O’Brien v Ministry of Justice

EU legislation ordinarily applies immediately to the future effects of situations arising under earlier law, but not to legal situations which became definitive before its entry into force.

It was not clear whether that principle requires pre-transposition service to be included when calculating a part-time worker’s occupational pension which becomes payable after the deadline for transposing Council Directive 97/81/EC. The competing view treats occupational pension rights as deferred pay fixed when the work was performed. The question required a preliminary ruling from the Court of Justice.

A retired recorder claimed a judicial pension equivalent, pro rata temporis, to that of a comparable full-time judge. An earlier Supreme Court decision, following a preliminary ruling from the Court of Justice, established his entitlement in principle.

On remission, the Employment Tribunal included all service from 1978 when calculating the pension. The Employment Appeal Tribunal reversed that decision: [2014] ICR 773. The Court of Appeal upheld the Employment Appeal Tribunal: [2015] EWCA Civ 1000; [2016] 1 CMLR 28.

The issue before the Supreme Court was whether Council Directive 97/81/EC required service completed before the transposition deadline to be included when calculating a pension payable after that deadline.

1. Question referred unanimously to the Court of Justice. Lord Reed gave the judgment, with which Lady Hale, Lord Kerr, Lord Carnwath and Lord Hughes agreed. The correct temporal application of Council Directive 97/81/EC was not acte clair. A preliminary ruling was therefore required before the appeal could be determined.

2. The general EU law principle is that a new rule applies from its entry into force to new legal situations and to the future effects of situations arising under the old law. It does not apply to legal situations which arose and became definitive under the old law, unless special provisions establish a different temporal rule.

3. The majority were inclined to regard discrimination as occurring when the retirement pension fell due for payment. On that view, where payment became due after the directive entered into force, its application to earlier service would regulate the future effects of an existing situation rather than operate retroactively. The Court of Justice’s reasoning in Bruno supported including pre-directive employment when service determined qualification for a pension.

4. There remained a material competing analysis. Occupational pensions have been treated as deferred pay, with entitlement accruing gradually when the relevant work is performed. If that analysis fixed the worker’s rights or non-rights at the time of service, the principle of non-retroactivity might prevent the directive from affecting service before its transposition deadline. The majority were inclined to regard the Ten Oever reasoning as connected to the exceptional temporal limitation imposed in Barber, but the Court of Justice had not determined the present argument.

5. The Court referred whether clause 4 of the Framework Agreement annexed to the directive requires pre-transposition service to be included when calculating a part-time worker’s retirement pension where the same service would count for a comparable full-time worker.

1. United Kingdom Supreme Court: By [2017] UKSC 46, unanimously referred the temporal-scope question to the Court of Justice before determining the appeal.
2. Court of Appeal: By [2015] EWCA Civ 1000; [2016] 1 CMLR 28, upheld the Employment Appeal Tribunal’s exclusion of service completed before the transposition deadline.
3. Employment Appeal Tribunal: By [2014] ICR 773, reversed the Employment Tribunal and held that the earlier service should not be included.
4. Employment Tribunal: On remission, held that the pension calculation should include the whole period of service.
5. United Kingdom Supreme Court: By [2013] UKSC 6; [2013] 1 WLR 522, held following a preliminary ruling that the appellant was a part-time worker and was entitled to a pension equivalent to that of a comparable circuit judge, subject to pro rata adjustment. It remitted the calculation to the Employment Tribunal.