Trust, the Secretaries of State for Health, Education and Employment and the Environment and a number of local authorities) and a group of claims by women employees in the private sector (employed by Midland Bank plc) should be taken as test cases to decide limited issues of law before the questions of fact were investigated.
These issues were principally concerned with the effect on the women's rights under Article 119, as explained in the Vroege and Fisscher cases, of section 2(4) and (5) of the Equal Pay Act 1970. S. 2(4) and (5) are amended by s. 8(6) of and Sch. 1, Pt. 1, para 2 to the Sex Discrimination Act 1975 and modified by reg. 12(1). Those subsections as amended provide as follows:
The cases came before the Industrial Tribunal in Birmingham. The Chairman gave a decision to the care and clarity of which the Employment Appeal Tribunal paid and I would pay tribute. After an analysis of the facts so far as relevant to the issues reserved to him he decided that the time limit in section 2(4) of the Employment Protection Act 1970 applied and that it did not render the exercise by the appellants of their European Community law rights impossible or excessively difficult. It followed that a claim was only in time if brought not later than the end of the period of six months beginning when the employment which gave rise to the complaint ended. He further held that, by reason of section 2(5), as amended, a claim could not be made in respect of the time earlier than the period of two years referred to in the subsection, and that this was not incompatible with Community law and in particular with the European Court's decision in Marshall v. Southampton & S.W. Hampshire Area Health Authority (No. 2)  ECR 1-4367 since during the two year period a full and complete recovery could be made. Section 2(5) did not make it impossible or excessively difficult to enforce rights under Article 119.
On appeal the Employment Appeal Tribunal upheld the decision of the Industrial Tribunal. They directed themselves that it was for the domestic legal system of each member state to determine the procedural rules and conditions governing actions at law intended to ensure the protection of the rights which individuals derive from the direct effect of Community law. The applicants could have enforced their rights of legal access to an occupational pension scheme at any time since 1976 and the time of six months under section 2(4) of the 1970 Act in which to invoke Article 119 was the same as that for bringing claims under the 1970 Act itself. Neither section 2(4) nor section 2(5) made it impossible or excessively difficult for the claimants to assert their Article 119 rights. The Tribunal decided not to refer questions to the European Court of Justice but to stay their final decision on the issue under section 2(5) of the 1970 Act until the European Court's decision in Mrs. B. S. Levez v. T. J. Jennings (Harlow Pools) Limited (appeal No. EAT/812/94) where questions as to the compatibility of section 2(5) with Community law were raised.
By judgment dated 13 February 1997 the Court of Appeal upheld the decision of the EAT. The court rejected the argument that ignorance of rights under community law made their exercise impossible. The six-month period under section 2(4) was a reasonable limitation. Moreover the exercise of rights under Article 119 was to be compared only with the exercise of rights under the 1970 Act which came into force before Article 119 was of direct effect in the United Kingdom. To make comparison with remedies under the Race Relations Act 1976 was inappropriate and it was not clear in any event that the latter were more favourable. The two year limitation under section 2(5) was not incompatible with the court's decision in Fisscher and they rejected arguments of the applicants based on the decision of the European Court of Justice in Emmott v. Minister for Social Welfare  ECR I-4269 but those arguments had not been pursued before their Lordships. The Court of Appeal also exercised its discretion against making any reference to the European Court.
By Article 177, third paragraph, of the Treaty, however, if questions as to the interpretation of the Treaty arise which it is necessary for the House to decide to enable judgment to be given they must be referred to the Court of Justice unless your Lordships are satisfied that the answer is so clear that a reference is not necessary.
On this appeal two groups of questions have arisen, which do not depend on the determination of any issue of domestic law, as to the compatibility of provisions of the Act of 1970 as amended with Article 119 of the Treaty and which clearly must be decided before judgment can be given.
The appellants contend, first, that the effect of the provision of section 2(4) of the Act of 1970, that a claim for membership of an occupational pension scheme (from which the right to pension benefits flow) must be brought within six months of the end of the employment to which the claim relates, makes it impossible in practice or excessively difficult for the claimants to exercise their rights under Article 119. They also say that this provision means that national procedural rules relating to a claim under Article 119 are thereby less favourable than national procedural rules which apply to other similar claims, in particular those under the Race Relations Act 1976, section 68, the Sex Discrimination Act 1975, section 76, and for breach of contract.
As to the requirement that a procedural rule must not be "impossible in practice" the appellants contend that the six-month limitation makes it impossible for them to claim the full amount of future benefits payable under the scheme since they cannot rely on years of past service in making the computation. As to the requirement that procedural rules should be not less favourable than rules relating to similar claims in domestic law, they say that, on the face of it, in some legislation longer periods are prescribed than for the claim under section 2(4). Alternatively they say that if shorter periods are prescribed than in the Act of 1970, the other legislation allows for flexibility and a discretion to extend the period so that in the result they are more favourable than the six month period provided in section 2(4).
