Labour & European Law Review Weekly Issue 365 16 April 2014
It has been unlawful to discriminate against civil partners since the introduction of the Civil Partnership Act 2004, with certain exceptions. In Innospec Ltd and ors v Walker, the Employment Appeal Tribunal (EAT) said that it was not unlawful to discriminate against civil partners in respect of a pension for periods of service before 5 December 2005 when the Act came into force, as it did not have retrospective effect.
Having joined Innospec's pension scheme in January 1980, Mr Walker retired in 2003 with a pension worth about £85,000 per year.
In January 2006, he entered into a civil partnership with his long term partner under the Civil Partnership Act 2004. However, because his pensionable service with Innospec took place before the law prohibiting discrimination on the ground of sexual orientation came into effect, the most his partner could hope for, should he survive Mr Walker, was around £500 per annum. Had he been married, his wife would have been entitled to two thirds of his pension.
Mr Walker claimed discrimination on the ground of sexual orientation. Innospec argued that under paragraph 18 of schedule 9 of the Equality Act, it was not unlawful under the Act to discriminate in respect of a pension for periods of service before 5 December 2005.
The tribunal held that the provisions of the Equality Act were incompatible with the equal treatment directive. The difference in treatment therefore constituted unlawful direct and indirect discrimination and paragraph 18 should be interpreted to mean the opposite of what it said. In other words, that it was unlawful to discriminate in respect of periods of pensionable service prior to 5 December 2005.
Innospec, supported by the Secretary of State for Work and Pensions, appealed on the basis that the provisions of the Equality Act did not have retrospective effect.
The EAT said it was clear from case law that if a pension accrues on a discriminatory, but lawful, basis which is against the law by the time it comes to pay out the pension, the payer is not obliged to remedy that past discrimination.
The same applied to claims for equal pay in respect of "ordinary salary”. Just as employers could not be liable for discrimination during periods of employment prior to the relevant EU instrument coming into force, the same must be true of a case concerning occupational pension benefits, which are earned as part of salary at the time, even though they fall to be paid at a much later date.
The directive did not have retrospective effect and paragraph 18 did not infringe the principle of equal treatment enshrined in the directive. Nor was it contrary to the directive to leave past discrimination unremedied. Although the UK could have made a different legislative choice, it was not required under the directive and it had good financial reasons for not doing so.