Appeal No. UKEAT/1069/02/ILB
UKEAT/1070/02/ILB
UKEAT/1071/02/ILB

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	                            At the Tribunal
	On 3, 4, 5 and 7 November 2003
                                                                                                      Judgment delivered on 19 December 2003

Before
HIS HONOUR JUDGE J McMULLEN QC
(SITTING ALONE)

MRS S PRESTON & OTHERS	APPELLANTS

WOLVERHAMPTON HEALTHCARE 
NHS TRUST & OTHERS	RESPONDENTS

Transcript of Proceedings

JUDGMENT

Revised

	APPEARANCES

FOR MRS V M BORROUGHS, MRS K A BARTLETT
MRS D CAREY AND MRS A SHEEN

FOR MRS C J BUNYAN

FOR MRS J M COCKRILL
AND
MRS P KILBURN

FOR MRS P CROUCHER

FOR MRS P SAVAGE, MRS J THOMAS 
AND
MRS S TYRRELL

(APPEARANCES CONT’D)

FOR MIDLANDS ELECTRICITY PLC
POWERHOUSE RETAIL LTD
FOR SEEBOARD RETAIL PLC

FOR SECRETARY OF STATE
FOR HEALTH

FOR THE SECRETARY OF STATE FOR
EDUCATION AND SKILLS

FOR NORTH MANCHESTER 
HEALTH AUTHORITY 

FOR LANCASHIRE COUNTY COUNCIL,
WOLVERHAMPTON CITY COUNCIL
AND
WORCESTERSHIRE COUNTY COUNCIL

	

MR JOHN CAVANAGH QC
and
MR DANIEL STILITZ
(of Counsel)
Instructed By:
Legal Adviser UNISON
Employment Rights Unit
1 Mabledon Place
London WC1H 9AJ

MR JOHN CAVANAGH QC
and
MR DANIEL STILITZ
(of Counsel)
Instructed By:
Mr Phillip Lott
ATL
Northumberland Street
London WC2N 5RD

MR JOHN CAVANAGH QC
and
MR DANIEL STILITZ
(of Counsel)
Instructed By:
Messrs Graham Clayton
Solicitors
Hamilton House
Mabledon Place
London WC1H 9BD

MR JOHN CAVANAGH QC
and
MR DANIEL STILITZ
(of Counsel)
Instructed By:
Legal Adviser UNISON
Employment Rights Unit
1 Mabledon Place
London WC1H 9AJ

MS LORNA FINDLAY
(of Counsel)
Instructed By:
Royal College of Nursing
67-69 Harbourne Court
Harbourne Road
Edgbaston
Birmingham

MR CHRISTOPHER JEANS QC
and
MR JASON COPPEL
(of Counsel)
Instructed By:
Eversheds LLP
Senator House
85 Queen Victoria Street
London EC4V 4JL

MR NICHOLAS PAINES QC
and 
MR RAYMOND HILL
(of Counsel)
Instructed By:
The Office of the Solicitor
The Department of Health
New Court
Room 546A
48 Carey Street
London WC2A 2LS

MR NICHOLAS PAINES QC
and 
MR RAYMOND HILL
(of Counsel)
Instructed By:
The Office of the Solicitor
The Department of Health
New Court
Room 546A
48 Carey Street
London WC2A 2LS

MR DANIEL OUDKERK
(of Counsel)
Instructed By:
Messrs Hempsons
Solicitors
Portland Tower
Portland Street
Manchester M1 3LF

MR CLIVE LEWIS
(of Counsel)
Instructed By:
MS FIONA DAVIS
Wolverhampton City Council
Civic Centre
St Peter’s Square
Wolverhampton WV1 1RG	

HIS HONOUR JUDGE J McMULLEN QC:

1	These appeals relate to the right of men and women to equal access to pension schemes.  I will refer to the parties as Applicants and Respondents except where more specific reference is required.  The Secretaries of State for different departments are known generically as the Secretary of State.  The case continues to be known as Preston v Wolverhampton No.3, notwithstanding Mrs Preston’s success at the Employment Tribunal and therefore her non-involvement in the appeals.  Preston No. 1 [1998] ICR 227 is the original Employment Tribunal case which went to the House of Lords.  The House of Lords referred it to the European Court of Justice and on its resumption at the House of Lords it became known as Preston No. 2 [2001] ICR 217. 

2	I am hearing this case under Section 28(4) of the Employment Tribunals Act 1996, ie as a Judge sitting alone, since it is an appeal from a Chairman alone and no party has made submissions to me to the contrary.

Introduction

3	These appeals and cross-appeals by both Applicants and Respondents arise from a Reserved Decision of the Regional Chairman, Nottingham Region Mr J.K. Macmillan, sitting at London Central, over nine days in June and July 2002, registered with Extended Reasons on 2 August 2002.  He decided some issues for and some against the Applicants.  The Reasons and Orders extend over 100 pages.  The Chairman paid tribute to the advisers, both trade union and legal representatives, of the parties in bringing the cases forward in a manageable form.  Lord Slynn paid tribute to the Chairman’s writing of the judgment in 1995 which led to Preston No. 1 (above). Seven years later, Preston No. 3 invokes the same tribute, not only from me but also from those Counsel who have appeared, albeit to criticise it, before me.  

4	In his reasons the Chairman noted colourful criticisms made by Mr Christopher Jeans QC on behalf of the Electricity Respondents of the case made by Mr John Cavanagh QC on behalf of the vast majority of the Applicants.  To some extent the Chairman adopted those criticisms.  Understandably, Mr Cavanagh and his union client UNISON wish those comments to be seen in context.  He submits that weak cases had to be put before the Chairman since it was not open to his team to select only their best cases – a range of factual issues needed to be put forward so that test cases could genuinely be adjudicated upon.  Only by expressing a range of test cases would the limits of the decision be determined.  That is a fair comment to make.  He also points out that he has culled many aspects of the Chairman’s decision which might have resulted in a ground of appeal.  I accept that, too.  These cases represent the largest litigation ever in an Employment Tribunal involving roughly 60,000 claims, mainly by women part-time workers.  They brought claims because their treatment, not unlawful under domestic law was said to breach EU law. They succeeded at least in one major respect for the first time in the European Court of Justice having lost in all of the domestic courts except the House of Lords where the reference was made.  The approach to the litigation was therefore informed by judgments made by the European Court and has led to a considerable reduction in the numbers of cases and the live issues. 

5	Mr Cavanagh also makes clear that, although the Applicants in these cases presented Originating Applications in around December 1994, no party takes any issue about the delay as we now reach their ninth anniversary.  All parties point to the substantial co-operation between themselves, and to the efforts made by Tribunal staff and judicial officers in bringing these cases forward.

6	I gave case management directions at a meeting in June 2003, Counsel agreed a timetable, and finished short of it.  All the material was presented to me electronically which has made navigation through the Decision and the arguments much easier.  I am very grateful to leading and junior counsel for this assistance, and for the succinct way in which their arguments were presented orally and in writing.

7	I say at once, since it is the subject of criticism on behalf of the Applicants by Mr Cavanagh, that the language of the Chairman is clear, cogent and entirely appropriate to the task in hand.  He expressly recognised that he was speaking to an audience on the internet concerned in these 60,000 cases, together with their legal advisers and the higher courts and tribunals.  

A simple summary of the background

8	At the outset of his reasons the Chairman summarised terms the background in simple terms:  

“1.	I have before me (sitting alone at the request of the parties) a further range of test cases in the part-time worker pension litigation, which are claims (perhaps some 60,000 in number) brought by part-time employees, mostly women, under sections 1 and 2 of the Equal Pay Act 1970 as modified by the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 [SI 1976/142] and Article 141 (formerly 119) of the Treaty of Rome alleging discrimination in a matter relating to pay, namely denial of access to membership of their employer’s occupational pension schemes, the scheme rules laying down minimum qualifying hours thresholds with which, as part time workers, they could not comply. That qualifying threshold, it is claimed, was indirectly discriminatory against women, (hence the need to invoke Art 141, which disapplies the domestic provisions to the extent that they did not encompass claims based on indirect discrimination, in respect of periods of claim prior to 31st May 1995 when the domestic legislation was amended) as the great majority of the part time workforce in the United Kingdom is female.  A more detailed exposition of the background to theses cases and the case management techniques adopted to deal with them can be found in the opening paragraphs of my Decision on certain preliminary issues of December 1995 and it would be idle to repeat them here.  Suffice it to say that the first decision dealt with a range of preliminary issues of universal application, such as time limits and the backdating of periods of claim.  The appeal process culminated in two decisions of the House of Lords on 5th February 1998 and 8th February 2001, the latter after a reference of certain questions to the European Court of Justice.
2.	The parties have always understood that a second round of test cases would be necessary.  The second round has generally been referred to as the common points, as it was anticipated that it would deal with issues which, whilst not of universal application, affected either all, or the majority of, cases within a sector or arose in similar form across a number of sectors.  Inevitably perhaps, further universal points have been identified (whether an applicant must be able to identify a comparator; does an applicant lose her right to bring a complaint if she failed to opt into the scheme when the qualifying threshold was removed) or have arisen as a result of the judgments of the House of Lords (whether a stable employment relationship exists) and these have been included in the second round.”

9	He sounded a cautionary note about the effect of test cases and indicated that he had heard no evidence, determining all these cases on agreed facts, or at least facts agreed for the purposes of the hearing.  

Summary conclusions on the issues 

10	At a directions hearing in 2001 six issues, with many sub-issues, were identified.  By the end, the Chairman in an executive summary answered twenty questions. Since those reading this judgment will also have access to the Chairman’s, I will retain his original numbering as agreed with the parties, and refer to the issues which survive on appeal as appeal issues 1 to 6. The Chairman’s decision, and mine on appeal, are as follow

(1)	Does time begin to run in a claim against a TUPE transferor from the date of transfer, or does time not run until the end of an employee’s employment with the transferee?  This issue arises in the appeals brought by Mrs Burroughs, Mrs Bartlett, Mrs Carey and Mrs Sheen, employed in the Electricity sector. The Chairman decided they were out of time. I find for them and allow their appeals.

(2)	When does a “stable employment relationship” arise?  This issue arises in the appeals brought by Mrs Bunyan, Mrs Cockrill and Mrs Kilburn in the education sector. The Chairman held these claims failed and I agree. Their appeals are dismissed.

(3)	Is there a breach of the Equal Pay Act 1970 where scheme membership is compulsory for full-time staff but part-time staff are excluded?  This issue arises in the appeal of Seeboard Retail plc in the Electricity sector. I agree with the Chairman that there is a breach and dismiss Seeboard’s appeal.

(4)	Is there a breach of the 1970 Act where scheme membership is compulsory for full-time staff and optional for part-time staff?  This issue arises in the cross-appeal by Mrs Savage, Mrs Thomas and Mrs Tyrrell, backed by the Royal College of Nursing (“the RCN cases”) in response to the appeal brought by the Secretary of State in the health sector. I agree with the Chairman that there is no breach and dismiss this ground of appeal.

(5)	Is there a breach of the 1970 Act where an employer has failed to inform staff of the removal of a barrier to scheme membership?  This issue arises in the appeal brought by the Secretary of State in the RCN cases. The Chairman held there is a breach; I agree, but only where there is a policy of failing to inform, having a disparate effect on women. This ground of appeal by the Secretary of State is upheld.

(6)	Did the Chairman err in his consideration of Mrs Savage’s and Mrs Thomas’ test cases?  This issue again arises in the appeal brought by the Secretary of State in two of the RCN cases. The Chairman did err in allowing these cases. Having had written submissions after the hearing, I hold that their cases should be dismissed.

11	Although Counsel carefully set out these six issues on appeal, the presentation of them does not, it seemed to me, reflect their logical sequence and so I will deal with them in the following order:  appeal issue 3, 4, 5, 6, 2 and 1.

The law: a simple introduction
12	In equally clear terms the Chairman summarised the law:

6.	Where a woman is employed on essentially the same work as a man or  on work which is of equal value to a man’s, she is entitled to equal pay with that man, unless the difference in pay can be objectively justified by factors which have nothing to do with their respective sexes.  To achieve this, the law implies into the contract of employment of every employee an equality clause. The equality clause is broken if the woman’s pay is not equal to that of the man and the woman can bring a complaint to an employment tribunal. However, she must bring the complaint within 6 months of the ending of the employment in question or her right to complain is lost forever.  The tribunal has no discretion to extend that time limit in any circumstances.  If her complaint succeeds, the tribunal can order her employer to pay her the difference between her pay and the man’s pay for, at most, the two years before she started proceedings.
7.	Membership of a pension scheme is regarded as part of an employee’s pay,  but because of the special nature of pensions, special rules apply.  Part-time workers who were excluded from pension schemes because they worked fewer than the minimum qualifying hours can complain to an employment tribunal because their exclusion is indirectly related to their sex, the great majority of part-timers in this country being women.  The question of whether in such a case an actual male comparator is required (which would present a problem in all female or largely female workforces) is currently being considered by the European Court of Justice and any part-timer worker pension case in which that point is being taken is stayed until it is resolved.
8.	A complaint that a woman has been excluded from her employers occupational pension scheme because she worked part-time must also be made to an employment tribunal within 6 months of the end of the employment in question or the right to claim will be lost.  However, where an employee has worked for an employer periodically rather than continuously, but in a way which gives rise to a stable employment relationship, the 6 month period runs not from the end of each separate period of employment but from the end of the whole relationship. ...
9.	I am also asked to decide what happens when an employee changes employer in two circumstances where the law regards the employment as continuing.  They are where there has been a transfer of a business under the Transfer of Undertakings Regulations and [… ][test issue 3 …].
10.	If an applicant succeeds, I have no power to award damages.  The only remedy I can give is a declaration requiring the employer to admit her to the pension scheme between certain dates. The declaration is not restricted to the two year period immediately before the date on which the applicant started her tribunal claim.  It can cover any period during which her part-time hours excluded her from membership of the pension scheme right back to the start of her employment or, if later, the 8th April 1976.  If I make such a declaration both the employer and the applicant are required to make contributions to the scheme sufficient to fund the applicant’s pension.
...
156	... It is common ground that Article 141 does not give rise to free-standing rights of action (Biggs -v- Somerset County Council (1996) ICR 364 CA).  Community provisions which are of direct effect, such as Article 141, are given effect to by disapplying provisions of domestic law which conflict with them.  The domestic legislation, prior to amendments consequent upon Vroege and Fisscher, was predicated on the basis that complaints in respect of equal pay, which includes the right of access to occupational pension schemes, could only be brought in cases of direct discrimination.  Article 141 also creates the right to equal pay where the inequality in pay arises as a result of indirect discrimination (Bilka-Kaufhaus GmbH -v- Weber Von Hertz (case 170/84) (1987) ICR 110 ECJ).  UK domestic law must therefore be interpreted in conformity with Article 141 (by disapplying it to the extent necessary to allow it to be so interpreted) and be deemed to extend to cases where the inequality of pay is consequent upon indirect discrimination. That is the extent of an applicant’s Article 141 right.
157. Under domestic law indirect discrimination occurs where there is a requirement or condition which cannot be justified on grounds unrelated to sex, (in this case the requirement or condition of working full-time) with which a considerably greater proportion of women than men cannot comply, or which is to the detriment of a considerably greater proportion of women than men, and is to the applicant’s detriment.  In European law the requirement is that the applicant be afforded equal treatment.  As I understand it, the parties accept that analysis and agree that a mere difference in treatment is insufficient.  
158.	 In the context of this case the comparison to be made to determine whether there is less favourable treatment is between part-time workers and full-time workers.”

