As the law currently stands, employers and pension funds are permitted to exclude civil partners from spousal benefits under a pension scheme the rights to which accrued prior to 5 December 2005, which is when Section 1 of the Civil Partnership Act 2004 (CPA) came into force.
This exemption, which is contained in Paragraph 18 of Schedule 9 of the Equality Act 2010, was challenged in a case brought by Liberty on behalf of a member of the Innospec pension scheme (Walker v Innospec Limited and Others).
John Walker, aged 62, worked for the Cheshire-based chemicals group for more than 20 years until his retirement in 2003. For most of that time he has been in a relationship with his partner and the couple entered into a civil partnership in 2006. It was Mr Walker’s expectation that, upon his death, his partner would receive the same benefits under the company’s pension scheme as would a surviving spouse. Innospec, however, relied on the exemption and refused to treat Mr Walker’s civil partner as a ‘spouse’.
By Mr Walker’s reckoning, were he to die, his partner would receive a pension of £500 per annum. Were he married, however, his widow would then receive two thirds of his pension.
The Employment Tribunal (ET) found that the operation of the exemption meant that the Innospec pension scheme discriminated against Mr Walker both directly and indirectly.
Furthermore, although the scheme complied with domestic legislation, it was in breach of the EU Equal Treatment Directive. In the ET’s view, civil partners should receive benefits based on the deceased’s full length of service, not just from the date on which the CPA was introduced.
This 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 Innospec’s appeal was supported by the Secretary of State for Work and Pensions, who instructed counsel in the matter.
The Employment Appeal Tribunal (EAT) upheld the appeal. Whilst it 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, the EAT found that the effect of the scheme on Mr Walker was nevertheless lawful by virtue of the exemption contained in the Equality Act.
The ET had been wrong to find that the exemption was incompatible with the Directive and EU law. That law ‘did not have retrospective effect in the field of sexual orientation, any more than would have been the case of a claim for previous inequality of pay based on sex, which arose before the acceptance of the right to equal pay, would have given rise to a claim for back pay, or pension entitlement based upon it’.
It was not, therefore, 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 contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.