Same-Sex Relationships and Survivors’ Pension Rights

In a guideline case that established that European equal treatment laws do not have retrospective effect – and that not every act of discrimination is unlawful – a gay man who campaigned to secure equal pension survivorship rights for same-sex couples has met with defeat at the Employment Appeal Tribunal (EAT).

John Walker, aged 62, worked for 23 years in a senior capacity for a chemicals company until his retirement in 2003. Drawing a pension of £85,000 a year, his younger civil partner would have inherited two-thirds of his entitlement on Mr Walker’s death – if he were a woman.

Mr Walker launched a test case, which was backed by pressure group Liberty. The Employment Tribunal (ET) ruled that the relevant pension scheme discriminated against him both directly and indirectly because of his sexual orientation and that his 49-year-old partner was entitled to the same survivorship rights as a wife would have been.

The ruling was met with dismay from business leaders, who said that it would leave UK companies to pick up an estimated £90 million bill. The level of concern was such that the employer’s appeal was supported by the Secretary of State for Work and Pensions, who instructed counsel in the matter.

The EAT accepted that a pension scheme which paid survivor’s benefits to a spouse of the opposite sex, but not to a same-sex partner, was clearly discriminatory. However, delivering a fatal blow to Mr Walker’s case, it found that the effect of the relevant scheme on him was nevertheless lawful by virtue of Paragraph 18 of Schedule 9 of the Equality Act 2010.

Had Mr Walker’s partner been a woman, she would have been entitled to two-thirds of his pension after his death, whereas his partner could look forward to receiving only about £500 a year. However, the effect of Paragraph 18 was that it was not unlawful for there to be discrimination in respect of access to a benefit payable in respect of periods of service prior to 5 December 2005.

The ET had found that Paragraph 18 was fundamentally incompatible with the European Equal Treatment Directive and that the latter held sway because it was directly effective in the UK. However, in overturning that decision, the EAT noted that it was ‘only a few decades ago’ that men were openly and routinely paid more than women doing the same jobs and that those earning ‘women’s rates’ had also been entitled to less generous pensions.

The EAT concluded, “The Directive does not purport to have retrospective effect such that inequalities in pay arising on the basis of sexual orientation prior to the date it was to be transposed can form the basis of a claim after transposition though they could not have done before.

“It (the Directive) is a basis for ensuring equal treatment as between those with different sexual orientation but who are, viewed broadly, in comparable situations after the latest date of transposition. Paragraph 18 does not infringe the latter principle. Nor is it contrary to the Directive in leaving past discrimination un-remedied.

“As the Secretary of State points out, there may be very good financial reasons for this, such that, although a different legislative change might have been made, as it may well have been made in Germany, it was not mandated. The ET was wrong in law to hold the opposite.”