The legislation relating to equal access to pension schemes

13	Specific aspects of appeal issues 1 to 6 are based on specific legislative provisions, but the general background against which these cases are set is revealed in the following provisions.  I set them out here and cross refer to them when I deal with the appeal issues 1 to 6 respectively.  

14	The Community right to equal pay is provided by Article 141(ex Article 119) as follows:

“(1) Each member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied. 
(2) For the purpose of this Article, ‘pay’ means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer.”

15	The Equal Pay Act 1970 was replaced in amended form before its implementation on      29 December 1975 as a schedule to the Sex Discrimination Act 1975. It provides for an equality clause where men and women do equal work (that is like work, work which is equally rated or work of equal value):
1	Requirement of equal treatment for men and women in same employment
(1)	If the terms of a contract under which a woman is employed at an establishment in Great Britain do not include (directly or by reference to a collective agreement or otherwise) an equality clause they shall be deemed to include one.
(2)	An equality clause is a provision which relates to terms (whether concerned with pay or not) of a contract under which a woman is employed (the ‘woman’s contract’), and has the effect that—
(a)	where the woman is employed on like work with a man in the same employment—
(i)	if (apart from the equality clause) any term of the woman’s contract is or becomes less favourable to the woman than a term of a similar kind in the contract under which that man is employed, that term of the woman’s contract shall be treated as so modified as not to be less favourable, and
(ii)	if (apart from the equality clause) at any time the woman’s contract does not include a term corresponding to a term benefiting that man included in the contract under which he is employed, the woman’s contract shall be treated as including such a term;

(6)	Subject to the following subsections, for purposes of this section—
(a)	‘employed’ means employed under a contract of service or of apprenticeship or a contract personally to execute any work or labour, and related expressions shall be construed accordingly

16	Until it was modified with effect from 19 July 2003, the Act contained two constraints on the effectiveness of its provisions. Section 2(4) provided that no claim could be presented if the employee “has not been employed in the employment within the six months preceding the date of the reference”. And section 2(5) imposed a limit on the recovery of back pay, or a declaration relating to access to a pension scheme, to two years preceding the making of the claim. 

17	From 6 April 1978 until 1988 (Social Security Act 1986 s.15), the Equal Pay Act was modified by Regulation 10 of the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 (S.I. 142 1976 made under s 53 Social Security Pensions Act 1975). This Regulation provided that references in the Act to ‘less favourable terms of a contract’ were to be read (so far as relevant) as referring to  terms (or terms and conditions) which enable persons to have access to membership of a scheme…on a voluntary (as compared with an obligatory) basis’. A transitional scheme was permitted whereby persons who were employed but who were not members of a pension scheme as of 5 April 1978 could continue to be afforded membership on a voluntary basis (regulation 10(3) and (4)). 

18	The precise terms of section 53 are as follows:

“‘53(1)	The provisions of sections 54 to 56 below shall have effect with a view to securing that the rules of occupational pension schemes conform with the equal access requirements.
(2)	Subject to subsection (3) below, the equal access requirements in relation to a scheme are that membership of the scheme is open to both men and women on terms which are the same as to the age and length of service needed for becoming a member and as to whether membership is voluntary or obligatory.’

19	Regulation 10, which has the cross-heading ‘Modification in relation to the equal access requirements of the provisions of the Equal Pay Act as to equality clauses’, provides, so far as material:-
‘(1)	... the Equal Pay Act shall be so modified, in its application to the equal access requirements, as to have effect as if there were substituted, for references to less favourable terms of a contract and less favourable terms and conditions of employment, references to 
(a) terms ... which do not enable persons to have access to membership of a scheme (as compared with terms ... which do enable persons to have such access) and 
(b) terms ... which enable persons to have access to membership of a scheme at a higher age or ... lower maximum age, after a greater length of service or on a voluntary (as compared with an obligatory) basis.’ ”

20	The “equal access requirements” did not apply in certain transitional circumstances for Regulation 9 contained special provisions for membership of a scheme to be or remain voluntary.  The Regulations were made on 3 February 1976 and came into operation on 6 April 1978, preserving the foregoing right in respect of persons who were employed in relevant employment up to that date.

21	Where there is a breach of the equal access requirements powers are given to an Employment Tribunal by Regulation 12 which provides as follows:

“12(1)	The Equal Pay Act shall be so modified as to provide that where a court or an industrial tribunal finds that there has been a breach of a term in a contract of employment which has been included in the contract, or modified, by virtue of an equality clause and which relates to membership of a scheme, or where it makes an order declaring the right of an employee to admission to membership of a scheme in pursuance of the equal access requirements, it may declare that the employee has a right to be admitted to the scheme in question with effect from such date (‘the deemed entry date’) as it may specify, not being earlier than whichever is the later of the following dates, namely – 
(a) 6th April 1978; and
(b) the date 2 years before the institution of the proceedings in which the order was made
(2)	The Equal Pay Act shall be so modified as to require that if the deemed entry date is earlier than the date of the declaration, the employer shall provide any such resources as are specified in paragraph (3) below.”

22	By Regulation 13, an employer found to be in breach of the equal access requirements may be ordered to make additional resources available so that the obligation may be met.  

23	Public policy in relation to occupational pension schemes changed and was embodied in the Social Security Act 1986, as follows:
“15(1)	Subject to such exceptions as may be prescribed –
(a) any term of a contract of service (whenever made) or any rule of a personal or occupational pension scheme to the effect that an employed earner must be a member of a personal or occupational pension scheme, of a particular personal or occupational pension scheme or of one or other of a number of particular personal or occupational pension schemes shall be void; and 
(b) any such term or rule to the effect that contributions shall be paid by or in respect of an employed earner to a particular personal or occupational pension scheme of which the earner is not a member, or to one or other of a number of personal or occupational pension schemes of none of which he is a member, shall be unenforceable for so long as he is not a member of the scheme or any of the schemes.”
The Pension Schemes Act 1993 section 160(1) continued that policy.

24	The 1976 Regulations continued in force until they were replaced by the 1995 Equal Treatment Regulations, with effect from 1 January 1996.  Hence the 1976 Regulations can be relied upon in these proceedings, which were, in the main, commenced in 1994.  Under powers given by the Pensions Act 1995, further Regulations were made modifying the Equal Pay Act where an employee claimed the equality clause was connected to pension rights.  Regulation 9 of the Occupational Pension Schemes (Equal Treatment) Regulations 1995 provides that Section 2(5) of the Equal Pay Act does not apply and damages could not be awarded.  Instead, Regulation 10 inserts section 2(6D) into the Equal Pay Act which provides as follows:

“ (6D)	Where a court or employment tribunal finds that there has been a breach of an equality clause which relates to the terms on which persons become members of the scheme –
(a)	the court or tribunal may declare that a person has a right to be admitted to the scheme in question with effect from such date (‘the deemed entry date’) as it may specify provided that such date may not be earlier than two years before the institution of the proceedings in which the order was made, and 
(b)	when the court or tribunal so declares and the deemed entry date is earlier than the date of the declaration, the employer shall provide any such resources to the scheme as are specified in subsection (7D) below.”

25	It will be seen that that provision replicates the two-year backdating limitation contained in Section 2(5) of the Equal Pay Act for ordinary claims of breach of the equality clause.  Further temporal limitation is imposed by Regulation 11, restricting backdating of any declaration to 17 May 1990 which was the date of the judgment of the European Court of Justice in Barber v Guardian Royal Exchange Assurance Group [1990] ICR 616 ECJ.

26	Although not directly relevant for these proceedings, the Sex Discrimination Act 1975 has been alluded to for its concepts of direct and indirect discrimination and “detriment”. In its form relevant to these proceedings, which were commenced before 12 October 2001, sections 1 and 6(2) provides as follows:

“1 Direct and indirect discrimination against women
(1)	In any circumstances relevant for the purposes of any provision of this Act, other than a provision to which subsection (2) applies, a person discriminates against a woman if –
(a) on the ground of her sex he treats her less favourably than he treats or would treat a man, or 
(b) he applies to her a requirement or condition which he applies or would apply equally to a man but –
(i) which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men who can comply with it, and 
(ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and 
(iii) which is to her detriment because she cannot comply with it.
6 Discrimination against applicants and employees
(2)	It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her - 
(a) in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them;
(b) by dismissing her, or subjecting her to any other detriment.”

27	Pensions in the National Health Service, relevant to the group of Applicants in this case who are in the Royal College of Nursing (“the RCN appeals”), were regulated by statute.  I adopt the summary of Miss Lorna Findlay who appeared for those Applicants in summarising the legislative background which appeared to be uncontroversial. From 1 April 1973, under the NHS (Superannuation) (Amendment) Regulations 1973 (SI 242 1973), regulation 4 and schedule 7 to the NHS (Superannuation) Regulations 1961 were amended so that ‘any part time worker who satisfies the requirements of schedule 7’ of the 1961 regulations was eligible to join the scheme. Paragraph 1(a) of schedule 7 to the 1961 Regulations (inserted by SI 242 1973) provided that any officer employed by one or more employing authorities for such hours in any period as in the aggregate amounted to not less than one half of the hours which would constitute whole time employment (WTE) in her case was eligible to join the scheme, provided that she had made an election in writing to join the scheme (paragraph 2 of schedule 7). Until 31 March 1981, ‘WTE’ was 40 hours per week, when it became 37.5 hours per week. Under the NHS Superannuation regulations 1980/362 this provision was replicated (schedule 7 became schedule 6). Under the NHS (Superannuation) Amendment Regulations 1989/804 regulation 4 was amended and schedule 6 was deleted so that any part time officer employed in the aggregate for not less than half of WTE was automatically included in the pension scheme unless s/he decided to opt out (regulation 6 as amended). By contrast, membership of the scheme was compulsory for full time employees until 1 June 1989, when SI 1989 /804 came into force. By a new regulation 6 inserted into the 1980 Regulations from that date, a full time officer could elect in writing to “opt out” of the scheme.  As of 1 April 1991, all NHS employees were automatically included in the pension scheme unless they elected to opt out, irrespective of the number of contracted hours worked.

28	The combined effect of the pensions legislation may be summarised as follows:

“63	The requirement of equal access to occupational pension schemes was originally set out in sections 53 to 56 of the Social Security Pensions Act 1975.
64	Implementation of the requirement of equal access to pension schemes before 1st January 1996 was through the 1970 Act as modified by the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 (‘the 1976 Regulations’) and subject to Article 141.  From 1st January 1996 when sections 6(1A) and (2) of the 1970 Act were repealed, claims in respect of access to pension schemes have been made pursuant to section 1 of the 1970 Act together with regulations 9 to 11 of the Occupational Pension Schemes (Equal Treatment) Regulations 1995 (‘the 1995 Regulations’).
65	The statutory schemes impose a requirement that equal access to pension schemes should be provided.  The domestic remedy in respect of the right to retroactive membership of a pension scheme is a declaration of right: see regulation 12 of the 1976 Regulations and regulation 10 of the 1995 Regulations.  This accords with the decision of the European Court of Justice in Preston v Wolverhampton Healthcare NHS Trust (Case C-78/98) [2000] ICR 961 at paragraph 37 at 997:
‘ … the object of such a claim is not to obtain, with retroactive effect, arrears of benefits under the occupational pension scheme but is to secure recognition of the right to retroactive membership of that scheme for the purpose of evaluating the benefits to be paid in the future’.”

29	For the purposes of employment claims under Part II of the Sex Discrimination Act 1975 an amendment was made by the Sex Discrimination (Indirect Discrimination and Burden of Proof) Regulations 2001, in respect of claims made after 12 October 2001 to insert the following:
“1(2)	In any circumstances relevant for the purposes of any provision to which this subsection applies, a person discriminates against a woman if –
(a) on the ground of her sex,  he treats her less favourably than he treats or would treat a man, or 
(b) he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but –
(i) which is such that it would be to the detriment of a considerably larger proportion of women than of men, and 
(ii) which he cannot show to be justifiable irrespective of the sex of the person to whom it is applied, and 
(iii) which is to her detriment..”

Appeal issue 3 Is there a breach of the 1970 Act where scheme membership is compulsory for full-time staff but part-time staff are excluded? 

30	The essence of the appeal by Seeboard Retail Plc is a challenge to the assumption that exclusion from a pension scheme constitutes less favourable treatment.  The issue originally arose in the form of the following question described by the Chairman as issue 5(1)(b):

“In what circumstances is there a breach of the equality clause in respect of that period of an applicant’s claim which predates her becoming eligible to join the scheme, if she failed to join the scheme upon becoming eligible.”

31	The assumption in that question is that there is a breach while there continues to be an exclusion from the scheme, but a question arises when the Applicant becomes eligible and does not take up membership.  The Chairman’s answer to that question was as follows:

“1.	An applicant’s claim in respect of a period of exclusion from a scheme will not fail merely because she did not join the scheme upon becoming eligible to do so.
2.	There is a breach of the equality clause, in respect of which an applicant will normally be entitled to a declaration of right of access to membership of the scheme, for any period of claim during which the applicant was excluded from membership because of her part-time hours and her full-time comparator was obliged to be a member of the scheme.  Whether the applicant did or did not join the scheme on becoming eligible to do so, or only joined after a significant delay, is irrelevant.”

32	The facts upon which this judgment was based are revealed by the test case of Mrs Croucher as follows:

162	Mrs Croucher commenced employment with Seeboard as a sales assistant on the 8th September 1980.  Until May 1982 she worked for 14 hours a week and thereafter, until the end of July 1988, for 13½ hours a week.  On the 1st April 1988, the rules of the electricity supply pension scheme changed in two respects, firstly, by abolishing the requirement that membership of the scheme was obligatory for full-time employees (other than in respect of a group described as industrial staff who had joined the industry before the 1st April 1975, although I understand that Mr Jeans accepts that for practical purposes the scheme is to be treated as obligatory).  Also on the 1st April 1988, the qualifying hours threshold was removed and Mrs Croucher became eligible to join the scheme.  She did not do so, and on the 18th July 1988 signed a form formally electing not to become a member.    She subsequently changed her mind and joined on the 28th October 1991.  
163	Her claim therefore encompasses two distinct periods in respect of which different considerations arise; the period September 1980 to the 1st April 1988; and the period 1st April 1988 to October 1991(which I will deal with under issue 5.2(a)). ...”

33	The Chairman acknowledged that he had had scant arguments on this subject and was invited to give guidance without making a formal declaration. He indicated that little else could be added, given his approach to the law relating to her first period of employment, and a declaration could not legitimately be refused.  
Submissions
34	Mr Jeans who represented three Electricity sector employers raised arguments on behalf of one of them, Seeboard Retail Plc, the Respondent in Mrs Croucher’s case.  One argument related to the requirement for Mrs Croucher to have named a male comparator.  This issue was left open by the Chairman until the conclusion of the Court of Appeal following its reference of questions to the European Court of Justice in Allonby v Accrington and Rossendale College & Others [2001] ICR 1189.  Advocate General Geelhoed gave his opinion on 2 April 2003 but the Court has not yet determined the matter.  What follows is subject to the outcome of that reference.  
35	Confining himself to the Electricity Supply Pension Scheme, into which contributions are paid by employers and employees, Mr Jeans contends that in a case such as Mrs Croucher’s there must be an examination to see whether her exclusion from the scheme during the first period 1980 to 1988 constituted less favourable treatment.  That is to be answered by a Tribunal having determined whether she would or would not have joined the scheme.  Less favourable treatment constitutes a detriment and the onus of proof is on an applicant to show that where a term of employment includes both a burden and a benefit, as in the case of a contributory pension scheme, breach of the equality clause imported by the Equal Pay Act and the Pension Regulations will not be proved.  He contends that the Chairman answered the question correctly, but inconsistently, in paragraph 180 of the Reasons. This provides as follows:

“180.	I must now briefly deal with those cases which fall between test issues 5.1(b) and 5.2(a), that is applicants whose claims include periods when they remained excluded from the scheme by virtue of their part-time hours but membership of the scheme was not obligatory for full-timers.  In these cases, the applicants’ failure to join the scheme upon becoming eligible to do so, or only after a significant delay (any applicant can, I think, be afforded a period of grace to make up her mind which would not jeopardise her earlier claim but in respect of which, as the scheme rules no longer excluded her, a claim would not lie) may be highly relevant in determining whether there has been a breach of the equality clause.   Here I think the respondents are right when they submit that there has been no less favourable treatment, or the applicant has not suffered a detriment if, although excluded from membership by the rules of the scheme, she would not have joined even if she had been given the opportunity.”

