O’Brien v. Ministry of Justice - (12 Jul 2017)

It is unlawful to discriminate against part-time workers, when a retirement pension falls due for payment

Service

Appellant is a retired self-employed barrister, who also held part-time judicial office as a recorder (a part-time judge of Crown Court) between 1 March 1978 and 31 March 2005, when he retired at age of 65. Recorders were not salaried but were paid fees on a per diem basis. There was no provision for payment of a judicial pension on retirement. In June 2005, Mr O’Brien wrote to Ministry, requiring that, he be paid a retirement pension on same basis, adjusted pro rata temporis, as that paid to former full-time judges, who had been engaged on same or similar work. He was informed by Ministry that, he fell outside categories of judicial office-holder to whom a judicial pension was payable. In September 2005, he began proceedings in Employment Tribunal, in which he claimed that, he was entitled to a judicial pension by virtue of directive and regulations transposing it into domestic law.

When case reached to Supreme Court, it referred the same to Court of Justice of European Union (CJEU), questioning as to whether it was permissible for national law to draw a distinction between salaried and daily fee-paid judges for purposes of pension provision. CJEU held that, it was not permissible, and Supreme Court found that, Mr O’Brien was therefore, entitled under directive and national law to a pension on terms equivalent to a comparable full-time judge. Supreme Court then remitted case to Employment Tribunal to determine amount of pension. There question arose whether, in calculating amount of his pension, account should be taken of whole of his service since, beginning of his appointment in 1978 (a period of 27 years), or only his service since 7 April 2000, deadline for transposing directive (a period of less than five years). Employment Tribunal held that, calculation should take into account whole of his service, but Employment Appeal Tribunal held the contrary. Court of Appeal upheld decision of Employment Appeal Tribunal.

United Kingdom gave effect to directive by Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (SI 2000/1551), which came into force on 1 July, 2000. Regulations provide that, a part-time worker has right not to be treated by his employer less favourably than employer treats a comparable full-time worker. In determining whether a part-time worker has been treated less favourably than a comparable full-time worker, pro rata principle is to be applied unless it is inappropriate. Regulations expressly do not apply to fee-paid part-time judges.

In European Commission v Moravia Gas Storage AS (Case C-596/13 P), Court of Justice stated that, “A new rule of law applies from entry into force of act introducing it, and, while it does not apply to legal situations that have arisen and become definitive under old law, it does apply to their future effects, and to new legal situations. It is otherwise, subject to principle of non-retroactivity of legal acts, only if new rule is accompanied by special provisions which specifically lay down its conditions of temporal application.”

Court applied that principle in context of directive in Istituto Nazionale della Previdenza Sociale (INPS) v Bruno, that “new rules apply, unless otherwise specifically provided, immediately to the future effects of a situation which arose under the old rule.” “Accordingly, calculation of period of service required to qualify for a retirement pension such as pensions at issue in the main proceedings is governed by Directive 97/81, including periods of employment before the directive entered into force.

Appellant argues that, under this line of reasoning, periods of employment before directive entered into force are to be taken into account, when applying the directive in situations which arise after it should have been transposed, not only in relation to qualification for a retirement pension (which the Ministry does not dispute), but also in relation to quantification of that pension, where its quantification is based on the employee’s length of service.

Ministry argued that, following Ten Oever v Stichting Bedrijfspensionenfonds voor her Glazenwassers en Schoonmaakbedrijf, an occupational pension constitutes deferred pay for past work, and worker’s entitlement to that pension accrues and is fixed at time of the work for which it constitutes pay; entitlement is not determined, when person retires and the pension becomes payable. The EU law principle of non-retroactivity therefore prevents right which accrued (or did not accrue) at time of service from being affected retrospectively by a change in the law. On that basis, it is argued that, Appellant’s non-entitlement to a pension in respect of his first 22 years of service was definitively established before directive entered into force.

Effect of Directive 97/81 is that, it is unlawful to discriminate against part-time workers, when a retirement pension falls due for payment. Directive applies ratione temporis, where pension falls due for payment after directive has entered into force. In so far as part of period of service took place prior to directive’s entry into force, directive applies to future effects of that situation.

However, Court of Justice has not as yet considered argument that if, following Ten Oever line of authority, an occupational pension is treated as deferred pay, right to which is acquired at time of work to which pay relates, then it follows from general principle of non-retroactivity that, directive does not alter or affect rights acquired (or, in Appellant’s case, not acquired) before it was brought into force, there being no provision in directive which overrides that general principle. Although, majority of Court are inclined to think that, Ten Oever was concerned with exceptional Barber limitation, which does not arise in present context, correct approach does not appear to Supreme Court to be acte clair.

Supreme Court has therefore referred question to Court of Justice: does Directive 97/81, and in particular clause 4 of Framework Agreement annexed thereto concerning principle of non-discrimination, require that, periods of service prior to deadline for transposing Directive should be taken into account, when calculating amount of retirement pension of a part-time worker, if they would be taken into account, when calculating pension of a comparable full-time worker.

Relevant : European Commission v. Moravia Gas Storage AS (Case C-596/13 P), Istituto Nazionale della Previdenza Sociale (INPS) v. Bruno, Ten Oever v. Stichting Bedrijfspensionenfonds voor her Glazenwassers en Schoonmaakbedrijf

Tags : PENSION ENTITLEMENT DIRECTIVES APPLICABILITY