John Walker had earned a pension that would provide an income for a surviving spouse. The dispute concerned who would qualify for that income if he died. Innospec argued that his service ended too early for his husband to receive the pension a wife would receive. The Supreme Court examined when the unequal treatment would actually take place.
Mr Walker worked for Innospec from 1980 until his early retirement in March 2003. He paid into its occupational pension scheme throughout. He and his partner registered a civil partnership in 2006 and later married.
Innospec refused to confirm a full spouse’s pension because all his service predated 5 December 2005. It relied on paragraph 18 of Schedule 9 to the Equality Act 2010. The difference was substantial. At the time of the claim, a widow would have received about £45,700 a year, while his husband would have received about £1,000 under the statutory guaranteed minimum.
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Decisions below
In November 2011 Mr Walker claimed sexual-orientation discrimination in the Employment Tribunal. On 13 November 2012 the Tribunal found both direct and indirect discrimination. The direct discrimination was unequal treatment of comparable lifetime couples, and the indirect discrimination was an unwarranted requirement imposed on a same-sex couple. The suggested funding justification was not supported by sufficiently cogent evidence. The Tribunal read paragraph 18 compatibly with Council Directive 2000/78/EC, the Framework Directive, and upheld liability.
The Employment Appeal Tribunal accepted that the couples were comparable and rejected the funding justification advanced for the difference in treatment. It nevertheless allowed Innospec’s appeal because it considered the Directive could not retrospectively alter entitlements attributable to past service. It held that the statutory exception could neither be interpreted away nor disapplied for that period.
The Court of Appeal dismissed Mr Walker’s appeal. It held that civil partnership and marriage were comparable, rejecting the argument that paragraph 18 itself made them different. It nevertheless applied what it described as the EU principles of no retroactivity and future effects. In its view, the Directive prohibited discrimination only in relation to future pension attributable in the relevant sense to the period after 2 December 2003, and requiring a full spouse’s pension for Mr Walker’s husband would give the Directive retrospective effect.
The Supreme Court’s reasoning
Lord Kerr, with whom Lady Hale and Lord Reed agreed, identified the central question as whether the Directive prohibits sexual-orientation discrimination in pension payments referable to service before 5 December 2005. EU law does not require states to recognise same-sex partnerships, but where national law provides a status equivalent to marriage, less favourable treatment of a same-sex partner in that status is directly discriminatory. The United Kingdom had to transpose the Directive by 2 December 2003 and had recognised same-sex unions domestically.
EU legislation generally applies prospectively, protecting legal certainty and legitimate expectations, while applying immediately to continuing situations rather than to situations permanently fixed before it came into force. Lord Kerr held that the equal-pay cases relied on below, including Defrenne II, Barber and Ten Oever, did not establish a general rule that a survivor’s pension is permanently fixed as it is earned. Those decisions exceptionally limited the ordinary retrospective effect of judgments because of potentially catastrophic financial consequences and legitimate reliance on an earlier understanding of article 119. That technique does not determine the temporal effect of legislation.
Maruko and Römer were decisive. In Maruko, the Court of Justice held that the Directive precluded refusal of an equivalent survivor’s benefit to a registered life partner, and that its judgment need not be limited in time, despite service and contributions largely or wholly before the Directive. In Römer, equal treatment applied if the national partnership was comparable to marriage. Payments due before the transposition deadline could not be recovered, but pension due afterwards was calculated on all contributions, whenever paid, absent evidence that the scheme’s financial balance would be retroactively disturbed. Parris was consistent with that analysis: a future survivor’s pension may be recognised even though calculated by reference to past service, although the Directive does not create claims for payments due before the transposition deadline.
The unequal treatment therefore occurs when the pension falls to be paid. A woman whom Mr Walker married after retirement would qualify, so the scheme’s financing should have allowed for a change in marital status. His salary had matched that of a heterosexual man, and there was no reason to assume that no lawful spouse would ever qualify. If his husband survives him and they remain married, refusal of the spouse’s pension is sexual-orientation discrimination. Paragraph 18, particularly paragraph 18(1)(b), is incompatible with the Directive.
The majority held that the scheme could not rely on the domestic exception to refuse the full pension. The Court could give effect to the EU right by disapplying the incompatible provision. It did not need to make a separate declaration under the Human Rights Act 1998.
The concurring judgment
Lord Carnwath and Lord Hughes agreed that the appeal should be allowed, but on narrower grounds. They preferred to await the Court of Justice’s answer in the related O’Brien reference before adopting Lord Kerr’s interpretation of the Ten Oever line. Even so, Mr Walker had earned a right to a pension for his spouse, and a possible change of marital status should have been built into the scheme. Who qualified as his spouse had to be determined when discrimination between heterosexual and same-sex marriages was unlawful. The period over which the entitlement was earned had nothing to do with its fulfilment, so paragraph 18 had to be disapplied to the extent that it restricted the right.
In O’Brien v Ministry of Justice [2017] UKSC 46, decided the same day, the Court referred a separate question about the treatment of past service in a fee-paid judge’s own pension.
Verdict: The Supreme Court unanimously allowed Mr Walker’s appeal. It declared paragraph 18 of Schedule 9 incompatible with EU law and required it to be disapplied. His husband would be entitled to a spouse’s pension based on all Mr Walker’s service if they remained married when Mr Walker died.
