It is unlawful to discriminate against civil partners under the Civil Partnership Act 2004, with certain exceptions. In Walker v Innospec Ltd and ors, the Supreme Court held that it is unlawful to discriminate against civil partners in respect of a pension for periods of service before 5 December 2005, which is when the Act came into force.
Basic facts
Mr Walker, who had worked for Innospec Ltd from 1980 until his retirement in 2003, entered into a civil partnership in January 2006 under the Civil Partnership Act 2004 which came into effect in December 2005. The two men subsequently married. In 2006 Mr Walker asked Innospec to confirm that, in the event of his death, they would pay the surviving spouse’s pension to his civil partner.
Relying on paragraph 18 of schedule 9 of the Equality Act which states that it is not unlawful to discriminate in respect of a pension for periods of service before December 2005, Innospec said that his civil partner was not entitled to the pension as Mr Walker’s service predated the Civil Partnership Act.
Mr Walker claimed discrimination on the ground of sexual orientation.
Decisions of lower courts
The tribunal found in his favour, but the EAT dismissed his appeal as did the Court of Appeal (see LELRs 365 and 451) on the basis that as the treatment was lawful under domestic law when it occurred, it could not become unlawful retrospectively.
Supreme Court decision
The main question was whether paragraph 18 was compatible with the EU Framework Directive which requires member states to prohibit discrimination in the field of employment and occupation on various grounds including sexual orientation.
The general rule under EU law is that the law does not have retrospective effect. The Court of Justice of the European Union (CJEU) has developed two principles to establish the “temporal application” of EU legislation, distinguishing between the retroactive application of legislation to past situations (which is prohibited unless expressly provided for) and its immediate application to the future effects of continuing situations (which is generally permitted).
Applying these principles presents a challenge, however, when dealing with entitlement to an occupational retirement pension. During the time that the right to a pension is accruing, actuarial assumptions are based on existing legal conditions, although the pension is payable in the future. Those assumptions are upset when, because of changes in social values, a new equal treatment provision is introduced and it becomes necessary to identify the point at which entitlement to a pension becomes “permanently fixed”. In other words, whether it is at the date of retirement or when the pension is paid.
The Court of Appeal wrongly concluded that a general principle of EU law had established that entitlement to a survivor’s pension was “permanently fixed” as it is earned. It was influenced in this view by a line of case law exceptionally limiting the temporal application of one of its judgments relating to equal pay for men and women. In the opinion of the majority of the Court, these cases were not relevant to the application of the Framework Directive in this kind of case. In any event, two recent decisions of the Grand Chamber of the CJEU had made clear that the Framework Directive precluded legislation under which a surviving partner could not receive a survivor’s benefit equivalent to that granted to a surviving spouse.
The Supreme Court therefore concluded that, unless there was evidence of unacceptable economic or social consequences of giving effect to Mr Walker’s entitlement to a survivor’s pension for his husband, he should not be subjected to unequal treatment. Paragraph 18 of Schedule 9 was therefore incompatible with the Framework Directive and must be disapplied.