36	The Chairman’s ruling on this question was as follows:

“3.	There is no breach of the equality clause for any period of claim during which an applicant was excluded from membership of the pension scheme because of her part-time hours but membership of the scheme for her full-time comparator was not obligatory, where an applicant did not join the scheme on becoming eligible to do so, or only joined after a significant delay, unless the applicant can satisfy the tribunal on the balance of probabilities that she would have joined the scheme during the period of exclusion, had she been eligible.”
37	That ruling applies to cases where the comparison is between part-timers excluded from the scheme on the one hand, and full-timers on the other who have the option to join.  Mr Jeans submits that the reasoning is apt also for a comparison where the full-timers are obliged to join.  His conclusion is that each Applicant should be cross-examined at a hearing as to her intentions:  in Mrs Croucher’s case she would be cross-examined in 2004 as to her relevant intentions between 1980 and 1988, as to which her decision to decline to opt in when she was given the right is relevant.  For a person who did opt in, the same fate awaits her although Mr Jeans, without conceding the point, accepted that his clients would consider it unlikely that in such a case there would be further contest.
38	Mr Cavanagh contends that that is to erect a further obstacle in the way of an Applicant in these proceedings.  In none of the landmark ECJ cases is there further discussion of the personal circumstances of any Applicant.  He contends that the UK approach to implementation of Article 141 is via the equality clause deemed to be included in each Applicant’s contract.  The contract can be examined without reference to the personal intentions of the Applicant.  He argues that if there is discussion of what is less favourable in a woman’s contract (or what is detrimental to her, another way of putting it) it is to be examined by reference to principles of contract, and is objective.  Mr Jeans submits the test is subjective and objective.  Mr Cavanagh submits that the Chairman’s remarks in paragraph 180 above were by the way and not strictly necessary for his decision;  alternatively are wrong.  
39	Mr Nicholas Paines QC for the Secretary of State, who was heard on this point although his clients are not involved, submitted it would be wrong to make any judgment about the Chairman’s reasons in paragraph 180.  Since none of the parties affected by the decision in paragraph 180 has appealed that part of the decision, it would be a breach of natural justice to make any decision about it.  Some Applicants affected by this decision had been clients of Mr Cavanagh and had not appealed, nor had employers.  Those parties had ordered their affairs in the year succeeding the Chairman’s decision on the basis that it was not to be disturbed.  Mr Paines’ argument in relation to appeal issue 4 (below) was also relevant to submissions made by both Mr Cavanagh and Mr Jeans for, as they pointed out, Mr Paines had contended, in the different statutory context of the amendments made by the Social Security Pensions Act 1975, that compulsory membership of a pension scheme between say 1975 and their becoming void in 1988 represented “a burden”.  
Conclusions on appeal issue 3
40	I accept the submissions made by Mr Paines in relation to the Chairman’s conclusions contained in paragraph 180.  I reject Mr Cavanagh’s contention that the statement was by the way and not directly relevant; it represents the Chairman’s thinking on one of the test issues and culminates in a declaration.  It would be unjust for me to make any comment about the correctness of that declaration when none of the parties affected by it chose to appeal, or be represented here.  For the same reason, I reject Mr Jeans’ submission that it directly affects the judgment relating to appeal issue 3.  It is sufficient for me to note that the Chairman was making a separate declaration relating to the separate circumstances ie where the full-timers were given the option of joining a pension scheme and were not obliged to join.
41	It is also clear that the Chairman was assuming on appeal issue 3 that different considerations apply to the period when scheme membership was opened up to part-timers.  The Applicants’ individual decisions to opt in or out as appropriate affected the Respondents’ liability for breach of the equality clause after the date of that decision.  For reasons which I will explain, the division between the two periods is one which can be decided precisely, rather than by reference to examination of each Applicant’s intentions.  
42	I agree with the Chairman that a breach occurs while there is exclusion of part-timers from a scheme whose membership is obligatory for full-timers.  What they did on the barrier being lifted does not in my view affect their entitlement to a declaration that the equality clause has been broken in the first period.  He said this

“159.	... Whether or not they subsequently expressly declined the opportunity to join the scheme when it became open to them and whether or not they were heartily thankful that they did not have to make the contributions that their full-time colleagues were making, does not make their treatment less favourable: they have still suffered the financial losses which I have identified.”

It is common ground between Mr Jeans and Mr Cavanagh that the words should read “does not prevent their treatment from being less favourable” since all parties understand that to be the sense of the paragraph.
43	I accept Mr Cavanagh’s submission that this question has been determined by judgments of the European Court of Justice.  In Bilka-Kaufhaus v Weber Von Hartz [1987] ICR 110 at paragraphs 24 to 31:

“24	In the first of its questions the national court asks whether a staff policy pursued by a department store company excluding part-time employees from an occupational pension scheme constitutes discrimination contrary to article 119 where that exclusion affects a far greater number of women than men.
25	In order to reply to that question reference must be made to the judgment of 31 March 1981 in Jenkins v Kingsgate (Clothing Productions) Ltd.  (Case 96/80) [1981] ICR 592.
26	In that judgment the court considered the question whether the payment of a lower hourly rate for part-time work than for full-time work was compatible with article 119.
27	Such a practice is comparable to that at issue before the national court in this case:  Bilka does not pay different hourly rates to part-time and full-time workers, but it grants only full-time workers an occupational pension.  Since, as was stated above, such a pension falls within the concept of pay for the purposes of the second paragraph of article 119 it follows that, hour for hour, the total remuneration paid by Bilka to full-time workers is higher than that paid to part-time workers.
28	The conclusion reached by the court in its judgment of 31 March 1981 is therefore equally valid in the context of this case.
29	If, therefore, it should be found that a much lower proportion of women than of men work full-time, the exclusion of part-time workers from the occupational pensions scheme would be contrary to article 119 of the Treaty where, taking into account the difficulties encountered by women workers in working full-time, that measure could not be explained by factors which exclude any discrimination on grounds of sex.
30	However, if the undertaking is able to show that its pay practice may be explained by objectively justified factors unrelated to any discrimination on grounds of sex there is no breach of article 119.
31	The answer to the first question referred by the national court must therefore be that article 119 of the EEC Treaty is infringed by a department store company which excludes part-time employees from its occupational pension scheme, where that exclusion affects a far greater number of women than men, unless the undertaking shows that the exclusion is based on objectively justifiable factors unrelated to any discrimination on grounds of sex.”

44	It is not clear from the report whether the Bilka scheme was contributory or non-contributory.  No point seems to have been taken before the Court about this.  
45	The Bilka reasoning was further explained in the joint cases of Vroege and Fisscher [1995] ICR 635 ECJ, at paragraph 13 on page 666, as follows:

“13 The reasoning behind [Bilka] is that if, as can be seen from the judgment of 31 March 1981 in Jenkins v Kingsgate (Clothing Productions) Ltd (Case 96/80) [1981] ICR 592, a pay policy which consists of setting a lower hourly rate for part-time work than for full-time work may in certain cases entail discrimination between men and women, the same applies where part-time workers are refused a company pension.  Since such a pension falls within the concept of ‘pay’, within the meaning of the second paragraph of article 119, it follows that, hour for hour, the total remuneration paid by the employer to full-time workers is higher than that paid to part-time workers:  see Bilka-Kaufhaus [1987] ICR 110, 125, para. 27.  
14	It follows that an occupational pension which excludes married women from membership entails discrimination directly based on sex, contrary to article 119 of the Treaty.
15	The answer to the first question must therefore be that the right to join an occupational pension scheme falls within the scope of article 119 of the Treaty and is therefore covered by the prohibition of discrimination laid down by that article.”

46	Vroege, Fisscher, and an earlier case, Ten Oever [1995] ICR 74 were all references of a combined set of questions from the Kantongerecht, Utrecht, Netherlands.  Each concerned an occupational pension scheme which was claimed to be discriminatory.  In Ten Oever and Fisscher the schemes were contributory (see headnote at 74 H in Ten Oever and the answer to the fourth question in Fisscher at 672 B).  Indeed Mr Paines, arguing for the UK Government in the latter case, successfully contended that it would be discriminatory for a woman to be allowed into a scheme without making good the contributions which she had been excluded from making.  In Vroege, it is not clear whether the scheme was contributory but the Court followed its judgment in Ten Oever (at page 660 para 13). Advocate General Van Gerven at page 642 paragraph 9 indicated that the question in Vroege and Fisscher was identical.  He was at pains to point out (page 644 H) that it was for the national court to determine whether there had been a breach of Article [141] after considering objective justification according to the principles in Bilka at page 126 paragraph 36 (above).  
47	It is important to note in our case the following:
a)	It is conceded that the Applicants were excluded because they were part-timers.
b)	This has a disparate impact on women.
c)	Justification is not advanced.
d)	The relevant scheme is contributory, whereas if it were non-contributory there can be no question but that it constituted less favourable treatment.
48	It seems to me that in those four cases before the Luxembourg Court (including Barber) the Court was prepared to conclude that, subject to justification, mere exclusion from an occupational pension scheme was a breach of Article [141].  It was not suggested that further examination of any particular candidate’s personal circumstances was required.  In other words, it is less favourable treatment to exclude a person from a pension scheme.  
49	The Chairman accepted, as correctly made, the concession of Miss Jane McNeill QC on behalf of certain Applicants that “some people do not want to join a pension scheme”.  There are of course many practical reasons for this, not least of which is the ability to hold on to money and invest it elsewhere, and to have it available.  For the purposes of the debate in this case, it is assumed in the electricity supply industry that, broadly speaking, employers pay substantially more than employees by way of contributions to the scheme.  Where that kind of relationship exists, it seems to me that the European Court did not require a national court to weigh the relative burden and benefit to any given employee, nor did it require an individuated assessment of their choice.  In any event, in the instant case choice was not an issue.  In this part of the decision, the comparison was with a full-timer who was obliged to join the scheme. Asking whether an Applicant would have wanted to join is irrelevant: treating her equally according to her contract would require her to join, not simply give her the option.  It seems to me therefore that the answer to Mr Jeans’ submission is found in those European Court judgments, but out of deference to further arguments he made I will address those.  
50	It is of course true that the Applicant has to succeed by way of Article 141, because in domestic law at the relevant time she could not complain of indirect discrimination, and she was precluded by the two-year limit on back-dating from obtaining any relief in domestic law.  I accept at once that the essence of Article 141 is to outlaw “less favourable treatment”. In Barry v Midland Bank Plc [1999] ICR 859, the House of Lords considered a complaint by a female part-time worker that her severance payment following redundancy was discriminatory, since it was based upon length of service and salary at termination.  She failed at every level because she could not prove less favourable treatment.  Lord Slynn (862F) found that the purpose of the payment was to provide support for lost income during the period immediately following redundancy.  That of course related to the amount paid at the end of the employment relationship and was found not to be a relevant difference in treatment as between women and men.  As Lord Steyn put it at 872 H:

“I would now on the special facts of this case accept the argument of Mr Elias that the rules of discrimination are not engaged.  In my view therefore the scheme does not offend against the principle of equal pay for equal work and is therefore not unlawful.”
51	By not engaging the rules of discrimination, Lord Steyn was referring to stage 1 of Lord Nicholls’ three-stage review (866 B) the first of which was “whether there was a difference in treatment between two groups of employees”.  Put simply, severance pay was based on final salary and final salary depended on hours worked.  There was no difference in gender.  In my judgment the case does not assist in evaluating whether there has been less favourable treatment by the exclusion of one group of workers from a contractual right to join a pension scheme.
52	Mr Jeans argued that less favourable treatment means the same as a detriment.  From paragraph 157 of the Chairman’s Reasons, that appears to be common ground.  However, whether that word derives from the Sex Discrimination Act, and the authorities under it, is another matter.  In support of his contention that less favourable treatment must relate at least in part to any given Applicant’s view of it, Mr Jeans relied on Shamoon v Chief Constable of the RUC [2003] ICR 337 HL.  In that case, Lord Scott at page 372 paragraph 105, dealing with detriment under the Sex Discrimination (Northern Ireland) Order, said:

“105. My only reservation is that the test of detriment as expressed by Brightman LJ in Ministry of Defence v Jeremiah [1980] ICR 13, 31, cited by Lord Hoffmann in Chief Constable of the West Yorkshire Police v Khan [2001] ICR 1065, 1077-1078, paragraph 53 (see paragraphs 33 and 35 of Lord Hope's opinion), namely, that ‘a detriment exists if a reasonable worker would or might take the view that the [treatment] was in all the circumstances to his detriment’, must be applied by considering the issue from the point of view of the victim.  If the victim's opinion that the treatment was to his or her detriment is a reasonable one to hold, that ought, in my opinion, to suffice.  In Khan the complainant, desiring to apply for a new job, wanted a reference to be given by his employers.  His employers refused to give one.  It was clear that if they had given one it would have been an unfavourable one.  It might be said that a reasonable worker would not want an unfavourable reference.  But the complainant wanted to be treated like all other employees and to be given a reference.  The House concluded that this was a reasonable attitude for him to adopt and that the refusal to give him a reference constituted ‘detriment’.  He was being deprived of something that he reasonably wanted to have.  And, while an unjustified sense of grievance about an allegedly discriminatory decision cannot constitute ‘detriment’, a justified and reasonable sense of grievance about the decision may well do so.  On the facts of the present case I agree with Lord Hope that the applicant was entitled to a finding that she was subjected to a detriment within the meaning of article 8(2)(b) of the 1976 Order.
Lord Hope, too, at page 349 paragraph 35 said this: 
“Is the treatment of such a kind that a reasonable worker would or might take the view that in all the circumstances it was to his detriment?  An unjustified sense of grievance cannot amount to ‘detriment’: Barclays Bank plc v Kapur (No 2) [1995] IRLR 87.”
53	Those cases are all brought under either the Sex Discrimination Act/Order or the Race Relations Act and involve consideration of “detriment” as well as “less favourable treatment”.  I accept Mr Cavanagh’s submission that, authoritative as they are, they do not assist in examining whether or not there has been a breach of contract ie a breach of the equality clause.  As he put it, the central question is whether there has been a breach of the clause, resulting in less favourable treatment, not whether the Applicant considers there to have been less favourable treatment.  When examining whether there has been a breach of contract, the result cannot be different for the group of workers affected by the Electricity test cases according to their personal circumstances and imputed intentions looked at retrospectively.  Insofar as the speeches in Shamoon are instructive on this issue, they point to an objective rather than a subjective approach to resolution of the issue.  Both Lord Scott and Lord Hope expressly refer to what is “reasonable” and the reference in Barclays Bank plc v Kapur (above) to “unjustified” by the Court of Appeal also injects objectivity into the discussion. 
54	Further, Mr Cavanagh is correct when he relies on Mr Paines’ submission as follows:

“51	Nothing in the ECJ case-law supports the assertion that optional membership amounts to less favourable treatment than compulsory membership.  The ECJ has consistently held since Case 170/84 Bilka [1986] ECR 1607 that Article 141 is infringed where part-time employees are excluded from an occupational pension scheme, where that exclusion affects a far greater number of women than men and where the scheme and employer cannot show that the exclusion is based on objectively justifiable factors unrelated to any discrimination on grounds of sex.  The whole of the case law of the ECJ on pensions has concerned substantive inequality between part-timers and full-timers, not differences in the administrative procedures for gaining access to schemes.

