Our Knowledge

07.Aug.2017

Supreme Court asks ECJ if past pension rights are affected by changes in law

The Supreme Court has asked the European Union Court of Justice (ECJ) to confirm if the Equal Pay for Part-Time Workers Directive applies retrospectively; in other words, whether a pension is ‘fixed’ at the time it is accrued, or if it is subject to any change in law at the time it comes to be paid.

Background
The Supreme Court’s referral is in the case of O’Brian v Ministry of Justice, a long-running case about the pension rights of part-time judges in England and Wales.

Mr O’Brian was a part-time judge from 1978 until retiring in 2005. He was told on retirement that he was ineligible for a judicial pension due to his part-time status.  Mr O’Brian successfully challenged that decision in the Supreme Court, which held in 2013 that such discrimination was incompatible with EU law protecting part-time workers. As such Mr O’Brian was entitled to a judicial pension in the same way as any full-time judge.

It then fell to be decided the level of pension Mr O’Brian would be paid. A judicial pension is a calculated by multiplying the member’s final salary by their years of ‘Pensionable Service’. The relevant EU law came into force on 7 April 2000.  A key issue for the ECJ, will therefore be should pensionable service before that date count towards his pension?

The Referral
Mr O’Brian’s argument is that a right to pension is not ‘fixed’ when it is accrued; instead, it needs to be tested against the law in force when it comes into payment. Therefore, because when he retired it was unlawful to discriminate against a part-time judge, all of his part-time service since 1978 should be included when calculating his pension.

The Ministry of Justice’s argument, by contrast, is that pension rights are ‘fixed’ at the point they are accrued; any change in law is only relevant for service accrued after the change. Its position, with which the Court of Appeal agreed, is therefore that Mr O’Brian’s pensionable service began on 7 April 2000 when the relevant EU law came into effect.

Both sides were able to cite previous EU rulings supporting their position, so the Supreme Court asked the Court of Justice to confirm the correct approach.

Comment
This case should be monitored closely by any employer or pension scheme which employed part-time staff before 7 April 2000, as it may be that if Mr O’Brian is ultimately successful this could lead to an increase in some schemes’ liabilities.  The Supreme Court hinted in its judgement that it is leaning towards agreeing with Mr O’Brian, and came to a similar conclusion in the related case of Walker v Innospec, meaning the decision of the ECJ is likely to be key.

You can read the full judgement here