The Court of Appeal has handed down its decision in Walker v Innospec, an important case about discrimination on grounds of sexual orientation and whether it is permissible, in some circumstances, to provide lower pension benefits to civil partners and same sex spouses than spouses of the opposite sex.
The member worked for Innospec between 1980 and 2003, entering into a civil partnership in 2006. He was a member of the company pension scheme, which provided for payment of a spouse’s pension, but the employer and trustees chose not to provide the same pension in relation to civil partners, save in respect of benefits accrued after the Civil Partnership Act came into force in December 2005. In doing so, they relied on the Equality Act 2010, which provides that applying such a cut-off is not unlawful discrimination. As a result, the member’s civil partner would only receive a pension in relation to contracted-out benefits, which was a fraction of the pension that would have been provided to a spouse.
The proceedings so far
In 2012 an Employment Tribunal held that the employer and scheme trustees had directly discriminated against the member. The Tribunal said that as direct discrimination was prohibited by the EU Equal Treatment Directive it would, using principles of interpretation set out by the European Court in a case called Marleasing, seek to read the Equality Act ‘compatibly’ with the Directive (effectively, by ignoring the December 2005 cut-off). However, the employer successfully appealed that decision to the Employment Appeal Tribunal. The member, in turn, appealed to the Court of Appeal.
During the course of the proceedings, the member married his partner (following the introduction of same sex marriage in 2013). When same sex marriage was introduced, Parliament introduced an equivalent December 2005 cut-off into the Equality Act for same sex spouses’ pension benefits.
The Court of Appeal’s view
The Court of Appeal dismissed the member’s appeal, and said that there were no grounds for making a reference to the European Court of Justice. It held that the Marleasing principle could not be used where the result would be directly contrary to the express legislative intention. The member would only be able to succeed in his claim if he could show breach of a fundamental principle of EU law but he was unable to do so.
In short, at the time when the member was earning his pension entitlement, the discriminatory treatment of which he complained was lawful. The Court was sympathetic to his position, but as Underhill LJ observed: “changes in social attitudes, and the legislation which embodies those changes, cannot fully undo the effects of the past.”
The outcome is clearly significant for members who have entered into civil partnerships or same sex marriages. For now, it will also provide certainty for trustees and employers as to the legal position, whether or not they rely on the 2005 cut-off.
However, whether or not there is a further appeal, this may not be the end of the story. The Marriage (Same Sex Couples) Act in 2013 required the Government to conduct a review of survivor benefits in occupational pension schemes, including the impact of the 2005 cut-off. That report, issued in June 2014, did not come to any firm conclusion, saying merely that the Government proposed to consider the issues “very carefully before making a decision on whether the law should be changed”.
It will be interesting to see whether the Court of Appeal’s decision prompts any update from Government as to the results of its consideration.
The judgment can be found here.