55	For these reasons I dismiss the appeal of Seeboard plc.  The furthest the Chairman could go in Mrs Croucher’s case was to reflect, for the benefit of the parties, that it seemed unlikely that a declaration would be refused on a full hearing by a Tribunal (see Reasons paragraph 164).  The practical outcome was that the case is stayed pending resolution of Allonby (above) and if the result of that is that Mrs Croucher does not need to cite a comparator, or in the meantime finds one, there will be a full hearing at Ashford Tribunal of her claim to a declaration for the period 1980 to 1988.  
 Appeal issue 4. Is there a breach of the 1970 Act where scheme membership is compulsory for full-time staff and optional for part-time staff?

56	This corresponds to test issue 5.2(a).  The decision of the Chairman on this issue was as follows:
“177.	…
Where an applicant was always eligible to join a pension scheme but did not do so,  or did not do so after becoming eligible to join, she has no cause of action in the employment tribunal beyond the date on which she became eligible to join as the requirement to opt into the scheme did not breach the equality clause.”

57	This issue arises in the cross-appeal against the Secretary of State’s appeal in respect of three Applicants, Mrs Tyrrell, Mrs Savage and Mrs Thomas.  They were all eligible to join the NHS Pension Scheme but did not do so.  However, the test case for the Health Service Applicants is that of Lount v South Devon Healthcare NHS Trust v Secretary of State for Health in respect of which the Chairman found the following facts:

“178.	… On the 6th June 1974, Mrs Lount commenced work with Torbay Health Authority working 20 hours a week rising to 30 in June 1977.  She joined the NHS pension scheme on the 1st January 1989.  However, she had always been eligible to join the scheme because her hours were never less than half full time hours.  Sometime in the mid to late 1970’s, the date cannot now be ascertained, she signed a form expressly choosing not to opt into the scheme.”

58	It is important to understand the differences in terminology.  For the purposes of this part of the case there are only three propositions.  Membership of the scheme is obligatory, is voluntary, or is unavailable.  In this part of the case membership was obligatory for full-timers, was voluntary for many part-timers, and was unavailable for those who worked less than half-time.  The Chairman found that in all of the test cases all any part-time Applicant was required to do to join the scheme was to tick a box on a form, or do something equally simple, and sign it.  This is described by the Chairman and by the parties as “a requirement to opt in” by which is meant that a decision must be made by a part-timer to enter the scheme, whereas the full-timer will automatically be put into the scheme on commencing employment.  

Submissions
59	At the heart of the RCN cases is that as a matter of Community law it is less favourable treatment to have an option to join a pension scheme than to be put into it automatically.  Miss Findlay has to express this in terms of the practice being contrary to Article 141; this is because the domestic regime will be disapplied only insofar as it erects barriers to the enforcement of Article 141 rights.  It is submitted by Mr Paines that none of the ECJ cases referred to above deals with what might be described as the procedure for gaining access to a pension scheme:  they are all about substantive inequality, either in the benefits afforded or the conditions of entry, or more simply by way of the exclusion of part-timers.

60	Miss Findlay argued that the effect of Section 53 of the Social Security Pensions Act 1975 and the modifications to the Equal Pay Act 1970 effected by Regulation 10 of the Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 is that, as a matter of construction, voluntary membership is “deemed” to be less favourable than obligatory membership.  These provisions apply to direct discrimination only, but Miss Findlay contends that they also apply to indirect discrimination.  Her case on appeal proceeds solely on the basis of a construction of these provisions.  She did not appeal this finding by the Chairman:

“176	During any period of time when the full-time comparator was obliged to be a member of the scheme and could not opt out, the requirement on eligible part-timers to opt in could not be less favourable treatment given Miss McNeill’s concession, which is plainly right, that some people do not want to join a pension scheme. ... ”

The Chairman reached that conclusion based on what he described as the value judgment attached to a comparison between obligatory and voluntary membership.  Having found the solution was not in the construction of the above statute he turned to first principles (Reasons paragraph 174).  Thus the fate of the RCN cases under appeal issue 4 depends on the correctness of the approach to the statutory provisions, whether by simple construction or resort to principle.

61	Mr Paines contends that the effect of the statutory provisions is simply to make equal what was unequal before that time for the Chairman said:

“172.	I accept the submission of the respondents that Regulation 9, read with Regulation 10, in fact demonstrates the reverse of the proposition for which Miss Findlay contends, namely that whilst abolishing direct discrimination by requiring the employer to make pension terms the same for both male and female employees, it recognised the value of the ability not to be a member of a scheme and therefore preserved the voluntary nature of existing schemes for existing employees, who, on Miss Findlay’s analysis of the reasoning behind the Regulations, must be presumed to be largely female.  The point becomes all the clearer when one sees that the regulations were made on the 3rd February 1976 but did not come into effect until the 6th April 1978 and that the qualifying date for retaining the right to voluntary membership was the 5th April 1978 not the 2nd February 1976.  Ultimately then, these Regulations cannot be presumed to be anything more than what they claim to be on their face – equalising – and it would be wrong to conclude that in equalising terms of access they are necessarily making value judgments.”

It is further contended that the approach to Regulation 9 of the 1976 Regulations indicates not only an answer to the value judgment, that voluntary membership may be more valuable than obligatory membership, but also that Regulation 10(1)(b) does not deem compulsory membership to be more favourable than voluntary membership.  

62	Section 53(2) of the 1975 Act deals only with equal access requirements as to age and length of service which are to be equalised by the mechanism of Regulation 10 and its effect on the Equal Pay Act.  The Regulations, however, add the concept of “voluntary (as compared with an obligatory) basis,” so access must be open equally and on the same conditions to men and women.  The saving provision in Regulation 9 indicates that it was regarded as advantageous to certain employees that they could have optional membership of a pension scheme and continue to retain that for their working career with that employer.  Further, the long lead-in period of more than two years indicates further protection of that group.  Miss Findlay contends that Regulation 10 is to be construed in accordance with its context next to Regulation 9.  

Conclusion on appeal issue 4
63	I reject her construction, as did the Chairman, and hold that these Regulations do not “deem” voluntary membership to be less favourable than obligatory membership of a pension scheme.  History records that by 1986, obligatory membership of pension schemes had begun to be considered as a burden and so was declared void in any contract where it appeared.  That fact cannot assist in the construction of the 1975/76 statutory regime, but it does indicate some difficulty in defining what public policy dictated in relation to the comparison between obligatory and voluntary schemes between 1975 and 1986.  

64	Miss Findlay relied on the judgment in Shamoon (above) relating to the description of “detriment” which I have cited.  I of course accept the approach of Lord Scott and Lord Nicholls to the interpretation of “detriment” under the Sex Discrimination Order/Act and the Race Relations Act 1976 but I do not think that they provide a clue to deciding whether or not, as a matter of construction, the 1975/76 statutory regime deemed voluntary membership to be less favourable than obligatory membership.  

65	Miss Findlay also contended that the Chairman’s decision was perverse. Such an argument is not open to her in the absence of a ground of appeal against his factual determination on this point.  And, with respect, perversity is not an argument which can be advanced in a matter of construction of a statutory measure, where the issue is to find its true construction rather than what a reasonable judicial officer might make of what it says.  I accept the submission made by Mr Paines that there is nothing in the authorities which indicates that the European Court of Justice would regard it as being less favourable treatment, and thus that her employers would be in breach of Article 141, or for that matter of the domestic equal pay regime, when a woman is offered voluntary membership of a pension scheme.  Such a choice offers the possibility of membership where it is advantageous, without the burden of membership where it is disadvantageous.  

66	As usual it is instructive to look at the facts of the test cases.  Mr Daniel Oudkerk, for the North Manchester Health Authority, submits that the facts of Mrs Tyrrell demonstrate just how valuable this choice is.  She expressly declined to opt in because, when given the opportunity to do so, she could not afford to.  That is entirely consistent with the concession made on behalf of the Applicants by Miss McNeill that some people would not want to join a pension scheme if offered.  It follows that in respect of the test case of Mrs Lount, the Chairman’s dismissal of her case stands.  Insofar as the test cases of Mrs Tyrrell, Mrs Savage and Mrs Thomas depend in part on the assertion that it is less favourable to be offered voluntary membership, that part must also fail.  

Appeal issue 5: Is there a breach of the 1970 Act where an employer has failed to inform staff of the removal of a barrier to scheme membership?  
Appeal issue 6: Did the Tribunal err in its consideration of the Savage and Thomas test cases? 

67	Appeal issues 5 and 6 were issues 5.2(b) and (c) and are as follows:
Where an applicant was always eligible to join a pension scheme but did not do so, or did not do so after becoming eligible to join, can her cause of action in the employment tribunal extend beyond the date on which she became eligible to join where 
(b) her reason for not opting into the scheme was because of her employer’s failure to alert her to the possibility of doing so;
(c) she attempted to opt into the scheme but was either discouraged from doing so, persuaded not to do so or continued to be denied the opportunity to do so.

The two situations envisaged were described by the Chairman as follows:

“184.	These issues involve applicants who, for reasons which can loosely be attributed to the fault of the employer, did not join the scheme after the eligibility rules changed.” (emphasis added)

68	That however is too loose a statement of the circumstances for these test cases are all about Applicants who were always eligible, and not those who became eligible when the rules changed.  The Chairman said:

“192.	I would therefore answer test issues 5.2(b) and (c) as follows:
1.	There is a continuing breach of the equality clause, and therefore an applicant’s cause of action continues beyond the date on which she became eligible to join her employers pension scheme, if, after the removal of any qualifying hours threshold with which she could not comply, an applicant’s continued failure to join, or inability to gain access to, the scheme (a) is directly referable to her status as a part-time employee; (b) the circumstances do not apply to full-time employees and (c) is to her detriment. 
2.	This would be the case where an applicant, on becoming eligible to join a pension scheme, did not do so because she was unaware of her right to join because of her employer’s failure to inform her of the right: or where an applicant who believed she might have the right to join was misled by her employer, intentionally or unintentionally into believing that she did not have the right, or whose employer denied that she had the right. 
3.	There would not be a breach of the equality clause if on seeking to join the scheme an applicant was either discouraged or dissuaded from joining, unless this was as a result of a policy of the employer, aimed at part-timers and involved the imposition of conditions not imposed on full-timers, or a campaign of deliberate misinformation, or otherwise amounted in practice to a denial of the right to membership of the scheme.”

69	Mr Paines, on behalf of the Secretary of State whose appeal this is, accepts the correctness of answer 3 above but contends that the approach of the Chairman to this issue is muddled. As is clear from the history, an employee in the NHS who worked full-time, or part-time in excess of half the full-time hours, was eligible to join.  From 1989 any part-time officer would automatically be included if they worked half of the whole time equivalent and from 1991 all NHS employees were automatically included unless they elected to opt out irrespective of the number of hours.  

70	The facts of the test cases are of course significant:

202.	Savage -v- Secretary of State for Health (1)  Southampton Community NHS Trust (2). Mrs Savage returned to employment in the NHS after a 7 year break in April 1976 as a bank staff nurse working part-time.  She did not become permanent until the 1st November 1977.  I am not clear whether the period between April 1976 and the 1st November 1977 is included in her claim but if it is, it may well give rise to the question of whether or not she was in a stable employment relationship with the respondent rather than employed by them under a continuous contract.  If she was only working intermittently with the respondents, even if it did amount to a stable employment relationship, it would seem that time began to run in respect of that period from the 1st November 1977 when she became permanent but still part-time.  
203.	On becoming a permanent staff nurse, she attempted to rejoin the health service pension scheme and spoke to the hospital secretary about it.  It is alleged that he told her that she was not eligible to join and she accepted that at face value.  However, within a very short time she learned that that may not have been the case and on making further enquiries discovered that she was eligible and joined the scheme on the 1st February 1978. ...
204.	Tyrrell -v- Secretary of State for Health (1)  Greater Manchester Health Authority for and on behalf of North Manchester Primary Care Trust (as successor to North Manchester Health Authority (2).   Mrs Tyrrell worked full-time in the health service between 1971 and 1984, during which time she was a member of the NHS pension scheme. She then changed her hours and her job, becoming a part-time health visitor, with effect from the 1st June 1984.  She noticed in her next pay slip that the superannuation contributions which she had been used to making had ceased and she telephoned the salary and wages department to enquire why.  She claims that she was told that it was the policy of the health authority that superannuation contributions could not be paid by part-time staff.  She claims that thereafter she made no further enquiries and remained unaware that she could have elected to rejoin the scheme until some time in 1989. 
206.	Thomas -v- Secretary of State for Health (1) Portsmouth Hospitals NHS Trust   (2). Mrs Thomas commenced her career in the NHS on the 30th January 1978 when she became an auxiliary nurse at the Queen Alexandra Hospital at Cosham, Portsmouth working part-time.  On the 22nd April 1979 she became a student nurse and on the 30th December 1982 a staff nurse.  Throughout, although part-time, she was eligible to join the pension scheme because she worked more than half of full-time hours.  However, she claims that at no stage during her career was it brought to her attention that she could have opted into the pension scheme and she only discovered her eligibility to join the scheme some months after taking out her own private pension in August 1988.”

71	The Chairman accepted that Mrs Savage and Mrs Thomas demonstrated facts which were capable of amounting to a breach of the equality clause.  These two cases were therefore remitted for a hearing.  It must be noted, however, that neither of these Applicants alleged a policy, aimed at part-timers, of discouragement, dissuasion, misinformation or a practical denial of membership rights.  Those allegations would have to be made for this case to fall within answer 3 above.  Each test case Applicant was at all times eligible to join the NHS scheme. The above extract of the facts makes this plain in Mrs Savage’s and Mrs Thomas’ case, and a reference to the witness statement of Mrs Tyrrell, which for these purposes was accepted to be correct, indicates her claiming that she was eligible to be a member, notwithstanding going part-time in 1984. When her position was regularised in 1989, she for personal reasons did not opt in, or rejoin until 1 October 1993.  She contends that if she had been given the choice of opting in during 1984 she would have done so.  The Secretary of State did not oppose the finding in her case that the matter should be remitted to a Tribunal because as the summary of facts indicates she is alleging she was told there was a policy, and thus it must be arguable that there was a policy.  If the Chairman’s decision were otherwise correct, Mrs Tyrrell’s case would go forward but not Mrs Thomas’ and Mrs Savage’s.

72	The Chairman’s reasoning at paragraphs 188 to 192 is that relevant Applicants were excluded from access to a pension scheme by reason of a working hours threshold, which was subsequently removed.  Thereafter, that previous discriminatory regime continued because of some fault of the employer e.g. in not informing the Applicant of the change.  The specific question asked under 5.2(b) and (c), in relation to an employee who became eligible, is not answered by reference to any of the test cases since, as I have pointed out, all three were always eligible.  

73	To understand this aspect of the case it is necessary to note that in each case where the threshold of hours for entry into the scheme was reduced or removed, it happened as a change in the contractual terms of the Applicant and whether or not she knew.  In contractual terms it could be put as being justified because the parties handed over negotiations on pensions matters to others. Pursuant to the original bilateral contractual terms, changes to the terms relating to pensions became effective by incorporating by reference the product of a collective agreement made elsewhere. 

