Walker v Innospec Limited and others

The Supreme Court held that Council Directive 2000/78/EC (the Framework Directive) precludes domestic provision which, by reference to service before 5 December 2005, excludes a surviving civil partner from receiving the same spouse's pension as a surviving opposite-sex spouse. Paragraph 18 of Schedule 9 to the Equality Act 2010, so far as it authorises restriction of pension benefits payable in respect of periods of service before 5 December 2005, is incompatible with the Framework Directive and must be disapplied.

The court distinguished general principles about non-retroactivity and the Court of Justice of the European Union's exceptional temporal limitations on its own judgments (for example Barber and Defrenne) from the ordinary temporal effect of EU legislation and the Directive. It applied CJEU authority (notably Maruko, Römer and Parris) to conclude that entitlement to equal treatment arises at the time the pension falls due and that that entitlement, once applicable, must be calculated by reference to all years of service, even those before transposition. Applying Kücükdeveci and related principle, the domestic exception in paragraph 18 was disapplied insofar as it conflicted with the Directive.

Background and parties: John Walker, a long-serving employee of Innospec Ltd, retired early in 2003 with pension rights that, by the employer's concession, were maximised to what they would have been at normal retirement age in 2007. Mr Walker entered a civil partnership in January 2006 and later married his partner. Innospec refused to pay to Mr Walker's civil partner (and later husband) the scheme's spouse's pension on the ground that the relevant service predated 5 December 2005, relying on paragraph 18 of Schedule 9 to the Equality Act 2010.

Procedural history: The Employment Tribunal (13 November 2012) found both direct and indirect discrimination. The Employment Appeal Tribunal (reported at [2014] ICR 645) allowed Innospec's appeal on the ground that the Framework Directive did not have retrospective effect to require equal pension treatment for periods before the transposition deadline. The Court of Appeal ([2016] ICR 182) dismissed Mr Walker's appeal, endorsing a temporal limitation principle. Mr Walker appealed to the Supreme Court.

Relief sought: Mr Walker sought a remedy for unlawful discrimination, including a declaration that paragraph 18 was incompatible with EU law and an entitlement for his civil partner/husband to the spouse's pension calculated by reference to all years of service.

Issues framed:

• whether paragraph 18 of Schedule 9 is compatible with Directive 2000/78/EC;
• whether, if incompatible, paragraph 18 must be given effect notwithstanding that incompatibility or must be disapplied under EU supremacy principles (Kücükdeveci and related authority); and
• whether a declaration of incompatibility under section 4 of the Human Rights Act 1998 should be made (not finally decided by the court).

Court's reasoning: The court analysed the principles of non-retroactivity and the "future effects" principle developed by the CJEU. It distinguished those principles from the exceptional temporal curtailments which the CJEU has, in rare and exceptional circumstances (notably in the context of article 119 equal pay cases such as Defrenne and Barber), imposed on its own judgments for pragmatic reasons. Applying the CJEU's decisions in Maruko and Römer (and the Advocate General's reasoning in Parris), the court held that the Directive precludes legislation or rules that would deny a surviving civil partner a spouse's pension when the pension falls due, and that where the Directive applies the pension must be calculated by reference to all periods of service. The court therefore concluded that paragraph 18(1)(b) is incompatible with the Directive and, applying the principle in Kücükdeveci, must be disapplied so far as it conflicts with EU law.

Resolution: The Supreme Court allowed the appeal, disapplied paragraph 18 insofar as it restricted payment of benefits in respect of periods of service before 5 December 2005, and declared that Mr Walker's husband is entitled to a spouse's pension calculated on all years of Mr Walker's service, provided they remain married at the date of Mr Walker's death.

Appeal allowed. The Supreme Court held that Directive 2000/78/EC precludes domestic rules that deny a surviving civil partner the spouse’s pension payable when the pension falls due; paragraph 18(1)(b) of Schedule 9 to the Equality Act 2010 is incompatible with the Directive and must be disapplied. The court relied on CJEU authority (Maruko, Römer, Parris) distinguishing ordinary temporal application of legislation from exceptional temporal limitations the CJEU has sometimes imposed on its own judgments, and applied Kücükdeveci principles to require disapplication of the conflicting domestic provision. The appellant’s husband is entitled to a spouse’s pension calculated by reference to all years of service, provided they remain married at the date of death.

Employment Tribunal (13 November 2012) found direct and indirect discrimination; Employment Appeal Tribunal allowed employer's appeal on temporal scope ([2014] ICR 645); Court of Appeal dismissed Mr Walker's appeal ([2016] ICR 182); appeal to the Supreme Court allowed ([2017] UKSC 47).