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|Judgments - Preston & Others v. Wolverhampton Healthcare N.H.S. Trust & Others and Fletcher & Others v. Midland Bank Plc
HOUSE OF LORDS
Lord Slynn of Hadley Lord Goff of Chieveley Lord Nolan Lord Hope of Craighead Lord Clyde
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
PRESTON & OTHERS
WOLVERHAMPTON HEALTHCARE N.H.S. TRUST & OTHERS
FLETCHER & OTHERS
MIDLAND BANK PLC
ON 8 FEBRUARY 2001
 UKHL 5
LORD SLYNN OF HADLEY
1. These appeals are brought by part-time workers to challenge the compatibility in relation to their employment of sections 2(4) and 2 (5) of the Equal Pay Act 1970 (as amended by section 8(6) of and paragraph 6(1) of Part I of Schedule 1 to the Sex Discrimination Act 1975), section 2(5) being read with effect from 6 April 1978 with regulation 12 of the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 (SI 1976 No 142).
Those provisions are as follows. Section 2:
Article 119 of the EC Treaty (OJ 1992 C 224, p 6) provides:
"Each Member State shall . . . maintain the application of the principle that men and women should receive equal pay for equal work. 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. . . . "
2. The facts of the cases are set out in my speech on 5 February 1998  1 WLR 280, 283 et seq to which I refer. Your Lordships asked a number of questions of the European Court of Justice pursuant to article 177 of the EC Treaty, to which that Court (Case C-78/98)  ICR 961 replied in its judgment delivered on 16 May 2000.
3. The Court in that judgment, at pp 995-996, para 31, referred to its decision in Rewe-Zentralfinanz eG v Landwirtschaftskammer fur das Saarland (Case 33/76)  ECR 1989, 1997, para 5 that
4. However, where reliance is placed on the performance of domestic procedural conditions those conditions must not be such as to make the enforcement of Community law rights impossible in practice and they must not be less favourable than those applying to a similar claim of a domestic nature.
5. It is in the light of the Court's judgment in the present case that the issues on the appeal must now be decided.
Effectiveness - section 2(4)
6. The first question posed asked (in part (a)) whether the requirement of section 2(4) that a claim could only be referred to an Industrial Tribunal if a woman had been employed in the employment within the six months preceding the date of reference meant that it was excessively difficult or impossible in practice for rights under article 119 to be exercised. The Court said that it was settled case law that the fixing of reasonable limitation periods for bringing proceedings satisfied the Community law principle of effectiveness in that it constituted an application of the fundamental principle of legal certainty.
7. Accordingly in paragraph 34 of its judgment, at p 996, the Court ruled that a limitation period of six months
8. This, however, is subject to the proviso that such limitation period is not less favourable for actions based on Community law than for those based on domestic law.
9. The applicants' argument on this point must therefore be rejected.
Effectiveness - section 2(5)
10. The first question in part (b) asks whether the rule that pensionable service is to be calculated only by reference to service after a date falling no earlier than two years prior to the date of her claim meant that it was excessively difficult or impossible in practice for the claimant to exercise her rights under article 119. The Court of Justice, at p 997, stressed two preliminary points. The first (paragraph 37) is that the object of such a claim as that in the present case is
In the second place (paragraph 38), a claimant could not claim more favourable treatment if she succeeded than she would have had if she had been duly accepted as a member. This meant (paragraph 39) that in order to claim retroactively to join an occupational pension scheme, contributions relating to the period of membership concerned would have to be paid.
11. The Court then referred, at p 997, para 40, to its own decision in Magorrian v Eastern Health and Social Services Board (Case C-246/96)  ICR 979 in which it had been held (paragraph 41, p 1003) that a rule similar to the rule in the present case, that the right to be admitted to a scheme may have effect from a date no earlier than two years before the bringing of proceedings,
Such a rule struck at the very essence of the rights conferred by the Community legal order and rendered any action by individuals relying on Community law impossible in practice: p 997, para 41. Such a rule as that in section 2(5) of the 1970 Act was therefore incompatible with Community law as was a procedural rule like regulation 12 of the 1976 Regulations which prevented the entire record of service completed by those concerned before the two years preceding the date on which they commenced proceedings from being taken into account for the purpose of calculating the benefits which would be payable even after the date of the claim: p 997, para 42 and 43.
12. Accordingly the rules in section 2(5) of the 1970 Act and in regulation 12 of the 1976 Regulations are precluded by Community law. The respondents cannot therefore rely on that section or that regulation to defeat a claim for periods prior to the two years to be taken into account, subject to the employee paying contributions owing in respect of the period for which membership is claimed retroactively. Future pension benefits have therefore to be calculated by reference to full and part-time periods of service subsequent to 8 April 1976, the date of the Court's judgment in Defrenne v Sabena (Case 43/75)  ICR 547 (when the Court held that article 119 of the EC Treaty had direct effect: see Vroege v NCIV Instituut voor Volkshuisvesting BV (Case C-57/93); Fisscher v Voorhuis Hengelo BV (Case C-128/93)  ICR 635.
