The Supreme Court has overturned the Court of Appeal decision in Walker v Innospec Limited & Others, confirming the right for same sex couples in civil partnerships or marriages to be granted the same survivor pension benefits as opposite sex spouses.
The EU Framework Directive extended the prohibition on discrimination in employment to sexual orientation. This was implemented into UK law in 2003 and is now contained in the Equality Act 2010. Same sex unions were legalised on 5 December 2005, and subsequently same sex marriages were recognised by the Marriage (Same Sex Couples) Act 2013.
The Walker case raised questions of retrospective application of the law recognising same sex unions, as the Equality Act 2010 provided an exception to the prohibition on sexual orientation discrimination that allowed benefit accrual – for a survivor's benefit for a same sex spouse – to be based on service from 5 December 2005 onwards, the day on which section 1 of the Civil Partnership Act 2004 came into force.
Mr Walker was a member of the Innospec pension scheme from 1980 until his retirement in 2003. In 2006 he entered into a civil partnership but wanted reassurance that his partner would receive his pension if he died, in the same way as a heterosexual spouse. Innospec, Mr Walker's former employers, claimed that as Mr Walkers retirement had begun in 2003, they were not obliged to offer him the same "spouse's pension" guarantees that a heterosexual married couple would receive. This made a significant difference: an opposite sex spouse would receive a pension of almost £47,000pa whereas Mr Walker's civil partner could expect to receive a pension of about £1,000pa. Mr Walker brought a claim in the Employment Tribunal who upheld his claim for discrimination based on his sexual orientation, however Innospec were successful in their appeals to the both the Employment Appeal Tribunal and to the Court of Appeal. The Court of Appeal held that legislation should not apply retrospectively (unless there a contrary intention appears). However, it is also a principle that new legislation should apply immediately to the future effects of a continuing situation. At issue was the application of these principles to a pension scheme which accumulates over a period of time.
Supreme Court Appeal
Mr Walker successfully claimed that providing an exception to the prohibition on sexual orientation discrimination that allowed benefit accrual – for a survivor's benefit for a same sex spouse – to be based on service from 5 December 2005 onwards was incompatible with EU law.
The Supreme Court decided that the previous decisions had failed to interpret European case law correctly on the retrospective application of legislation and had also erred in determining that the discrimination had to be assessed over the period of time over which the pension accrued. Instead, the Court of Appeal concluded that the assessment of whether discrimination had occurred had to be made at the point at which the pension fell to be paid. The Innospec Scheme would have to pay the full spousal pension if Mr Walker's was married to a woman, even if the marriage had occurred after he had retired. Innospec should have account for this possibility in financing the Innospec Scheme. Mr Walker's salary and payments into the Innopsec Scheme were identical to those of a heterosexual man, and there was no reason for Innospec to assume any less than it would be liable to pay a survivor pension to his lawful spouse. As the UK Parliament has passed legislation that recognises that a lawful spousal relationship could be homosexual or heterosexual, it followed it would breach EU law and the Framework Directive, to treat a marriage differently on the basis of its partners being of a particular sexual orientation. As a result, the relevant section of the Equality Act 2010 should be disapplied.
Clyde & Co comment
The decision marks the end of one of the final battles for equal workplace rights for same sex couples, with same sex spouses now being treated in the same way as opposite sex spouses.
The Government considered removing this discrimination in 2014 and considered the costs of doing so would be around £3 billion for public sector schemes and under £0.5 billion for private sector schemes. Although the cost – which is based ultimately on the amount which has to be paid out – could increase, schemes may not see any increase in immediate funding requirements, as this is based on the assumptions used in an actuarial valuation which may not have drawn any distinction between same sex and opposite sex marriages and assumed that all spouses' pensions would be based on full pensionable service.