74	This is what happened in Scally v Southern Health and Social Services Board [1991] ICR 771 HL.  Certain employees in the Health Service in Northern Ireland joined their employment too late to complete 40 years’ service, the basis upon which full pension would be paid.  They were given the right by statutory instrument to buy added years provided they exercised that right within twelve months of the coming into force of the instrument, or of their employment.  If not exercised at that time, the right became less favourable.  Some medical practitioners were not informed of this right and brought a claim for breach of contract alleging a failure by their employer to notify them.  Lord Bridge giving the only speech in the House of Lords said this:

“I think there is force in the submission that, since the employee’s entitlement to enhance his pension rights by the purchase of added years is of no effect unless he is aware of it and since he cannot be expected to become aware of it unless it is drawn to his attention, it is necessary to imply an obligation on the employer to bring it to his attention to render efficacious the very benefit which the contractual right to purchase added years was intended to confer.  ... I would define it as the relationship of employer and employee where the following circumstances obtain:  (1) the terms of the contract of employment have not been negotiated with the individual employee but result from negotiation with a representative body or are otherwise incorporated by reference:  (2) a particular term of the contract makes available to the employee a valuable right contingent upon action being taken by him to avail himself of its benefit:  (3) the employee cannot, in all the circumstances, reasonably be expected to be aware of the term unless it is drawn to his attention.  I fully appreciate that the criterion to justify an implication of this kind is necessity, not reasonableness.  But I take the view that it is not merely reasonable, but necessary, in the circumstances postulated, to imply an obligation on the employer to take reasonable steps to bring the term of the contract in question to the employee’s attention, so that he may be in a position to enjoy its benefit.  Accordingly I would hold that there was an implied term in each of the plaintiffs’ contracts of employment of which the boards were in each case in breach.”

75	The Respondents contended that Scally is a complete answer to the Applicants’ claim of failure to inform in any given test case.  Miss Findlay, representing the RCN Applicants, contends that Scally is a red herring for a right to take action in respect of a breach of the implied term in Scally exists independently of the right to take action in respect of a breach of the equality clause.  The Respondents contended that it was not a breach of the equality clause to take action which might well be a breach of the Scally implied term.  Because of that submission the Chairman decided to create a proposition of his own.  He did so partly on the basis that having decided against the Applicants in their claim under appeal issue 3 (test issue 5.2(a) - obligatory/voluntary membership of a pension scheme) these points which were submitted to be part of the same chain would also fail.  The Chairman’s proposition came to be encapsulated in Reasons paragraph 192 answer 1.

76	It is at this point that Mr Paines made his submission that the Chairman, for once in this otherwise exemplary Decision, became muddled.  Leaving aside the cases of those who were always eligible, and concentrating on those who became eligible only after the threshold was removed, the reasoning appears to be that in the absence of notice that the threshold has been removed “she remains for all practical purposes excluded”.  Whether that proposition is right or not, Mr Paines submits that the Chairman has added an additional feature which is “assuming of course that the employer is not equally keeping full-time employees in the dark about their pension rights, which is possible where new recruits have to positively opt into a scheme”: see Reasons paragraphs 188 and 192.  As Mr Paines puts it, this introduces a fresh element of discrimination based upon disparate information given to full and part-time workers.  
Conclusion on appeal issues 5 and 6
77	I accept the submissions of Mr Paines.  If there is a breach of the duty to inform, that sounds as a separate claim and does not relate to the right to an equality clause.  In the cases envisaged, but not the test cases, the Scally implied term comes into effect at the same time as the removal of the barrier across the entry to the scheme.  In my view, when the inequality is removed, the failure to notify the Applicant about it is not a continuing inequality in breach of the equality clause, but may well be a breach of the Scally implied term.  In other words, the employer ceases to be in breach of the equality clause, but becomes liable for breach of the Scally implied term.  

78	The introduction of a comparison with the employer’s treatment of new recruits is confusing.  If they are not informed of their rights to join the pension scheme, discrimination cannot be inferred unless (a) disparate impact between genders is shown; and (b) it is proved as a matter of law that the failure to inform a female employee she can join the pension scheme constitutes unequal pay at a time when she is in fact entitled to join the pension scheme on equal terms with a man.  The first of these inferences requires there to be some form of practice or policy in place:  a one-off mistake by an officer in an individual’s case would not suffice.  For the purposes of this (indirect) discrimination, the law is concerned with a discriminatory regime or policy or practice.  

79	It is for that reason that the decision in relation to Mrs Savage and Mrs Thomas is unsustainable, since in their cases there is nothing more than an allegation that something went wrong.  In Mrs Tyrrell’s case, as Mr Paines accepts on behalf of the Secretary of State, a triable issue is raised as to whether there was a policy as she alleges.  I would therefore substitute for Reasons paragraphs 192.1 and 2 above the following: “Where her reason for not opting into the scheme was because of her employer’s failure to alert her to the possibility of doing so, her employer may be in breach of implied terms of the contract of employment but not of the equality clause.” Paragraph 192.3 remains.

80	The Chairman remitted Mrs Savage’s and Mrs Thomas’ cases for a hearing. Before handing down this judgment I received written submissions from Miss Findlay and Mr Paines as to how to proceed if I upheld Mr Paines’ submission. I accept what he says about disposal. There has been no application to amend these Originating Applications put in in 2000 to allege a policy of dissuasion. Their 2002 witness statements do not allege this. An amendment would be required to add new facts and a new allegation, not simply further particulars. These test cases proceeded on agreed facts and I did not allow amendment of Notices of Appeal in two other cases, for that reason. It would not be just to allow these two other cases to go back to an Employment Tribunal to be the subject of an application to amend: even now, no draft has been given to me or the other parties. Although not essential to my decision, I doubt on the material I have that any such application would pass the test in Selkent v Moore [1996] ICR 836, 843F-844C. It must be borne in mind that the Chairman acknowledged that these cases did not strictly give rise to test case issues.  On the other hand he was invited to and did give guidance, as he did in the next issue, appeal issue 26 (Reasons paragraph 208).  

Appeal issue 2: When does a “stable employment relationship” arise?
81	Before descending into this issue, it is necessary to consider what was said at various stages as this case proceeded to the European Court of Justice and back to the House of Lords.  It is now clear that the domestic legislation created two procedural obstacles to the enforcement of the Article 141 right to equal treatment.  By Section 2(5) of the Equal Pay Act 1970 and by Regulation 12(1)(b) of the 1976 Regulations, the period for which damages may be awarded for breach, or a declaration be ordered for such a breach relating to membership of a pension scheme, is two years before the institution of the proceedings.  In Community law, the right to equal treatment has existed since the judgment in Defrenne v Sabena on 8 April 1976.  The European Court of Justice drew, as Mr Paines put it, a blue pencil through this subsection in Magorrian v Eastern Health & Social Services Board [1998] ICR 679 when it held as follows, on this question referred from the Northern Ireland Court of Appeal:

“‘Where the relevant national legislation restricts backdating entitlement in the event of a successful claim to a period of two years prior to the date on which the claim was made, does this amount to the denial of an effective remedy under Community law and is the industrial tribunal obliged to disregard such provisions in domestic law if it feels necessary to do so?’

The European Court said this:
‘37.	The court has consistently held that, in the absence of relevant Community rules, it is for the national legal order of each member state to designate the competent courts and to lay down the procedural rules for proceedings designed to ensure the protection of the rights which individuals acquire through the direct effect of Community law, provided that such rules are not less favourable than those governing similar domestic actions and are not framed in such a way as to render impossible in practice the exercise of rights conferred by Community law: see, to that effect [inter alia]  Rewe-Zentralfinanz e.G (Case 33/76) [1976] E.C.R.@ p 1997-1998 paras. 5 and 6 ...
41.	As far as this issue is concerned, it must be stated that application of a procedural rule such as regulation 12 whereby, in proceedings concerning access to membership of occupational pension schemes, the right to be admitted to a scheme may have effect from a date no earlier than two years before the institution of proceedings, would deprive the applicants of the additional benefits under the scheme to which they are entitled to be affiliated, since those benefits could be calculated only by reference to periods of service completed…..two years prior to commencement of proceedings by them.
42.	However, it should be noted that, in such a case, the claim is not for the retroactive award of certain additional benefits but for recognition of entitlement to full membership of an occupational scheme through acquisition of mental health officer status which confers entitlement to the additional benefits.
44.	Consequently, unlike the rules at issue in the Judgments (in Steenhorst-Neerings (Case C-338/91) [1993] ECR I-5475 and Johnson –v- Chief Adjudication Officer (Case C-410/92 [1995] ICR 375) which in the interests of legal certainty merely limited the retroactive scope of a claim for certain benefits and did not strike at the very essence of the rights conferred by the Community legal order, a rule such as that before the national court in this case is such as to render any action by individuals relying on Community law impossible in practice.
47.	Accordingly, the reply to be given to the second question must be that Community law precludes the application, to a claim based on Article [141] of the E.C. Treaty for recognition of the claimant’s entitlement to join an occupational pension scheme, of a national rule under which such entitlement, in the event of a successful claim, is limited to a period which starts to run from a point in time two years prior to commencement of proceedings in connection with the claim’ ”

A limit on backdating in the Northern Ireland legislation was therefore contrary to Article 141, even before the ECJ’s judgment in Preston.  

82	The other procedural obstacle relates to limitation of actions.  By Section 2(4) of the Equal Pay Act, a claim must be presented during the course of employment or within six months thereafter.  With one limited exception, that provision was held not to be contrary to Article 141.  That is where there is “a stable employment relationship” extending over a succession of short-term contracts.  Although the reference from the House of Lords to the ECJ in Preston included the backdating and the limitation points, and this case on appeal concerns only the latter, it is necessary to consider the former, since Mr Cavanagh relies on the approach of the ECJ to backdating in support of his argument on the limitation point.  The questions which were referred to the European Court of Justice, so far as are relevant, were as follows:

“‘1(a)	Is a national procedural rule which requires that a claim for membership of an occupational pension scheme …which is brought in the [employment] tribunal, be brought within the six months of the end of the employment to which the claim relates: (b) a national procedural rule which provides that a claimant’s pensionable service is to be calculated only by reference to service after a date falling no earlier than two years prior to the date of her claim;……compatible with the principle of Community law that national procedural rules for breach of Community law must not make it excessively difficult or impossible in practice for the claimant to exercise her rights under Article [141]. 
3.	In circumstances where: (a) an employee has served under a number of separate contracts of employment for the same employer covering defined periods of time and with intervals between the periods covered by the contracts of employment; (b) after the completion of any contract, there is no obligation on either party to enter into further such contracts; and (c) she initiates a claim within six months of the completion of a later contract or contracts but fails to initiate a claim within six months of any earlier contract or contracts: is a national procedural rule which has the effect of requiring a claim for membership of an occupational pension scheme from which the right to pension benefit flows to be brought within six months of the end of any contract or contracts of employment to which the claim relates and which, therefore, prevents service under any earlier contract or contracts from being treated as pensionable service, compatible with: (1) the right to equal pay for equal work in Article [141] of the E.C. Treaty; and (2) the principle of Community law that national procedural rules for breach of Community law must not make it excessively difficult or impossible in practice for the claimant to exercise her rights under Article [141]?’ ”

83	The ECJ answered the backdating question in the same way as it did in Magorrian.  On the limitation point the answer was as follows:  see Preston v Wolverhampton Healthcare NHS Trust [2000] ICR 961, 1001:

“1.	Community law does not preclude a national procedural rule which requires that a claim for membership of an occupational pension scheme (from which the right to pension benefits flows) must, if it is not to be time-barred, be brought within six months of the end of the employment to which the claim relates, provided, however, that that limitation period is not less favourable for actions based on Community law than for those based on domestic law.
6.	Community law precludes a procedural rule which has the effect of requiring a claim for membership of an occupational pension scheme (from which the right to pension benefits flows) to be brought within six months of the end of each contract of employment to which the claim relates where there has been a stable employment relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme applies.”

84	So the first mention of “stable employment relationship” appears in the judgment of the ECJ.  How it is to be applied is the subject of the appeal under appeal issue 26.  It is of course clear that the ECJ determines principles which can be applied in domestic courts and tribunals in construing domestic measures.  As usual, in order to see the context in which appeal issue 26 arises, it is useful to look at the factual circumstances in the three test cases:

“209.	
(b)	Cockrill-v-Wolverhampton Metropolitan Borough Council (1) Secretary of State for Education (2).  Mrs Cockrill presented her IT1 on 19th December 1994.  She had been employed by Wolverhampton at all material times, first as a supply and temporary teacher between February 1985 and November 1987 (the period of claim), thereafter in a full time pensionable teaching post.  During the period of claim, she has identified fourteen separate assignments of varying durations, between which there were some gaps, not exclusively because of school holidays.  Mrs Cockrill’s case raises two questions:  first, was there a stable employment relationship in existence during the period of claim; secondly, if so, did it come to an end, and therefore cause time to run for the purposes of section 2(4), when she took up the full time, pensionable, position.
(e)	Kilburn-v-Lancashire County Council (1) Secretary of State for Education (2).  Mrs Kilburn presented her IT1 on 4th January 2001.  She was employed by Lancashire as a part-time supply teacher from 1967 (although the period of claim is of course limited to service after 8th April 1976).  She worked in term time with some gaps and, at least once, during the summer holiday.  She then took a permanent, pensionable position.  Two questions arise: did the pattern of her part-time supply teaching create a stable employment relationship and if so did it survive the change to pensionable employment?
(f)	Bunyan –v- Hereford College of Technology (1) Secretary of State for Education (2)  Worcestershire County Council (as successor to Hereford and Worcester County Council)  (3) and Hereford Sixth Form College (4). Mrs Bunyan presented her IT1 on 8th December 1994 claiming that she was denied access to the Teachers Pension Scheme between 15th September 1980 and 13th June 1984 when she was a part-time psychology lecturer employed by the County Council to work at the Technical College.  Since September 1984 she has been in full time pensionable employment initially at the Technical College and from 1st September 1992 at the Sixth Form College.  Both colleges became independent Further Education Colleges from the 1st April 1993.  Mrs Bunyan’s case raises three issues: was there a stable employment relationship during the period of claim: did it survive her translation to full time pensionable employment: if so, did it survive the change of college in 1992.”

85	The Chairman dismissed all three applications.  Mrs Bunyan took up a “newly created post”:
“247.
(d)	The concept of the stable employment relationship was devised to reconcile the need for legal certainty in the running of time limits with the excessive difficulty caused to employees employed under a series of short term contracts in enforcing their rights under Art 141.  But with the ending of the series of short term contracts, that difficulty, and with it the need for the added protection of the stable employment relationship, ended.  The ending of the sequence of short term contracts, albeit by their replacement with a full-time fixed term contract (a fortiori when that in turn became permanent a year later) caused time to run against Mrs Bunyan.”

In Mrs Kilburn’s case there was a want of information and her work was characterised as “regular rather than intermittent despite the fact that within the regular termly cycle, her hours varied” (Reasons paragraph 248(h)).  In Mrs Cockrill’s case it was held that one of the periods in question “was far too brief and the work was far too spasmodic to be capable of creating a stable employment relationship”.