The respondents reply that it was not impossible for the applicants to make their claim within the six-month period. That they failed to do so, even if because they did not know prior to the judgments in Vroege and Fisscher that they had a claim, was their own responsibility and did not make the assertion of the claim impossible. In any event six months is not only reasonable but a generous limitation period. As to the assertion of less favourable treatment the respondents contend that the only relevant similar domestic right of action is the claim under the Act of 1970 itself and that the other claims relied on are not in any sense similar to a claim for equal pay without sex discrimination. As to section 2(5), the appellants say that, in relation to a claim for membership of a pension scheme and for the calculation of pension benefits payable after the date of the application to the Industrial Tribunal, the respondents cannot, as a matter of Community law, be allowed to rely on section 2(5) of the Act of 1970 so as to exclude part-time service performed more than two years prior to the date when proceedings were commenced, so long as it is after 8 April 1976, the date of the European Court's judgment in Defrenne.
The respondents reply that section 2(5) merely limits the period in respect of which the claim which is made (in itself permissible under the decision in Rewe) and does not affect the full entitlement to the amount of pension payable during that period.
The application of the tests of "excessively difficult or impossible in practice" and of the test of "not less favourable" raises questions common to section 2(4) and to section 2(5). As to section 2(5) two particular factors are to be noted.
In the first place, the issue arising under section 2(5) of the Act of 1970 is the subject matter of a reference already made by the Employment Appeal Tribunal to the European Court of Justice in Levez to which reference has been made. The question thus arises as to whether the House should wait for that decision before considering further the present case or whether it is preferable to refer the particular questions which the parties are agreed fall to be decided in the present case. In my opinion the better course is to refer the latter questions to the European Court which it is to be anticipated will have them available if it proceeds to hear the Levez case, unless of course the European Court decides to hear the two cases together with the advantage of hearing all the arguments at the one time but with the obvious disadvantage to Levez of delay in that case.
In the second place, since the judgment of the Court of Appeal in the present case, the European Court has given judgment in the case of Magorrian & Cunningham v. Eastern Health & Social Services Board and Department of Health and Social Services (Case C-246/96 Judgment 11 December 1997). That case also concerned the compatibility with Article 119 of the two year rule set out in Regulation 12 of the Occupational Pension Schemes (Equal Access to Membership) Regulations (Northern Ireland) 1976 S.I. No. 238 where exactly the same question of principle arises. In that case the court said:
The parties are not agreed as to the effect of that decision on the present case. The applicants say that it decides clearly that, because section 2(5) (or Regulation 12) applied to claims for future benefits based on past service, it rendered action by individuals relying upon Community law impossible in practice. That reasoning is applicable to the claim under section 2(4) though section 2(4) was not in issue in the Magorrian case. The respondents contend that the decision in Magorrian was based on the particular fact that under the scheme 20 years' service constituted a precondition of additional benefits over and above the basic pension payable and that Regulation 12 prevented the applicants from qualifying. In the alternative they say that this judgment is inconsistent with previous decisions of the court and in particular with Fantask C-188/95 judgment 2 December 1997 and Fisscher (supra). They contend that this radical change in the law and a misreading of the Regulation makes it necessary that what was said there should be considered in the present case before section 2(5) as amended is held to be invalid.
In my opinion the answer to the question whether as Mr. Pannick submits the European Court's judgment in Magorrian is decisive of the issue in relation to both section 2(4) and section 2(5) of the Act of 1970 as amended, which have to be decided before judgment can be given, cannot be said to be so clear that no reference by your Lordships' House to the European Court of Justice is necessary.
In my opinion, therefore, questions numbered 1 and 2 set out at the end of my speech should be referred to the European Court of Justice pursuant to the third paragraph of Article 177 of the EEC Treaty. For the convenience of the European Court I annex to this speech a summary of more details of the facts and pension provisions as agreed by the parties to this appeal.
There is one further issue in the Preston case which involves in the first place a question of domestic law, namely the proper interpretation of section 2(4) of the Act of 1970. It concerns part-time teachers or lecturers who respectively belong to one of three groups: (a) those who were employed at the same school under a succession of contracts for the academic year, the only break being for the period of each long vacation; (b) those employed under a succession of fixed term contracts with breaks during vacations or courses; and (c) those who work intermittently. It is possible that in such situations there may exist an "umbrella" contract, which requires the employer to offer and the employee to accept work from time to time, although there is no agreement that that exists in the present cases.
