Preston v Wolverhampton Healthcare NHS Trust (Fletcher v Midland Bank plc)

An equality clause under the Equal Pay Act 1970 attaches to the particular contract of employment. Where successive contracts are separated by breaks and no overriding contract exists, the six-month period under section 2(4) runs separately from the end of each contract.

National procedures governing directly effective Community rights must be no less favourable than those governing similar domestic claims. They must also avoid making enforcement impossible in practice or excessively difficult. Whether the statutory six-month and two-year restrictions satisfied those requirements, including where they prevented aggregation of service under successive contracts, required a preliminary ruling from the European Court of Justice.

Women employed part-time in the public and private sectors claimed that their exclusion from occupational pension schemes constituted indirect sex discrimination contrary to article 119 of the EC Treaty. Their claims were selected as test cases. The principal issues concerned the six-month jurisdictional limit and two-year restriction imposed by sections 2(4) and 2(5) of the Equal Pay Act 1970.

The Industrial Tribunal and Employment Appeal Tribunal held that those rules neither made the Community rights impossible or excessively difficult to enforce nor treated them less favourably than comparable domestic rights. The Court of Appeal upheld that decision on 13 February 1997.

A further issue concerned part-time teachers and lecturers serving under successive fixed-term, sessional or intermittent contracts. The domestic-law question was whether section 2(4) referred to each individual contract or to the wider employment relationship. The Community-law questions concerned the compatibility of both statutory limits, and of the prohibition on aggregating earlier contracts, with article 119 and the principles of effectiveness and equivalence.

1. Disposition. The domestic-law appeal was dismissed. Three questions concerning Community law were referred to the European Court of Justice under article 177 of the EC Treaty. Lord Slynn of Hadley delivered the leading speech. Lord Hope of Craighead expressly agreed with both the dismissal and the reference. Lord Goff of Chieveley, Lord Lloyd of Berwick and Lord Nolan agreed that all three questions should be referred and that the proposed order should be made.

2. Construction of section 2(4). Per Lord Slynn, an equality clause under the Equal Pay Act 1970 is incorporated into a specific contract of employment. The expression “the employment” in section 2(4) therefore refers to employment under the contract containing the equality clause which is the subject of the claim. Where separate contracts are divided by breaks, and there is no overriding contract requiring work to be offered and accepted, the six-month period runs from the end of each contract. Earlier contracts cannot be included unless proceedings were begun within six months of their termination.

3. A succession of contracts without a break ordinarily attracts the same analysis. Lord Slynn nevertheless left open the possibility that the facts could establish an overriding or “umbrella” contract. A claim concerning that overriding contract might then be brought when the overall employment ended. That possibility did not arise on the agreed facts.

4. Sections 62 and 63 of the Pensions Act 1995 did not alter the construction of the earlier legislation. The Equal Pay Act 1970 addressed contractual equality between a particular employer and employee. The later Act addressed pension schemes potentially covering several descriptions or categories of employment. Its broader wording therefore served a distinct purpose.

5. Community-law reference. Domestic procedural rules governing Community rights must satisfy both effectiveness and equivalence. The effect of the recent decision in Magorrian upon the six-month and two-year restrictions was insufficiently clear. It was also unclear whether preventing aggregation of service under successive contracts frustrated article 119 rights. Because those questions were necessary to judgment and their answers were not so clear as to make a reference unnecessary, the House was obliged by article 177 to refer them.

1. House of Lords: Dismissed the appeal on the domestic construction of section 2(4) of the Equal Pay Act 1970. Referred three Community-law questions to the European Court of Justice.
2. Court of Appeal: On 13 February 1997, upheld the Employment Appeal Tribunal. It regarded the six-month period as reasonable, rejected the proposed comparisons with other domestic claims and declined to make a reference.
3. Employment Appeal Tribunal: Upheld the Industrial Tribunal. It held that sections 2(4) and 2(5) did not make enforcement of article 119 rights impossible or excessively difficult. It stayed its final decision concerning section 2(5) pending the European Court's decision in Levez.
4. Industrial Tribunal: Held that the six-month limit ran from the end of each relevant contract and that the two-year restriction was compatible with Community law.