Equivalence - section 2(4)
13. Having decided that section 2(4) of the 1970 Act did not render the claim impossible in practice, there remained the question whether the limitation was less favourable than for similar actions based on domestic law. In the first place it has to be asked whether there is a similar action to take as the comparator. On the basis of its judgment in Levez v T H Jennings (Harlow Pools) Ltd (Case C-326/96)  ICR 521 the Court  ICR 961, 998, para 51, ruled that since the 1970 Act was adopted to give effect to the Community principle of non-discrimination on grounds of sex in relation to pay pursuant to article 119 and Council Directive (75/117/EEC) of 10 February 1975 (OJ 1975 L 45 p 19) ("the Equal Pay Directive") it was not appropriate to compare the procedural rules for the two claims. Accordingly an action alleging a breach of the 1970 Act was not a domestic action "similar" to a claim for infringement of article 119.
14. Whether a domestic law action is similar to a claim for infringement of article 119 depends on whether the purpose, the cause of action and the essential characteristics of the two proceedings are similar: see paragraphs 55-57 of the Court of Justice's judgment in the present case, at p 999.
15. The first question is thus whether the purpose, essential characteristics and cause of action in proceedings identified by the applicants as being similar are in fact similar to a claim for the infringement of article 119.
16. The applicants originally relied on claims under the 1975 Act and the Race Relations Act 1976 but they no longer pursue those contentions. They do however say that claims for breach of contract are similar to claims for infringement of article 119 as limited by section 2(4) of the 1970 Act since the breach of contract alleged is in respect of a failure by the employer to conform with the deemed equality clause introduced into the contract by section 1 of the 1970 Act. It is said that Advocate General Léger in his opinion in the present case, at pp 981-983 contemplated an appropriate comparison being one with a domestic action by a part-time worker who complained that he had been unlawfully excluded from an occupational scheme when the employer knew or ought to have know that such exclusion was unlawful: see paragraphs 92 -101 of his opinion.
17. The respondents say that the domestic law claim to be similar must "in juristic structure [be] very close to the Community claim": Matra Communications SAS v Home Office  1 WLR 1646, 1658, per Buxton LJ. The claim in Community law is essentially to establish the right of retroactive access to the pension scheme as the Court of Justice has stressed. A claim in contract could only be for damages for failure to give effect to the bargain agreed between the parties by the employer failing to pay into the pension scheme and thereby not paying the appropriate pension when it eventually fell due. A claim in contract is essentially different from a claim to a statutory right or a claim under article 119 which is for the enforcement of a fundamental right which overrides any bargain which the parties might have agreed. The fact that regulation 11 of the 1976 Regulations excludes the right to damages and that regulation 12 gives a right of retrospective access to the scheme only serves to emphasise the lack of similarity.
18. It is clear that there may be no similar action for the purposes of this inquiry: see Palmisani v Istituto Nazionale della Previdenza Sociale (Case C-261/95)  ECR I-4025, 4049, paragraph 39 and Levez v T H Jennings (Harlow Pools) Ltd (Case C-326/96)  ICR 521, 546, paragraph 50. The Court is not therefore driven to find the nearest comparison but to decide whether there really is a similar action to that to enforce rights under the statute and under article 119.
19. Some distinctions between what on the surface were arguably similar claims have been accepted by the Court of Justice as precluding the application of the principle of equivalence. Thus in Palmisani's case  ECR I-4025, 4048, paragraph 34 the Court said:
20. Again in Edilizia Industriale Siderurgia Srl v Ministerio delle Finanze (Case C-231/96)  ECR I-4951) the Court was asked to consider whether Community law permitted actions for the reimbursement of charges paid in breach of a Community law Directive (Council Directive (69/33/EEC) (OJ, English Special Edition 1969 (II), p 412)) to be subject to a time limit of three years, a period which differed from the limitation period (10 years) which italian national law laid down for actions for the recovery of sums paid between individuals when they were not due. The Court, having set out the established principles of national procedural autonomy, subject to observance of the principles of effectiveness and equivalence, went on to hold that the principle of equivalence does not oblige a member state to extend its most favourable rules governing recovery under national law to all actions for repayment of charges or dues levied in breach of Community law: paragraph 36, p 4991.
21. I accept that there is force in the respondents' arguments and that one should be careful not to accept superficial similarity as being sufficient. It is not enough to say that both sets of claims arise in the field of employment law, nor is it enough to say of every claim under article 119 that somehow or other a claim could be framed in contract. I have, however, come to the conclusion that these arguments should not prevail.
22. The essential matter here is that moneys have not been paid to the trustees of a pension fund to purchase pension rights on eventual retirement or on reaching the prescribed age. A successful claim under article 119 obtains retroactively full access to the scheme so that the necessary contributions to obtain the appropriate pension rights for that individual have to be paid. A claim in contract would be for damages for the failure to pay those sums to the trustees leading to a total or in some cases a partial loss of the pension rights. In form they are plainly different but in substance the eventual benefit to the employee is sufficiently similar for present purposes. To adopt the words of the Court of Justice in paragraph 57 of its judgment  ICR 961, 999 the "right of action available under domestic law is a domestic action similar to proceedings to give effect to rights conferred by article 119 of the Treaty . . . ". This is so whether the contractual term is express, implied or imposed by statute.
