Powerhouse Retail Limited and others v. Burroughs and others

The House of Lords considered the meaning of the time limit in section 2(4) of the Equal Pay Act 1970 in claims for retrospective access to occupational pension schemes where the claimant's employment was transferred under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). The court held that the statutory six-month time limit runs from the end of the employment to which the claim relates. Where the claim concerns the operation of an equality clause in respect of pension rights arising under the transferor's contract before a TUPE transfer, the relevant employment is the claimant's employment with the transferor and time therefore begins to run from the date of the transfer. The effect of TUPE regulation 5 (the continuity fiction) and regulation 7 (the pension exception) does not produce a different starting point for the limitation period. The interpretation adopted promotes legal certainty and links the limitation period to the party who bears the liability.

This appeal concerned claims by part-time employees denied access to an occupational pension scheme before a TUPE transfer. The claimants applied to industrial tribunals for retrospective access under equality clauses introduced by the Equal Pay Act 1970 as amended. The central issue was the construction of section 2(4) of the 1970 Act: whether the six-month time limit for bringing a claim runs from the end of the employment "within the six months preceding the date of the reference", measured against the transferor (whose pension obligations remained) or against the transferee (with whom the continuing contract was deemed to exist under TUPE regulation 5).

Background and procedural history:

• The claimants had periods of employment with the transferor during which they did not qualify for scheme membership; they later became eligible and were transferred in 1992 to Powerhouse Retail Ltd under TUPE.
• The originating applications were presented to tribunals in November and December 1994, more than six months after the TUPE transfers.
• The employment tribunal held that time began to run from the date of the TUPE transfer. The Employment Appeal Tribunal held time ran from the end of employment with the transferee. The Court of Appeal allowed the respondents' appeal and concluded time ran from the end of the claimant's employment with the transferor. The House of Lords heard the appeal.

Issues framed:

• What is the meaning of "employment" in section 2(4) of the Equal Pay Act 1970 when a claim relates to the operation of an equality clause concerning occupational pension rights where there has been a TUPE transfer?
• Does the continuity fiction in regulation 5 of TUPE, together with regulation 7's exception for occupational pension schemes, mean that time runs from the end of employment with the transferee rather than the transferor?

Reasoning and conclusions:

• The House of Lords focused on the words of section 2(4) and concluded the subsection requires the claim be brought within six months of the end of the employment to which the claim relates. Where the relevant pension rights arose under the transferor's employment prior to transfer, that employment is the relevant one.
• The court rejected the argument that the continuity fiction in regulation 5 should alter the starting point for the limitation period; regulation 7 demonstrates the statutory scheme treated pension rights differently and left liability for pre-transfer pension rights with the transferor.
• The court emphasised legal certainty and that the limitation period should be linked to the party bearing the liability. The court also noted consistency with Community law as addressed in the earlier Preston references and ECJ authority.

Relief sought and disposition: The appellants sought to have time run from the end of their employment with the transferee; the House of Lords dismissed the appeal and held that time ran from the end of employment with the transferor, rendering the claims out of time.

Appeal dismissed. The House of Lords held that for claims about the operation of an equality clause relating to occupational pension rights that pre-dated a TUPE transfer, the "employment" in section 2(4) of the Equal Pay Act 1970 is the claimant's employment with the transferor; therefore the six-month time limit runs from the end of that employment (the date of transfer) and the appellants' claims were out of time. The court relied on the ordinary meaning of "employment" in the statute, the effect of TUPE regulations (regulation 5 continuity fiction and regulation 7 pension exception), and considerations of legal certainty and alignment with Community law principles.

Employment tribunal: held time began to run from date of TUPE transfer. Employment Appeal Tribunal: held time began to run from the end of employment with the transferee ([2004] ICR 993). Court of Appeal: allowed respondents' appeal, holding time ran from end of employment with the transferor ([2004] EWCA Civ 1281; reported [2005] ICR 222). House of Lords: appeal dismissed ([2006] UKHL 13).