Walker v Innospec Limited and others

Where an occupational pension scheme provides a survivor’s pension for a member’s spouse, the spouse’s entitlement must be determined under the law in force when the pension becomes payable. A future survivor’s pension must therefore be provided without discrimination based on sexual orientation, even where the member’s service and contributions predated the prohibition of that discrimination.

The pension must be calculated by reference to all qualifying service. Applying that rule to future payments does not give the prohibition retrospective effect. Domestic legislation authorising unequal treatment in those circumstances conflicts with the Framework Directive and must be disapplied.

The appellant joined his employer’s contributory occupational pension scheme in 1980 and retired in 2003. He later entered a civil partnership with his long-term male partner, whom he subsequently married. The scheme would pay a substantial survivor’s pension to a wife, but relied on paragraph 18 of Schedule 9 to the Equality Act 2010 to limit the pension payable to the appellant’s husband because the appellant’s service preceded 5 December 2005.

The Employment Tribunal upheld claims of direct and indirect sexual-orientation discrimination. The Employment Appeal Tribunal reversed the decision on the basis that the Framework Directive could not affect pension rights accrued before its transposition deadline. The Court of Appeal dismissed the employee’s appeal: [2015] EWCA Civ 1000.

The central question was whether a future survivor’s pension, calculated from service predating the Directive, fell within its prohibition of sexual-orientation discrimination and, if so, whether paragraph 18 had to be disapplied.

1. Appeal allowed unanimously. Lord Kerr, with whom Lady Hale and Lord Reed agreed, held that the appellant’s husband was entitled, provided the couple remained married at the appellant’s death, to a spouse’s pension calculated by reference to all the appellant’s years of service.

2. EU law distinguishes prohibited retroactive application to situations permanently fixed under earlier law from the immediate application of new law to the future effects of continuing situations. A future pension payment is governed by the prohibition of discrimination applicable when it becomes payable. Calculation by reference to earlier service does not convert that application into retrospective legislation.

3. The temporal restrictions developed in the equal-pay authorities beginning with Defrenne II and Barber concerned the exceptional limitation of the normal retrospective effect of judicial decisions. They did not establish a general rule governing the temporal application of legislation. Such judicial restrictions require exceptional considerations of legal certainty and serious consequences for relationships established in good faith.

4. Maruko and Römer established that, after the Framework Directive became applicable, a survivor’s pension had to be provided without sexual-orientation discrimination and could be calculated using service and contributions predating the transposition deadline. The material unequal treatment occurs when the pension falls to be paid, rather than when the employee performed the service from which its amount is calculated.

5. The scheme already had to allow for the possibility that the appellant might marry a woman after retirement. His lawful marriage to a man could not be treated differently. Paragraph 18 of Schedule 9 to the Equality Act 2010, particularly paragraph 18(1)(b), was incompatible with the Directive so far as it authorised restriction of benefits by reference to service before 5 December 2005. It had to be disapplied.

6. Lord Carnwath and Lord Hughes agreed with the disposition on the narrower ground that the appellant had earned a spouse’s pension and that the identity of the qualifying spouse fell to be determined when discrimination between opposite-sex and same-sex marriages was unlawful. They reserved their position on Lord Kerr’s wider interpretation of the Ten Oever line of authority pending authoritative guidance in another case.

7. It was unnecessary to determine whether paragraph 18 was also incompatible with article 14 of the ECHR, read with article 8 or article 1 of the First Protocol.

1. United Kingdom Supreme Court: Allowed the appeal unanimously and set aside the result below. It declared that paragraph 18 of Schedule 9 to the Equality Act 2010 was incompatible with the Framework Directive to the relevant extent and had to be disapplied.
2. Court of Appeal: Dismissed the employee’s appeal: [2015] EWCA Civ 1000. It accepted that marriage and civil partnership were comparable but held that applying the Directive to benefits derived from earlier service would give it retrospective effect.
3. Employment Appeal Tribunal: Allowed the employer’s appeal: [2014] ICR 645. It upheld the findings concerning discrimination and justification but held that the Directive did not affect inequalities arising before its transposition deadline and that paragraph 18 could neither be read compatibly nor disapplied.
4. Employment Tribunal: Unanimously found direct and indirect sexual-orientation discrimination and held that paragraph 18 should be read compatibly with the Directive.