The question essentially is whether if a woman claims in respect of the operation of an equality clause within six months of the end of her employment the equality clause is to be read as applicable to the particular contract governing that employment or as applying to the employment relationship covering a number of different contracts with the same employer, whether as in (a) and (b) above (periodic but regular) or as in (c) above (intermittent).
The Industrial Tribunal, the Employment Appeal Tribunal and the Court of Appeal all held that in section 2(4) "the employment" means the employment under the contract of service about which complaint is made. As the EAT put it
It is thus not possible to claim in respect of previous contracts unless proceedings have been instituted within six months of their termination.
The appellants contend to the contrary. It is their case that in section 2(4) "employed in the employment" refers to the whole employment relationship under a series of successive contracts, even where there are breaks, so long as a claim is made within six months of the end of the employment generally. If this were not so, workers in the public sector, particularly part-time teachers, would be at a serious disadvantage. Once it is accepted (as the courts below accepted) that "the employment" can cover a series of successive contracts where there is no break, there is no justification for excluding from the benefit of the section a succession of contracts for the same kind of employment with breaks between them, particularly where the breaks are during periods (school holidays) where there is no teaching to be done. This approach, it is said, is supported by the provisions of section 1 of the Act of 1970 where the reference to a man employed in the same employment cannot mean "employed under the same contract of employment"; nor does section 1(6) of the Act point to one single contract as opposed to a series of related contracts.
Looked at as a whole, they say, the purpose of section of 2(4) must be to allow a claim to be brought in respect of the full employment relationship and to exclude claims which are not brought within six months of the end of that relationship. It is unreal not to have regard to the continuity and artificial to say that the employment relationship ends at each day, each term or each year of the contract when really the teachers are employed under a series of contracts which contribute to the pension rights about the quantum of which they complain. If the statute is construed as the Court of Appeal construe it that will be inconsistent with the European Court of Justice's decision in Marshall v. Southampton & S. W. Hampshire Health Authority (No. 2) (supra) since there will not be real and effective judicial protection of rights under Article 119. Indeed to require a claimant to bring a separate claim in respect of each separate contract makes it "impossible in practice" to enforce full pension rights. Moreover it does not make sense to do so when the claims all arise under the same pension scheme and the benefits are only paid when the "employment" rather than "a contract of employment" comes to an end.
Mr. Pannick's submissions on this point may provide strong arguments as to what the policy should be in relation to, for example, supply teachers who, he suggests, have a continuous period of employment under separate contracts.
I do not, however, consider that this interpretation of section 2(4) of the Act of 1970 can be accepted.
In the first place section 1 of the Act provides that "(1) If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include . . . an equality clause they shall be deemed to include one" and by section 1(6)(a) "employed" is defined as "employed under a contract of service." That definition is for the purposes of section 1 only but it does give an indication that the structure of the Act is based on the incorporation of the equality clause into a specific contract of employment and not simply into an employment relationship. There is no provision that different contracts of employment are to be treated as continuous employment.
In the second place section 2(4) refers to a claim in respect of the operation of "an equality clause relating to a woman's employment." That equality clause is a clause in a contract of employment which as I see it can only be the specific contract in respect of which the claim is made and which for the purposes of the Industrial Tribunal's jurisdiction must cover employment which has ended within six months of the claim before the Industrial Tribunal. The "woman's employment" in line two is referable to "the employment within the six months" period in lines 4-5 of the section; the latter refers back to employment under a contract which contained, or which by statute has read into it, an equality clause. Where there are breaks between separate contracts, at any rate where there is no umbrella clause under which periodically and regularly work must be given and accepted, the time to bring a claim expires six months from the end of each contract.
That conclusion, contrary to the appellants' contention, does not involve putting a gloss on or reading words into section 2(4). It is the natural meaning of the words in their context.
Where there is a continuing succession of contracts without break, in principle, the position should be the same but I would not rule out the possibility that on particular facts the existence of a succession of such contracts might lead to the conclusion that there was an overriding contract in respect of which a claim might be made when all employment came to an end. On the statement of facts agreed by counsel in Mrs. Preston's case that question does not arise on this appeal.
Mr. Pannick relies on the provision in section 6(c) of the Interpretation Act 1978 that words in the singular include words in the plural. I do not think that helps here since even if, unlikely as it may be, a person was employed under more than one contract with the same employer, they must all end at a date within the six months period. I do not think in any event that the context requires that "contract" should here include all contracts of employment.
Mr. Pannick also relies on section 62 and section 63 of the Pensions Act 1995. The former section lays down an equal treatment rule for occupational pension schemes. The latter provides that for the purposes of section 62 section 2 of the Act of 1970 shall have effect as if references to an equality clause were references to an equal treatment rule and as if for section 2(4) there were substituted: