The Supreme Court (“SC”) has made an important ruling in a case brought by a gay man seeking to establish that, if he died, his husband should be entitled to the same survivor’s pension as a wife in a heterosexual marriage would receive. The Court ruled that an exemption in the Equality Act 2010 (“EqA”), allowing employers to exclude civil partners from pension benefits accruing before December 2005, was incompatible with EU law and should be disapplied.
By way of background, civil partnerships only became possible from 5 December 2005, the date the Civil Partnership Act 2004 came into force. Because it was previously lawful to discriminate against same-sex couples, the law contains an exemption for pension benefits which accrued before that date or are payable in respect of service before that date (discussed further below). This case involved a challenge to the application of this exemption in an individual case.
How did the case arise?
The claimant was Mr Walker, who is gay and has lived with his male partner since 1993. They entered into a civil partnership in January 2006 and later got married. Mr Walker had been employed by Innospec Ltd from 1980 until he retired in 2003. Throughout his employment, he contributed to the company’s occupational pension scheme.
In 2006, Mr Walker asked Innospec to confirm that, in the event of his death, it would pay his civil partner the spouse’s pension that the scheme provided for. Innospec refused, on the basis that the whole of Mr Walker’s service predated 5 December 2005. In taking this approach, Innospec was relying on an exception in Schedule 9 to the EqA to the general anti-discrimination rule that applies that applies to pension schemes. Under this exception, it is lawful to discriminate against an employee who is in a civil partnership or same-sex marriage by preventing or restricting access to a benefit the right to which accrued before 5 December 2005, or which is payable in respect of periods of service before that date.
Mr Walker brought a claim for sexual orientation discrimination. The financial stakes for him were high. Under Innospec’s approach, his husband would be entitled on his death to only a statutory minimum pension of around £1,000 a year. If he had been married to a woman, she would receive an annual spouse’s pension of over £45,000 in the same circumstances.
Mr Walker’s claim was upheld by the Employment Tribunal, but this was overturned on Innospec’s appeal to the Employment Appeal Tribunal, so Mr Walker appealed to the Court of Appeal
The case revolved around complex arguments as to the retrospective application of EU legislation and, specifically, the 2000 Equal Treatment “Framework” Directive which prohibited discrimination in employment on various grounds including sexual orientation.
The CA decided that Mr Walker’s must be assessed on the basis of the EU law in force at the time of his employment. It said that the EU principle of “no retroactivity” meant that conduct that was lawful when it occurred could not retroactively become unlawful. This led the CA to conclude that the exemption in Schedule 9 to the EqA was not inconsistent with the Framework Directive, and so the survivor’s pension for a civil partner could lawfully be restricted so that it reflected only the period of the deceased member’s pensionable service since 5 December 2005.
Mr Walker then made a final appeal to the SC. In simple terms, the options for the SC were:
- Decide that the full benefit would not be payable, because at the time when Mr Walker was working for Innospec and building up rights under his pension it was lawful to discriminate against same-sex couples. It would be unfair for Innospec to be bound by a law that came into force later.
- Decide that the full survivor’s benefit would be payable, because discrimination against same-sex couples who are married or in a civil partnership is now unlawful and will be at the time when Mr Walker’s husband becomes entitled to the payment. This would not be unfair because it just involves applying the law at the current time.
What did the Supreme Court decide?
The SC unanimously allowed the appeal and made a declaration that the exception in Schedule 9 to the EqA is incompatible with EU law and must be disapplied. The upshot is that Mr Walker’s husband – provided they remain married – will be entitled on his death to a full survivor’s pension. The five judges in this SC were, however, split in how they arrived at this result. The main reasoning of the three majority judges was as follows:
- In applying the “no retroactivity” principle, the CA had been wrongly influenced by a string of judgments of the European Court of Justice (“ECJ”) dealing with pensions equality as between men and women (starting with Barber v Guardian Royal Exchange Assurance Group  IRLR 240). While the ECJ had limited the retrospective effect of its rulings in those cases, the SC said this was not relevant to the temporal application of EU legislation, such as the Framework Directive.
- The point of unequal treatment occurs at the time that the pension falls to be paid, and the period during which Mr Walker acquired that entitlement was immaterial. The financing of Innospec’s pension scheme should have taken into account a possible change in Mr Walker’s marital status, and he could not have been denied entitlement to a spouse’s pension if he married a woman after he retired. His marriage to his current partner was just as legal as a heterosexual marriage, so his entitlement to a spouse’s pension was equally well founded.
- There were two ECJ judgments which put the validity of Mr Walker’s claim beyond doubt – Maruko  IRLR 450 and Römer (Case C-147/08). The ECJ in these cases specifically decided that it was contrary to the Framework Directive for same-sex civil partners not to have the same right to survivor’s benefit under an occupational pension scheme as surviving spouses in a similar position. It was clear from these judgments that, unless evidence established there would be unacceptable economic or social consequences of giving effect to Mr Walker’s entitlement to a survivor’s pension for his husband, there was no reason he should be subjected to unequal treatment.
The two minority judges in the SC agreed that Mr Walker’s appeal should be allowed, but on a more limited basis - essentially the second point outlined above. They considered that the question of who qualified as Mr Walker’s “spouse” would fall to be answered at the time the pension is due to be paid, when it would be unlawful under the Framework Directive to discriminate between heterosexual and same-sex marriages.
The minority judges noted that the SC had heard Mr Walker’s appeal at the same time as another case, O’Brien v Ministry of Justice, concerning the pension rights of part-time workers (specifically, fee-paid, part-time judges). The SC had decided to refer various questions to the ECJ to help resolve that case, which would involve consideration of the Barber line of cases on pensions equality. Pending the ECJ’s judgment in O’Brien, the minority judges preferred not to decide on whether those authorities were relevant to the application of the Framework Directive in Mr Walker’s case.
What are the implications?
The restrictions on backdating in Schedule 9 to the Equality Act 2010 were originally enacted in 2005, the year after the UK adopted civil partnerships, by amending the Sexual Orientation Regulations that were then in force. Only three years later, the ECJ’s ruling in Maruko cast serious doubt as to whether the UK exception was consistent with the requirements of EU law, but it has taken many more years for this finally to be confirmed in Mr Walker’s case.
This result has unsurprisingly been hailed as a “landmark” victory for gay rights, not least by the human rights and civil liberties organisation Liberty which supported and acted for Mr Walker in his legal proceedings. Clearly the SC’s judgment will pave the way for claims for other gay couples in a similar position to Mr Walker and his husband. While many occupational pension schemes will already have retrospectively equalised the treatment of gay married members and civil partners with that of opposite-sex married members, a significant proportion have not. It has been estimated that the potential financial repercussions for such schemes could be around £100 million for private sector schemes and much more in the public sector.
A Government spokesperson has been reported as saying they are considering the implications of the SC’s judgment and will respond in due course. There has in fact already been a detailed government review of the differences in survivor benefits provided by occupational pension schemes for opposite and same sex couples in legal relationships, the findings of which were published in June 2014. The Government has since declined to make a decision as to whether and how the law should be changed, most likely because it was awaiting the outcome of Mr Walker’s case.
A final point is that this case was all about the relationship between UK law and EU law and whether a provision of a domestic statute was consistent with the UK’s obligations contained in the underlying European directive. The SC’s judgment clearly highlights the current supremacy of EU law in this respect. Consequently, there is an intriguing element as to how the Government will now decide to proceed on account of Brexit. If and when the UK ultimately leaves the EU - depending on the agreed terms of departure - it could theoretically be possible for the UK to legislate in a way that falls short of the requirements of the Framework Directive in relation to same-sex survivors’ pensions.
Walker v Innospec Ltd and others – judgment available here