23. Accordingly, resisting the temptation to say simply that a claim under article 119 and under the 1970 Act is sui generis, I would uphold Mr Pannick submission that a claim in contract may provide a sufficiently similar comparison.
Less favourable rules
24. That, however, leaves the question whether the rules of procedure for claims under article 119 are no less favourable than those governing domestic actions in contract so as to satisfy the principle of equivalence.
25. In deciding that question "the national court must take into account the role played by that provision in the procedure as a whole, as well as the operation and any special features of that procedure before the different national court (Levez v T H Jennings (Harlow Pools) Ltd (Case C-326/96)  ICR 521, 545, paragraph 44): see  ICR 961, 999.
The court further ruled, at pp 999-1000:
26. The applicants contend that the six-year limitation period for bringing a claim for breach of contract provided for by section 5 of the Limitation Act 1980 is plainly more favourable than the six months from the date of termination of employment under section 2(4) of the 1970 Act. Under section 5 of the 1980 Act the time does not run until the cause of action has accrued, and where there is (as there is here) a continuing obligation to provide equal access to the rights under the pension scheme, then time does not run until the last time when the employers could have admitted the applicants to the scheme - ie the last date of employment. This is a much longer period and therefore more favourable than the six month limitation from the end of employment provided for in section 2(4) of the 1970 Act.
27. I do not accept that the limitation period in contract only begins to run from the date of the termination of employment. In Bell v Peter Browne & Co  2 QB 495, 501 Nicholls LJ distinguished cases where
28. In the present case it seems to me that there was an obligation to admit the employee to the scheme and to provide payments for the employee's future pension periodically during the period of employment. That obligation may have been on a daily or weekly or other periodic basis but each time there was an obligation to admit to the scheme and to make the necessary payments to the trustees and the obligation was breached a complete cause of action arose since the damage existed at once. The next time the obligation was breached a separate cause of action occurred in respect of that second breach. The time limit of six years runs from each complete cause of action. Accordingly I do not accept that the comparison is between six years from the date of termination of employment for all failures to carry out the equality clause obligations by giving access to the scheme and six months from the date of termination of employment under section 2(4). Once six years had run in respect of each specific breach claims in respect of that breach were statute barred.
29. There is still a six-year period for contract claims rather than a six-month claim for infringement of article 119. This, however, is not the end of the inquiry. Merely to look at the limitation periods is not sufficient. It is necessary to have regard to the role played by that provision in the procedure as a whole, as well as the operation and any special features of that procedure before the different national courts"  ICR 961, 999, para 61.
In Levez v T H Jennings (Harlow Pools) Ltd (Case C-326/96)  ICR 521, 546 the Court of Justice said:
30. There are thus factors to be set against the difference in limitation periods. As has already been seen the claim under a contract can only go back six years from the date of the claim whereas a claim brought within six months of the termination of employment can go back to the beginning of employment or 8 April 1976 (the date of the judgment in Defrenne v Sabena (Case 43/75)  ICR 547), whichever is the later. Moreover the claimant can wait until the employment is over, thus avoiding the possibility of friction with the employer if proceedings to protect her position are brought during the period of employment, as will be necessary since the six year limitation runs from the accrual of a completed cause of action. It is in my view also relevant to have regard to the lower costs involved in the claim before an Employment Tribunal and if proceedings finish there the shorter time-scale involved. The period of six months itself is not an unreasonably short period for a claim to be referred to an Employment Tribunal. The informality of the proceedings is also a relevant factor.
31. I am not satisfied that in these cases it can be said that the rules of procedure for a claim under section 2(4) are less favourable than those applying to a claim in contract. I therefore hold that section 2(4) does not breach the principle of equivalence.
A stable employment relationship
32. The employees concerned in these appeals were variously employed, some under consecutive but separate contracts of service with breaks in between (eg teachers on a termly or academic year contract); some were regularly employed over a long period on this basis, others were not regularly employed but were employed from time to time and in that category some had what has been called an "umbrella" contract. Where there is an "umbrella" contract there is an ongoing contractual relationship but in the other cases there are separate contracts of employment. The Employment Appeal Tribunal  IRLR 484 and the Court of Appeal  ICR 899 held that section 2(4) was dealing with specific contracts so that as a matter of interpretation a claim could only be brought in respect of employment in existence within the six months preceding, the reference of the claim to the Industrial Tribunal. Your Lordships  1 WLR 280 agreed with that interpretation but the question inevitably arose as to whether or not such interpretation meant that section 2(4) was incompatible with article 119. The Court of Justice  ICR 961, 1001, whilst accepting that time-limits could be imposed in the interests of legal certainty, considered that
33. Accordingly it is clear that where there are intermittent contracts of service without a stable employment relationship, the period of six months runs from the end of each contract of service, but where such contracts are concluded at regular intervals in respect of the same employment regularly in a stable employment relationship, the period runs from the end of the last contract forming part of that relationship.