86	To find where the dividing line is drawn it is useful to look at one test case which succeeded:
250.	Jones -v-  Stockport Metropolitan Borough Council and others
(a)	Mrs Jones worked for the Respondents as a home tutor from March 1977 to December 2001.   Until August 1989, none of her work had been pensionable but from then until August 1993 the part of her work based at the Pendlebury Centre, a home tuition centre, was pensionable.  However, alongside that work she continued with other home tuition work which was paid on an hourly basis and was not pensionable.  This ended in 1993 when that part of her work became remunerated as a proportion of full-time pay, rather than hourly and was therefore eligible for contributions to the pension scheme. 
(b)	Away from the Pendlebury Centre, her work was organised on the basis of a freshly created contract for each child who was in need of home tuition.  It appears to be common ground that although Mrs Jones was free to refuse any assignment offered to her, she never did so.  
(c)	Initially, the contracts were open-ended, i.e. no duration was stated in the letter of appointment, but latterly the contracts appear to have been for a defined period of time.   It also appears to be common ground that the obligations of the Council were coextensive with those of Mrs Jones in that they were not obliged to offer work to her.  However, it seems clear that they did so on a regular (in its non-metronomic sense) basis.  
(d)	This case, in common with many of the part-time worker pension cases, is bedevilled by the absence of detailed information about Mrs Jones’ working pattern, due no doubt to the loss of records over the years.”

The Chairman rejected the submission of Mr Paines that the same conclusion must be reached in respect of Mrs Jones as the three above cases.  However, Mr Paines conceded “that intermittent patterns of working may give rise to a stable employment relationship”.  The Chairman went on to say as follows:

“250.
(i)	This seems to me to be pre-eminently one of what I suspect will be a fairly rare instance of a pattern of intermittent working which is capable of being a stable employment relationship. Where such occurs, the expectations, in the sense of intention rather than hope, of the parties is of paramount importance.   The question of whether Mrs Jones and Stockport had the necessary expectations of each other to create a stable employment relationship is remitted for hearing by a full tribunal at Manchester.”

87	The composite conclusion reached by the Chairman on this test issue was therefore as follows:
251.	
1.	A stable employment relationship arises (and only arises) when an employee is employed - by the same employer - on a succession of contracts - punctuated by intervals without a contract - on the same or broadly similar terms - to perform essentially the same work - under the same pension scheme – provided that the sequence of contracts and the pattern of intervals between them is dictated either by the nature of the work itself or the employers requirements for employees to perform it - and (subject to 2 below) the contracts and the intervals between them are sufficiently regular for it to be apparent without the benefit of hindsight to determine when the sequence is broken, that being the moment from which time begins to run.  
2.	Where the sequence is intermittent rather than regular, the intention of the parties both as to the inception and the cessation of the working arrangement which is said to give rise to the stable employment relationship, outweighs the absence of a pattern of strict regularity. Where a stable employment relationship has arisen in such circumstances it remains in being until the parties intend otherwise, notwithstanding changes in the frequency of the work, provided that any such changes arise exclusively from the nature of the work.   
3.	A stable employment relationship ceases and time for commencing proceedings therefore begins to run when:
a.	A party indicates that further contracts will either not be offered or not accepted if offered
b.	A party acts inconsistently with the continuation of the relationship
c.	a further contract is not offered when the periodicity of the preceding cycle of contracts indicates that it should have been offered
d.	a party ceases to intend to treat an intermittent relationship as stable
e.	the terms of the contract or the work to be done under it alters radically; e.g. a succession of short term contracts is superseded by a permanent contract.

88	The Chairman also rationalised the need for a stable employment relationship, in terms similar to those applied in Mrs Bunyan’s case, as follows:
“227.	... The stable employment relationship concept was devised to ensure that, consistent with the fundamental principle of legal certainty, a limited class of employees who did not have a single contract could enforce their Article 141 rights:  therefore where a single contract exists, the stable employment relationship concept is otiose.  

Preliminary view on appeal issue 2
89	Taking a narrow view of those conclusions for the purposes of the test cases of Mrs Bunyan, Mrs Kilburn and Mrs Cockrill, the answer given at 3(e) above is sufficient if it is correct in law.  Since the case of the intermittent worker, Mrs Jones, was not the subject of appeal the other aspects in Reasons paragraph 251 above may not arise.  I would uphold the Chairman’s reasoning.

90	However, the cases were the subject of argument before me.  Mr Cavanagh QC raises six criticisms, which I deal with in turn.

(1)	The ECJ’s judgment on backdating “sheds light” on its judgment on limitation.

(2)	The Chairman failed to deal with an argument that employment terms could change by amendment, rather than termination.

(3)	The stable employment relationship ceases when a succession of part-time contracts is superseded by a permanent contract.

(4)	There is no requirement for the terms of succeeding contracts to be the same or similar and the work to be broadly the same.

(5)	The breaks between the periods of work may arise at the instigation of the employee.

(6)	It is not appropriate to ask how the Applicant and her employer regarded her state.

The history of the test cases relevant for appeal issue 2
91	In order to test the cogency of these arguments, it is necessary to look at the way in which the test cases and issues were presented to the ECJ.  In summary, the ECJ ruled on the questions referred to it in the Order for Reference.  The way in which the Applicants expressed themselves in framing those questions directly affected the answers given by the ECJ.  It is also necessary to bear in mind that the backdating point had already been decided in Magorrian and was reaffirmed in Preston.  The limitation point was new and was the basis upon which test cases were put to the Chairman.  Both the backdating and the limitation points were argued to be obstacles to the effectiveness of a remedy under Article 141.  It is not too simplistic to say that the ECJ upheld the Applicants’ cases on the backdating point (Section 2(5) of the 1970 Act and Regulation 12) but dismissed, in the interests of legal certainty, the complaint on the limitation point (Section 2(4)) while giving some relief to particular kinds of contract where a stable employment relationship exists.  

92	The evolution of these cases shows the treatment of this issue.  First, in the EAT Mummery P said this:  [1996] IRLR 484:

“In our judgment the legal position is as follows:
(1)	The scheme of the 1970 Act is that the principle of equal pay for equal work, without discrimination based on sex, takes effect through the mechanism of an equality clause introduced by statute into a particular contract of employment.  The 1970 Act does not contain any provisions for employment under different contracts with the same employer to be treated as continuous employment cf. [Part XIV Chapter 1 Employment Rights Act 1996].
(2)	Section 2(4) bars a claimant if the claimant:
	‘…has not been employed in the employment within six months preceding the date of the reference.’
(3)	The earlier reference in section 2(4) to ‘employment’ is in the context of the nature of the claim, i.e. a claim ‘in respect of an equality clause relating to a woman’s employment’. Such a claim is in respect of a particular contract of employment, because an equality clause is a clause in or introduced into a specific contract of employment, either as a mater of express agreement or incorporated into the specific contract by statute. Under section 1(6)(a) ‘employee’ is defined, only for the purposes of section1 as employed under a contract of service’. 
(4)	The second reference to ‘employment’ in section 2(4) is in the context of a limitation on the jurisdiction of the [employment] tribunal to entertain such a claim. An [employment] tribunal has no jurisdiction in respect of the claim if the applicant ‘has not been employed in the employment’ within the specified period of six months.  The ‘employment’ referred to in the jurisdictional context must, on a natural, ordinary and consistent reading of the provision, refer to the same employment in respect of which the claim is made.  As that claim must be in respect of an equality clause in a particular contract, so the limit on jurisdiction must also be a reference to employment under the contact of employment containing the equality clause….
(5)	If the applicant is employed under a succession of separate contracts of employment, the prima facie position is that she is not entitled to bring a claim in respect of the equality clause in any contract of employment which has expired more than six months prior to the bringing of the claim to the tribunal.
(6)	There are two possible modifications of the position…where there has been a succession of contracts-
(a) where there is no break in fact in the employment under a succession of immediately consecutive contracts…..
(7)	This analysis of the position is consistent with the demands of legal certainty and fairness.  The applicants accepted that, even on their contention, a part-time employee could not bring a claim within the time limits in section 2(4) in the case of irregular employment; if for example there was a five year gap between the two periods of working under different contracts with the same employer. The six month period would, in that case, start to run in respect of the first contract from the end of that contract, not from the end of the later contract under which he was re-employed.
It is not possible to divorce section 2(4), which places a time limit on the enforcement of the right, from section 1, which defines the nature of the right conferred.  They are rights in a particular contract.  When that contract expires, the employment will also expire, even if another contract follows after the break and even if the break itself is related to the periodical nature of the work and the employee in fact does the same work contract after contract, term after term, year after year, for the same employer and will enjoy continuity of service for the purpose of enjoying and exercising other employment rights such as the right not to be unfairly dismissed: see Ford –v- Warwickshire County Council (1983)IRLR 126’.”

93	Thus time runs from the end of each contract.  This was upheld by the Court of Appeal [1997] ICR 899 for Otton LJ said:

“The notice of appeal asserts that the appeal tribunal was wrong in law in adopting this construction and they ought to have held that:
‘(a)	The entirety of a claim is in time if the claim is made within six months of the end of the period of regular employment in which there are regular breaks in the contract of employment.  (b) The entirety of the claim is in time if the claim is made within six months of the end of a period during which the applicant has been employed in irregular employment in the same capacity (for example supply teachers) whether or not there is an ‘umbrella contract’.(c) There is no basis for placing a gloss on section 2(4) so as to require that the claim is made within six months of the ending of the same contract as that in respect of which the claim is made.’
Mr Cavanagh…identifies four types of contract where breaks of service occur: (1) regular employment with regular breaks in the contract of employment (teachers with termly or academic yearly contracts); (2) irregular employment in the same capacity where there is an ‘umbrella contract’; (3) irregular employment in the same capacity where there is no umbrella contract (supply teachers or home tutors); and (4) a complete break in employment followed by re-employment some years later.
As regards category (2), the appeal tribunal acknowledged that where there is an umbrella contract there is a continuing contractual relationship. No point thus arises.
[Counsel for the banking employees] contends that section 2(4) of the Act of 1970 does not in terms refer to the same contract of employment.  It makes no sense for the time limit not to cover the whole period of a person’s employment if the breaks in service flow from the nature of the work and are a direct consequence of it. A teacher may work year after year without a contract covering her for the school holidays, or, at least, the summer holidays. Nevertheless, she will be doing a full year’s teaching work.  The only difference between such a teacher and a full time teacher will be the way in which the employer decides to order its affairs….[emphasis in the original]
….
I am unable to accept the argument advanced on behalf of the applicants.  It is common ground that an umbrella contract constitutes a single contract of employment, so that time runs from the ending of it, not from the beginning of a break in service under it.  Conversely the applicants accept that (as to [Mr Cavanagh’s] category (4)) where there is a ‘complete’ break in employment, subsequent re-engagement by the same employer does not make time run afresh in relation to the earlier employment.  The applicants contend, in reality, that the mere repetition of episodes of service, whether or not on a regular pattern, means that the employee is ‘employed in’ a single employment stretching over all the periods of employment.    
When sec 2(4) of the Act of 1970 is construed in the light of sections 1 and 2(1) the time limit which it imposes runs from the end of the contract of employment alleged to contain the equality clause in respect of which the claim is made.  This construction does not involve placing a gloss by way of the addition of the word ’same’ on the section.  I accept [the submission of Counsel for the further education employers and the banking employers] that ‘rather it entails giving section 2(4) a meaning consonant with the statutory scheme of which it forms part’.
….
It follows that I am not persuaded that the legislature inadvertently overlooked the need to include provisions bridging breaks in service which relate to the nature of the work….Accordingly I cannot fault the approach of the Employment Appeal Tribunal on this issue.”

94	On appeal to the House of Lords Lord Slynn of Hadley said, when making the reference to the European Court [1988] ICR 227 at 233 C to E:

“On this appeal two groups of questions have arisen…as to the compatibility of provisions of the [Equal Pay Act 1970], as amended, with Article 119 of the Treaty and which clearly must be decided before judgment can be given.
The applicants contend, first, that the effect of the provision of section 2(4) of the Act of 1970, that a claim for membership of an occupational pension scheme…must be brought within six months of the end of the employment to which the claim relates, makes it impossible in practice or excessively difficult for claimants to exercise their rights under Article [141]…
As to the requirement that a procedural rule must not be “impossible in practice” the applicants contend that the six-month limitation makes it impossible for them to claim the full amount of future benefits payable under the scheme since they cannot rely on years of past service in making the computation….’
Later at p. 236 B – 238 B:
“There is one further issue…which involves in the first place a question of domestic law, namely the proper interpretation of section 2(4) of the Act of 1970.  It concerns part-time teachers or lecturers who respectively belong to one of three groups:  (a) those who were employed at the same school under a succession of contracts for the academic year, the only break being for the period of each long vacation; (b) those employed under a succession of fixed term contracts with breaks during vacations or courses; and (c) those who work intermittently…
The question essentially is whether, if a woman claims in respect of the operation of an equality clause within six months of the end of her employment, the equality clause is to be read as applicable to the particular contract governing that employment or as applying to the employment relationship covering a number of different contracts with the same employer, whether as in (a) and (b) above (periodic but regular) or as in (c) above (intermittent)…
…It is [the applicants’ case] that in section 2(4) ‘employed in the employment’ refers to the whole employment relationship under a series of successive contracts, even where there are breaks, so long as a claim is made within six months of the end of the employment generally.  If this were not so, workers in the public sector, particularly part-time teachers, would be at a serious disadvantage…
Looked at as a whole, they say, the purpose of section 2(4) must be to allow a claim to be brought in respect of the full employment relationship and to exclude claims which are not brought within six months of the end of that relationship.  It is unreal not to have regard to the continuity and artificial to say that the employment relationship ends at each day, each term or each year of the contract when really the teachers are employed under a series of contracts which contribute to the pension rights about the quantum of which they complain…Indeed to require a claimant to bring a separate claim in respect of each separate contract makes it ‘impossible in practice’ to enforce full pension rights.  Moreover it does not make sense to do so when the claims all arise under the same pension scheme and the benefits are only paid when the ‘employment’ rather than ‘a contract of employment’ comes to an end.
….
I do not… consider that this interpretation of section 2(4) of the Act of 1970 can be accepted…
….
….section 2(4), as amended, refers to a claim in respect of the operation of ‘an equality clause relating to a woman’s employment.’  That equality clause is a clause in a contract of employment which as I see it can only be the specific contract in respect of which the claim is made and which for the purposes of the [employment] tribunal’s jurisdiction must cover employment which has ended within six months of the claim before the [employment] tribunal…Where there are breaks between separate contracts, at any rate where there is no umbrella clause under which periodically and regularly work must be given and accepted, the time to bring a claim expires six months from the end of each contract.
That conclusion, contrary to the applicant’s contention, does not involve putting a gloss on or reading words into sec 2(4).  It is the natural meaning of the words in their context….’
At p.239 B 
“On the domestic law question raised in this appeal I agree with the conclusions of Otton L.J. with which the other members of the Court of Appeal agreed and I would dismiss the appeal on that point.”  

95	The questions referred by the House of Lords, so far as now relevant on appeal, are cited above [1998] ICR 227, 239. Attached to the questions in the Order for Reference was a schedule setting out the facts, paragraphs 8 and 9 of which provide as follows:

“8.	In the education sector, the applicants include applicants falling into the following categories:
(1)	Part-time teachers or lecturers who taught at the same school or college for a number of years and who were employed under a succession of contracts which lasted for the academic year only (known as ‘sessional contracts’), with a break between contracts over the summer vacation from the end of one academic year to the beginning of the next.
(2)	Part-time lecturers who taught at the same school or college for a number of years and who were employed under a succession of fixed term contracts for each term (‘termly contracts’), with breaks between contract during the school holidays and college vacations.  Such contracts normally involved the teaching of a specific course and were therefore co-terminous with the course in question.  They might therefore in some cases last the course in question.  They might therefore in some cases last for less than a term.
(3)	Part-time teachers who, by reason of the nature of their jobs, worked intermittently.  The said teachers worked when called on to do so by their local education authority employer and entered into a specific contract of employment which covered each period when they were called on to work.
9.	It is possible for a succession of specific contracts for regular or short occasional work to be governed by another underlying, continuing, ‘umbrella’ contract which requires the employer to offer and the employee to accept work from time to time.  The third question related to applicants employed under the types of contract described above when employment was not also covered by an ‘umbrella’ contract.”

