Preston & Others v. Wolverhampton Healthcare N.H.S. Trust & Others and Fletcher & Others v. Midland Bank Plc

Domestic procedural rules governing directly effective Community rights must make enforcement neither impossible nor excessively difficult. They must also be no less favourable than rules governing genuinely similar domestic actions. Equivalence is assessed objectively and in the context of each procedure as a whole, rather than by comparing limitation periods alone.

The six-month limit under the Equal Pay Act 1970 satisfied those principles. The two-year restriction on retrospective pension membership did not: it struck at the essence of the right and was disapplied, subject to payment of the employee’s contributions. Where regular short-term contracts formed a stable relationship involving the same employment and pension scheme, the six months ran from the end of that relationship. Otherwise, it ran from the end of each contract.

Preston and others v Wolverhampton Healthcare NHS Trust and others and Fletcher and others v Midland Bank plc were conjoined appeals by part-time workers seeking retrospective membership of occupational pension schemes. They contended that the time restrictions in sections 2(4) and 2(5) of the Equal Pay Act 1970, together with regulation 12 of the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976, were incompatible with article 119 of the EC Treaty.

The Employment Appeal Tribunal, [1996] IRLR 484, and the Court of Appeal, [1997] ICR 899, treated section 2(4) as referring to individual contracts. The House agreed with that construction in [1998] 1 WLR 280 and referred questions to the European Court of Justice under article 177. Following the preliminary ruling in Case C-78/98, [2000] ICR 961, the House had to determine effectiveness, equivalence and the treatment of successive short-term contracts forming a stable employment relationship.

1. Disposition. The House unanimously allowed the appeals to the stated extent. Lord Slynn of Hadley delivered the principal speech and Lord Hope of Craighead agreed with it. Lord Clyde gave further reasons on equivalence; Lord Goff of Chieveley and Lord Nolan agreed with Lord Clyde. All five Law Lords concurred in the order.
2. Retrospective pension membership. Per Lord Slynn, as reflected in the unanimous order, section 2(5) of the Equal Pay Act 1970 and regulation 12 of the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 were precluded by Community law. A restriction which excluded service earlier than two years before proceedings struck at the essence of the right to retrospective pension-scheme membership. Consistently with Magorrian v Eastern Health and Social Services Board, [1998] ICR 979, benefits had to take account of qualifying service from 8 April 1976, or the commencement of employment if later. Employees remained liable for contributions attributable to the retrospective membership period.
3. Six-month limitation and effectiveness. Per Lord Slynn, the six-month period in section 2(4) was a reasonable limitation period and did not, in itself, make enforcement of article 119 rights impossible or excessively difficult. Its validity remained subject to the principle of equivalence.
4. Equivalence. Lord Slynn considered that a contractual claim could be sufficiently similar because, despite differences of form and cause of action, its substantive pension benefit could correspond to that obtained through retrospective membership. Lord Hope agreed. Lord Clyde considered that a stricter comparison might yield no comparator, but assumed the broader approach and agreed that the Community procedure was not less favourable; Lord Goff and Lord Nolan agreed with him. The common basis of the decision was therefore that, even assuming a contractual comparator, equivalence was satisfied.
5. The comparison had to address each procedure objectively and as a whole. Although contract supplied a six-year limitation period, time ran separately from each completed breach. By contrast, a timely tribunal claim could reach back to the start of the employment or 8 April 1976. The ability to await the end of employment, together with lower costs, greater speed and informality, supported the conclusion that section 2(4) was not less favourable.
6. Successive contracts. Per Lord Slynn, as reflected in the order, where short-term contracts were concluded regularly for the same employment and under the same pension scheme, they could constitute a stable employment relationship. The six months then ran from the interruption of that sequence. Without such a relationship, time ran from the end of each contract. The identification of qualifying appellants was remitted to the Employment Tribunal.

1. House of Lords: In [2001] UKHL 5, unanimously allowed the appeals to the stated extent, granted declarations concerning the statutory time restrictions and remitted the stable-employment questions to the Employment Tribunal.
2. European Court of Justice: In Case C-78/98, [2000] ICR 961, answered the House’s questions concerning effectiveness, equivalence and successive short-term contracts.
3. House of Lords: In [1998] 1 WLR 280, agreed that section 2(4) of the Equal Pay Act 1970 referred to specific contracts and made a preliminary reference under article 177 of the EC Treaty.
4. Court of Appeal: In [1997] ICR 899, held that section 2(4) dealt with specific contracts and required a claim to relate to employment existing within the preceding six months.
5. Employment Appeal Tribunal: In [1996] IRLR 484, adopted the same construction of section 2(4).