96	It follows that the paradigm example under paragraph 8(3) is of supply teachers and home tutors.  Paragraph 9 deals with “umbrella” contracts where no issue on appeal arises.  A summary of these two last groups of cases was given by the ECJ in its judgment [2000] ICR 961, 993, paragraphs 23 and 24:

“23.	Lastly, the distinguishing feature of a third series of cases is that the applicants worked regularly, but periodically or intermittently, for the same employer under successive legally separate contracts.  According to the order for reference, such successive contracts may sometimes be covered by a framework contract (known as an ‘umbrella contract’), under which the parties are required to renew their various contracts of employment, thereby establishing a continuous employment relationship.
24.	Where there is no umbrella contract, the period provided for in section 2(4) of the Act of 1970 starts to run from the end of each contract of employment and not from the end of the employment relationship between the worker and the establishment concerned.  As a result, a worker can secure recognition of periods of part-time employment for pension entitlement purposes only if he commences proceedings within the six months following the end of each contract covering the relevant employment.”

97	The report for the hearing prepared for the ECJ [2000] IRLR 507, 520 includes the observations of the Applicants.  These are predicated upon the existence of “a series of such similar contracts” and employment “under a series of identical or substantially similar contracts”.  The point the Applicants were noted as making was that it was an obstacle to an effective remedy for them to have to make successive claims against employers who were covered by “the one over-arching pension scheme” (at page 522).  The Chairman determined that what was meant by that was “the same pension scheme” (Reasons paragraph 38).  No one has quarrelled with that and it is plainly right.  

98	The ECJ answered question 1(a) referred by the House of Lords by saying that there was no breach of the effectiveness principle under Article 141 for there to be a limitation rule, provided it was no less favourable than analogous domestic law remedies.  The Court said as follows:
“33	As regards the compatibility of a time requirement, such as that contained in section 2(4) of the Equal Pay Act 1970, with the Community law principle of effectiveness, it is settled case law, and has been since Rewe-Zentralfinanz (1976) ECR 1989, 1997-98, para. 5, that the setting of reasonable limitation periods for bringing proceedings satisfies that requirement in principle, inasmuch as it constitutes an application of the fundamental principle of legal certainty…
34.	Contrary to the contention of the applicants in the main proceedings, the imposition of a limitation period of six months, as laid down in section 2(4) of the Equal Pay Act 1970, even if, by definition, expiry of that period entails total or partial dismissal of their actions, cannot be regarded as constituting an obstacle to obtaining the payment of sums to which, albeit not yet payable, the applicants are entitled under Article [141] of the E.C. Treaty. Such a limitation period does not render impossible or excessively difficult the exercise of rights conferred by the Community legal order and is not therefore liable to strike at the very essence of those rights
35.	The answer to the first part of the first question must therefore be that Community law does not preclude a national procedural rule which requires that a claim for membership of an occupational pension scheme…must, if it is not to be time-barred, be brought within six months of the end of the employment to which the claim relates, provided, however, that that limitation period is not less favourable for actions based on Community law than for those based on domestic law.”

The Court in that passage is asserting the primacy of domestic procedural rules on limitation.
99	In respect of question 3 referred by the House of Lords it said as follows:

“65.	This question relates to a number of actions before the national court which are distinguished by the fact that the claimants work regularly, but periodically or intermittently for the same employer, under successive legally separate contracts.  According to the order for reference, in the absence of an umbrella contract, the period prescribed in section 2(4) of the Equal Pay Act 1970 starts to run at the end of each contract of employment and not at the end of the employment relationship between the worker and the establishment concerned…
66. In its written observations, the Commission maintains that the application of a procedural rule of that kind to actions brought by such workers is incompatible with the principle of effectiveness in two respects.  First, that procedural rule compels workers wishing to have their periods of part-time employment recognised for the purpose of calculating their pension rights to bring a continuous series of actions in respect of each contract under which they have performed the work concerned.  Secondly, such a rule precludes inclusion of all past service of the workers concerned in the calculation of their retirement benefits even where such service formed part of a continuous employment relationship.  Any such workers who brought their first legal actions within the six months following the end of their last contract of employment would be deprived of the possibility of having service under their previous contracts recognised.
67.	As pointed out in paragraph 33 of this judgment, the court has held that the setting of reasonable limitation periods is compatible with Community law inasmuch as the fundamental principle of legal certainty is thereby applied.  Such limitation periods cannot therefore be regarded as capable of rendering virtually impossible or excessively difficult the exercise of rights conferred by Community law.
68.	Whilst it is true that legal certainty also requires that it be possible to fix precisely the starting point of a limitation period, the fact nevertheless remains that, in the case of successive short term contracts of the kind referred to in the third question, setting the starting point of the limitation period at the end of each contract renders the exercise of the right conferred by Article 119 of the E.C. Treaty excessively difficult.
69.	Where, however, there is a stable relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme applies, it is possible to fix a precise starting point for the limitation period.
70.	There is no reason why that starting point should not be fixed as the date on which the sequence of such contracts has been interrupted through the absence of one or more of the features that characterise a stable employment relationship of that kind, either because the periodicity of such contracts has been broken or because the new contract does not relate to the same employment as that to which the pension scheme applies.
71.	A requirement, in such circumstances, that a claim concerning membership of an occupational pension scheme be submitted within the six months following the end of each contract of employment to which the claim relates cannot therefore be justified on grounds of legal certainty.
72.	The answer to the third question must therefore be that Community law precludes a procedural rule which has the effect of requiring a claim…to be brought within six months of the end of each contract of employment to which the claim relates where there has been a stable employment relationship resulting from a succession of short term contracts concluded at regular intervals in respect of the same employment to which the same pension scheme applies.”

100	 When the case returned to the House of Lords, now known as Preston No.2 [2001] ICR 217, at 223, Lord Slynn held that the Respondents could not rely on Section 2(5) of the 1970 Act and Regulation 12 of the 1976 Regulations to defeat claims for retroactive consideration of service more than two years prior to the date of claim.  He held:

“Future pension benefits have therefore to be calculated by reference to full - and part-time periods of service subsequent to 8 April 1976, the date of the court’s judgment in Defrenne v Sabena [1976] ICR 547.”

101	 He also held that Section 2(4) was not a bar to an effective remedy under Article 141 by reference to comparable actions.  Having analysed the ECJ’s holdings at paragraphs 68 to 70 he held as follows:

“33	Accordingly it is clear that where there are intermittent contracts of service without a stable employment relationship, the period of six months runs from the end of each contract of service, but where such contracts are concluded at regular intervals in respect of the same employment regularly in a stable employment relationship, the period runs from the end of the last contract forming part of that relationship.”

All other members of the House of Lords agreed with Lord Slynn on this point.

102	 It was the Chairman’s judgment that the speech of Lord Slynn and the judgment of the ECJ provided the answers to the test cases put before him.  I agree.  But I must first deal with the six criticisms made by Mr Cavanagh of the Chairman’s approach.  I say at once that I do not accept any of them.

1. The decision on Section 2(5) sheds light on the approach to Section 2(4)
103	 In my view, the only similarity between the court’s approach to these two sections is that in each case a procedural rule was contended to be a barrier to the effectiveness of an Article 141 right.  The limit on compensation partially defeated an Applicant’s just entitlement.  Section 2(4) extinguishes such entitlement if a claim was not made in time.  At first sight, there is no reason why the court’s judgment having the effect of disapplying Section 2(5) should be read across into its decision in effect upholding Section 2(4).  Respect for Member States’ right to make procedural rules of this kind, and the need for legal certainty, combined to preclude claims being made more than six months late, even though the Applicants would have their just claims dismissed.  The court’s reasoning as to the importance of domestic law supremacy and legal certainty (see paragraphs 33 to 35, 65 to 72 (above)) do not arise when considering what recognition should be given to service prior to two years before the claim was made.  

104	 The order of the ECJ on backdating (Section 2(5)) was so clear to the House of Lords that it allowed retroactive effect back to 8 April 1976.  On the other hand, with regard to Section 2(4), the ECJ referred the matter back to the House of Lords for it to consider comparisons between the enforcement of Article 141 rights and other domestic rights.  What was left to the domestic court, as in the present case, was to decide whether a stable employment relationship applied having given effect to the ECJ’s and the House of Lords’ judgments.  I do not consider any support is given to Mr Cavanagh’s argument by consideration of the submission of the Commission, cited at paragraph 66 of the ECJ’s decision above).  It may be that the Commission’s position could broadly be described as being in favour of allowing recognition for all of an Applicant’s service from 8 April 1976 so that she might not be defeated by limits on retroaction (Section 2(5)) and the limitation of actions (Section 2(4)).  But as the ECJ points out in its next paragraph (paragraph 67) a separate policy reason exists in respect of Section 2(4), which does not apply in respect of Section 2(5).  

105	 I reject Mr Cavanagh’s contention that the ECJ’s approach to Section 2(5) sheds light on, or even provides a clue to, the approach to Section 2(4).  

2. Amendment of the contract

106	 It was contended before the Tribunal that changes in terms and conditions of employment arising from the variation or amendment of a contract of employment, as opposed to its termination, should not preclude the continuation of a stable employment relationship.  The error lies in the failure of the Chairman to deal with the submission.  Had he dealt with it, he would have concluded in the Applicants’ favour.  The argument was originally raised in respect of the three test cases but when objection was taken by Mr Clive Lewis, for the local authority employers, Mr Cavanagh in Reply applied for permission to amend the Notice of Appeal to cover all three.  For reasons which I gave on 4 November 2003 and which have not been appealed, I accepted the submission from Mr Lewis, supported by Mr Paines, that this argument could be made only in respect of Mrs Bunyan.  

107	 It was conceded in her case that there was a stable employment relationship between 1980 and 1984.  At the heart of this submission is that there was a consensual change in her terms and conditions of employment in 1984, then again in 1985 and again in 1992: these were amendments or variations only.  The short answer provided by Mr Paines and Mr Lewis is that there never was a variation but a cessation of a contract in 1984 and its replacement with something entirely new.  In 1984 she began a fixed-term full-time pensionable contract which later became permanent.  She entered into a “newly created post”.  The series of contracts from 1980 to 1984 could not be found in written form.  She ceased to be employed on 13 June 1984.  She was hourly paid.  On accepting the offer of the newly created post with effect from 1 September 1984, she became pensionable and was paid an annual salary.  At the time the offer was made, and at the time it was accepted, no contract of employment was in place.  The earlier contracts had by concession been bolted together to form a stable employment relationship up to June 1984 but the problem for Mrs Bunyan was how to bridge the gap from June to September 1984.  

108	 I do not accept that it was possible to vary a contract which had terminated.  What followed the old contract was a new one, not its continuation in varied terms. I of course accept the principle set out in Marriott v Oxford and District Co-operative Society [1969] 1 WLR 254 Divisional Court, per Lord Parker CJ, as to the essential distinction between a variation and a rescission, for he said at 259 C, as follows:

“... an important consideration is the nature of the alleged variation.  In order to amount to a rescission it must be so fundamental that nobody could claim that the original contract was still in being.  On the other hand, the new terms may be on such minor matters that really the only common sense of the case is that the original contract is in being, subject to slight variations.  In other words, each case must depend upon the circumstances of the case.”

109	 That case concerned the reduction in pay of and demotion of a worker where it was held that his agreement thereto constituted a variation and the circumstances were not a dismissal giving rise to a redundancy payment.  Ashworth J agreeing dealt with the situation more akin to the circumstances in Mrs Bunyan’s case when he said at 261 D:

“Promotion by consent between the parties involves variation of the existing contract of employment, but it is in the highest degree artificial to think of a man who is promoted from being chargehand to a foreman as a result of negotiations between him and his master, being described as ‘dismissed’.”

Lord Parker reminded himself of the essence of the judgment of the House of Lords in Morris v Baron & Co [1918] AC 1, that “the answer to the question is always one of intention:  was the intention to make a new contract, in which case the old contract was rescinded, or was the intention merely to treat the old contract as in being but with certain variations”.  See page 258 G.

110	 It is not appropriate to apply this principle to the present case since in my judgment the old contract could not be varied: it had ceased to exist.  Not only were the new terms on offer in a letter of 6 July 1984 significantly different and the post newly created, but also Mrs Bunyan was asked to send her P45 to the Respondent, consistent only with the previous relationship having terminated.
111	 It also seems to me that the two authorities relied upon by Mr Cavanagh in his case on appeal issue 1 (TUPE) are against him here. 
a)	In HQ Service Childrens’ Education (MOD) v Davitt [1999] ICR 978 EAT, it was held that time does not begin to run against a person who is under notice but required not to work.  His Honour Judge Peter Clark in the EAT says this, at page 983 G:
“An employee may be off sick, on holiday or simply not required to attend for work.  Until the contract of employment is materially varied or terminated the employee remains employed in the employment.”
That indicates that material variation of a contract starts the clock running. Termination of it certainly does.
b)	In Young v National Power Plc [2001] ICR 328 CA, time did not begin to run until the end of the employment. In my view, the judgment does not assist in interpreting the correct approach to a series of contracts.  Mrs Young, after all, had unbroken service.

3. Contracts superseded by a permanent contract. 
112	 The Chairman accepted (Reasons paragraphs 251(1) to (2) (above)) that a stable employment relationship may in certain circumstances arise following a succession of regular short-term contracts even where there is a sequence of intermittent short-term contracts.  It was contended that the graduation of an employee from a succession of short-term contracts to a permanent contract reflects an increase in the stability of the employment relationship, not its cessation.  Far from being incompatible with the continuation of a stable employment relationship, entering into a permanent contract typically cements the stability of the relationship.  It is contended that there should be no artificial restriction on the types of successive contracts leading to a stable relationship.  On behalf of the Respondents it is contended that the expression of this relationship by the ECJ provides a complete answer.  All three test cases raise the same issue.

113	 In ordinary language any permanent job can be described as a stable employment relationship.  But in the context in which it is coined by the ECJ, it is there to rescue employees who do not have a permanent job.  The rescue operation is limited to cases satisfying the conditions defined by the ECJ and adopted by the House of Lords.  (I will leave aside for one moment the special circumstances of Mrs Bunyan since Mr Lewis contends that in any event his client is not liable in the circumstances of Mrs Bunyan’s employment at a college).  

114	 It also seems to me that the word “periodicity” arises for the first time in the ECJ’s judgment.  The OED defines this as having a tendency to recur at intervals, regularly recurrent.  Examples are given from astronomy, chemistry and the publication of journals.  On the other hand “intermittent” means occurring at irregular intervals.  The ECJ at paragraph 65 defined the question before it as relating to applicants who “worked regularly but periodically or intermittently, for the same employer, under successive legally separate contracts.  Lord Slynn in Preston No.1 at page 236, divided the categories of applicants into 

(a)	those employed on an academic year or sessional basis; 
(b)	those employed on a termly basis; and
(c)	those who work intermittently.

He defined them (at 236 D) as “(a) and (b) above (periodic but regular) or as in (c) above (intermittent)”.  In a slightly different context the use of the words “periodically and regularly” is repeated at 237 H.  When the case came back to the House of Lords Lord Slynn said:

“33	Accordingly it is clear that where there are intermittent contracts of service without a stable employment relationship, the period of six months runs from the end of each contract of service, but where such contracts are concluded at regular intervals in respect of the same employment regularly in a stable employment relationship, the period runs from the end of the last contract forming part of that relationship.”

What the Chairman said about these statements is as follows:

“224.	It is immediately apparent that this gives rise to very considerable practical difficulties as both linguistically and conceptually, ‘regular’ and ‘intermittent’ are contradictory, perhaps incompatible.  An analysis of the essential ingredients of the stable employment relationship which are to be found both in the judgment of the court and propositions derived from it, will throw such light as can be generated onto the problem.”

He came to the conclusion that Lord Bridge’s tripartite division on the reference to the ECJ had been merged in the ECJ into a single proposition. Intermittent contracts formed part of a stable employment relationship, to the same extent as regular and periodic contracts, because they are all “successive short-term contracts of the kind referred to in the third question”:  see ECJ judgment paragraph 68.  

115	 It is therefore necessary to consider the “features that characterise a stable employment relationship” (ECJ judgment para 70) and these can be broken down as follows:

(1)	A succession of short-term contracts.
(2)	Concluded at regular intervals.
(3)	Relating to the same employment.
(4)	To which the same pension scheme applies.

As to (1), this devolves into two parts.  The subject matter must be short-term contacts.  The House of Lords in its Order for Reference and in its consideration of the ECJ judgment when referred back to it has in mind as “short-term” contracts which are termly, or for the academic or sessional year.  It follows that those contracts and anything for a shorter period are “short-term”.  There must be a “succession” or a “sequence” (ECJ judgment para 70).  I interpret this to mean three or more, for the existence of two such contracts is not usually described as a sequence or a succession of such contracts.  It would ordinarily be described as the repetition of a contract.

116	 As to (2), the intervals which must be regular, this is described as “periodicity” which of course implies regularity.  The periods are regular because they are clearly predictable and can be calculated precisely; and they are also regular where the intervals between work, and the length of the spells of work, are not to be predicted with accuracy; but nevertheless it is possible to say that the teacher, for example, is frequently, or even customarily, called upon whenever a need arises.  This arises, by definition in the field of supply teaching, several times a term and thus may be described as regularly; but the precise dates cannot be calculated or predicted and so the work may accurately be described as intermittent. 

117	 As to (3) “same employment”, no guidance is given. As to (4), the same pension scheme, it seems that the adoption of the expression “over-arching” is encompassed within the same scheme.

118	 In order to succeed in bringing the test cases within the above framework, Mr Cavanagh submits that the Chairman was wrong to find that the stable employment relationship ceases when the terms of the contract, or the work done, alter radically; that is, when a succession of short-term contracts is superseded by permanent contract (Reasons paragraph 251(3)(e)).  But in the context of the analysis of the ECJ’s judgment as applied by the House of Lords, the submission fails because feature (1) is missing.  The succession of short-term contracts ceases, or is interrupted, when a new permanent contract is negotiated.  It is not apt to describe a succession of short-term contracts and a permanent contract as a succession of short-term contracts.  The succession is broken, and the nature of the contract changes from short-term to permanent.  The submission also fails because there is no periodicity about the contracts.  There is no interval, let alone a regular interval, between the contracts since on the footing of the test cases each relationship is regulated by a single permanent contract.  Thirdly, the cases may also founder under feature (3) as not being in “the same employment”.  I will examine this matter in more detail below.  I would further agree with the Chairman that in respect of Mrs Cockrill, her claim would fail because the pattern of her working was too spasmodic and could not be characterised as meeting each of the features set out above.  She would fail principally on feature (2):  the lack of periodicity of the employments.  

4. Similarity of terms and/or work
119	 The Chairman held (Reasons para 233, 235) that:

“It is simply inconsistent with the nature of a stable employment relationship that the fundamentals of the succeeding contracts should vary. …  
The work must be for the same employer and be broadly the same throughout; that is it will be supply teaching though not necessarily at the same schools, or the same subject at the same key stages; or home teaching, but not necessarily the same subjects, or to the same pupils.... broadly the same throughout.”

It was contended that these words represent a gloss impermissibly put upon the words “stable employment relationship”.  Or alternatively that they “imposed too strict a test of similarity”.  In my view, that is an unfair criticism for one of the features of a stable employment relationship is “same employment” which can be construed in different ways. It must be borne in mind that the Report for the Hearing in the ECJ described the stable employment relationship cases as follows (at page 510):
‘… in other cases, the appellants worked regularly, but periodically or intermittently, for the same employer, with each period of work technically being under a separate contract of employment but with each contract containing the same terms and with the employment in total being relevant for pension purposes (but for it being part-time work)’ (emphasis added)
The Applicants contended (at page 520): 
‘To require the applicants who are employed under a series of identical, or substantially similar, contracts to bring applications within six months of the end of each such contract – some of which may be contracts for only one day’s work – would plainly impose an unrealistic requirement which would make the enforcement of rights excessively difficult or impossible in practice and thus infringe the principle of effectiveness’.”

It is for that reason that “same employment” was given the characteristic cited above:  it was not a gloss but the exemplification of the issues placed before the European Court of Justice.  

120	 As for the test cases themselves, Mrs Bunyan moved to a wholly new position on terms which are very significantly different.  It follows that I accept the submission of Mr Paines that the basis upon which the ECJ was considering the issue of stable employment relationship was the existence of a series of contracts containing the same or substantially similar terms.  

5. The reasons for breaks between periods of work

121	 This criticism is focused upon the cases of Mrs Bunyan and Mrs Cockrill.  However, the argument appears to be based upon the existence of intermittent work patterns for Mr Cavanagh submits that the Chairman accepted that there were circumstances in which a stable employment relationship could be founded upon an intermittent work pattern:  see Reasons para 235.  But the Chairman’s reasoning is criticised when he says “The breaks between work must be a reflection of the employer’s demand for work, not the demands of the employee’s private life” (Reasons para 235).  It is contended on behalf of the Applicants that this places an arbitrary and unduly restrictive interpretation on the meaning of stable employment relationship.  So it is argued that breaks, for example, for school holidays are consistent with a stable employment relationship as are breaks by reason of maternity or periods of sickness, since these might normally occur to a permanent employee.  The Chairman found that none of the test cases revealed such circumstances.  Mrs Bunyan does not exhibit an intermittent work pattern.  Mrs Cockrill provides no evidence of circumstances falling within Mr Cavanagh’s example.  

122	 In order to give his decision the Chairman summarised the submission and his reason as follows:

229.	It is also clear both from the wording of question 3, the Order for Reference (see in particular paragraph 8 of the facts) and the submissions made to the court, that the breaks in service must arise either because of the nature of the work being done (as in the case of supply teachers or home tutors) or because of the nature of the contract offered by the employer to do the work (as in sessional or termly contracts).”

123	 It seems to me that that conclusion is amply justified by reference to the Order for Reference which includes employees “who by reason of the nature of their jobs worked intermittently”.  There was no discussion of those who by nature of their own circumstances worked intermittently.  The question was based upon the factual example of intermittent work being inherent in the nature of the job, rather than by individual instigation by any given employee.  

6. The test in relation to home tutors and supply teachers.

124	 In the application of the ECJ’s principles to home tutors and supply teachers the Chairman made an adaptation of the proposition, and expressed himself by way of some examples.  It is criticised by Mr Cavanagh both for being a proposition which is not advanced by any party, and for being vaguely expressed in colloquial language and in any event perverse.  The Chairman’s proposition and his examples were expressed as follows:

238.	In my judgement, the need for there to be a predictable cycle of periods of being in and out of contract must assume a lesser degree of importance when one is considering intermittent work.  If this was not to be so it would, because of the very nature of the work in question, by itself preclude the possibility of a stable employment relationship ever arising in such cases.  That is not to say, however, that it assumes no importance.  It is replaced as the key criteria by the expectation (in the sense of intention rather than hope) of the parties.  Thus, if, when asked by the officious bystander whether it was their intention that work would be offered and would be accepted when offered, at intervals consistent with the pattern of work in question, for the foreseeable future, the parties were able to answer with a testy “of course”, then a stable employment relationship would exist so long as that intention remained mutual, surviving even severe periodic downturns in work, so long as they arose “by reason of the nature of (the job)”.  The fundamental principle of legal certainty is safeguarded because time will not run until the parties expectation changes, a matter of which, by virtue of the nature of the relationship, they are likely to be aware. 
239.	Perhaps if I may put it colloquially, the way to approach this extremely difficult question is to ask, despite the fact that she was not employed under a permanent contract, did the applicant and her employer both regard her as a member of the first team; part of the furniture of the home tuition or supply teaching service, rather than someone who could be turned to if the need arose. Merely being on a list of those to whom work is offered from time to time would be insufficient.  In practice, this is likely to exclude all supply teachers and home tutors other than those who embark upon the work as a career or who do it long term on a regular (in the non-metronomic sense of the word) basis.”

When seen in context paragraph 238 is the summation of the reasoning, including the parties’ submissions, which preceded it in paragraphs 234 to 237.  Illustrations of the application of the test in paragraph 238 are given in paragraph 239.  The Chairman had already reported that the Applicants had been “unable to offer any guidance as to where the dividing line might be” (Reasons para 221).

125	 Before dealing with Mr Cavanagh’s detailed criticism of the Chairman’s decision under this head, it is right to recognise the difficulty the Chairman faced.  It was conceded by the Secretary of State that some intermittent working patterns would count as stable employment.  It was conceded by the Applicants that some would not.  The Commission in its submission offered no assistance in how to identify working patterns, “given the almost limitless permutation ... which might conceivably be characterised as intermittent” (Reasons para 221).  The Chairman had already acknowledged the conceptual and linguistic difficulty in including “regular” and “intermittent” working patterns within a stable employment relationship (Reasons para 224).  So he accepted the submission of all of the Respondents “that the precept that it must be possible to fix the start of the limitation period is vital” (Reasons para 225).  The essential tool he used for determining this was the intention of the parties.  This intention will often be clear “by reason of the nature of their jobs” as the Order for Reference (at para 8(3)) makes clear.  Thus the Chairman was able to hold (Reasons paragraph 235):

“The work must be for the same employer and be broadly the same throughout; that is it will be supply teaching though not necessarily at the same schools, or the same subject at the same key stages; or home teaching, but not necessarily the same subjects, or to the same pupils.” 

126	 In my view, the nature of the work for both of these categories of teacher is more precarious than for permanent teachers.  Whilst it may be confidently expected that an education authority may always seek to plug the gaps of teacher absence by supply teachers, and may always have needs for home tutors for particular pupils, the employment relationship between a given teacher or tutor and the authority will be stable if she is called upon regularly (in what counsel and the Chairman described as “the non-metronomic sense”) but unstable if she is casual or ad hoc.  The Chairman decided that the key criterion for drawing the line between these two relationships was the existence of the parties’ joint intention.  

127	 The statement of principle in paragraph 238 of the Chairman’s Reasons is not challenged.  What is challenged by Mr Cavanagh is the way the Chairman expressed himself in paragraph 239. It is a little unfair of Mr Cavanagh to criticise this colloquial language as vague and unhelpful when elsewhere his own colloquialism is accepted by the Chairman (“a ‘get out of jail free’ card”) (paragraph 54)).  The Chairman’s illustrations of a “first team” and “part of the furniture” are a simple way of identifying those who, by reference to the joint expectation of the parties, have a stable relationship with a single local authority.  Those who are called upon over a long period of time are also in this category.  If asked, they and their employer would say that they had regular work but could not predict the precise dates on which it would occur.  The joint intention was that they would be called in by the employer when the need arose, more or less as a first resort before turning to a long list of persons who had registered for the work but who were not often called upon.  

Final conclusion on appeal issue 2
128	 In my judgment, the requirement of legal certainty in fixing the start of a limitation period is met by the introduction, for intermittent contracts, of the intention of the parties.  If it was not the intention of the parties that the teacher would be called on regularly, she will be an ad hoc or casual worker.  If it was so intended, she will have a stable employment relationship until, as the ECJ put it in paragraphs 69 and 70, one of the essential features of the relationship is missing ie periodicity or the same employment.  If there is no longer an intention to employ, or to work, on a regular basis when called upon, periodicity disappears, and time begins to run from the interruption period.

Appeal issue 1: Does time begin to run in a claim against a TUPE transferor from the date of transfer, or does time not run until the end of an employee’s employment with the transferee?

The legal principles 
129	 Appeal issue 1 involves a discussion of the regime where an undertaking has been transferred from one employer to another.  Prior to the Equal Pay Act 1970 provisions were in place relating to the preservation of continuous employment for certain statutory purposes on what even then was described as the transfer of an undertaking.  The lineal descendant of provisions in the Contracts of Employment Act 1963 is Section 218 of the Employment Rights Act 1996.  However, protection of employees’ contractual rights did not occur until the Transfer of Undertakings (Protection of Employment) Regulations 1981.  These give effect throughout the United Kingdom to the Acquired Rights Directive 77/187/EEC.  As originally passed on 14 February 1977, Articles 3 and 4 preserved the rights of employees on a business transfer and imposed obligations on transferees (and optionally also on transferors) as follow:

“Article 3
1.	The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee.
Member States may provide that, after the date of transfer within the meaning of Article 1(1) and in addition to the transferee, the transferor shall continue to be liable in respect of obligations which arose from a contract of employment or an employment relationship.
2.	Following the transfer within the meaning of Article 1(1), the transferee shall continue to observe the terms and conditions agreed in any collective agreement on the same terms applicable to the transferor under that agreement, until the date of termination or expiry of the collective agreement or the entry into force or application of another collective agreement.
...
3.	Paragraphs 1 and 2 shall not cover employees’ rights to old-age, invalidity or survivors’ benefits under supplementary company or inter company pension schemes outside the statutory social security schemes in Member States.”
Article 4
1.	The transfer of the undertaking, business or part of the undertaking or business shall not in itself constitute grounds for dismissal by the transferor or the transferee.  This provision shall not stand in the way of dismissals that may take place for economic, technical or organisational reasons entailing changes in the workforce.”

That Directive was replaced by Directive 2001/23/EC on 12 March 2001.  The original text is relevant to these proceedings.

Regulation 5 of TUPE transposes those Community obligations into municipal law, preserving employees’ rights and imposing on transferees the inherited liabilities. So far as is relevant it provides:

“5 Effect of relevant transfer on contracts of employment, etc.
(1)	... a relevant transfer shall not operate so as to terminate the contract of employment of any person employed by the transferor in the undertaking or part transferred but any such contract which would otherwise have been terminated by the transfer shall have effect after the transfer as if originally made between the person so employed and the transferee.
(2)	Without prejudice to paragraph (1) above, but subject to paragraph (4A) below, on the completion of a relevant transfer – 
(a) all the transferor’s rights, powers, duties and liabilities under or in connection with any such contract, shall be transferred by virtue of this Regulation to the transferee; and
(b) anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee.
(3)	Any reference in paragraph (1) or (2) above to a person employed in an undertaking or part of one transferred by a relevant transfer is a reference to a person so employed immediately before the transfer, including, where the transfer is effected by a series of two or more transactions, a person so employed immediately before any of those transactions.
(4)	Paragraph (2) above shall not transfer or otherwise affect the liability of any person to be prosecuted for, convicted of and sentenced for any offence.
(4A)	Paragraphs (1) and (2) above shall not operate to transfer his contract of employment and the rights, powers, duties and liabilities under or in connection with it if the employee informs the transferor or the transferee that he objects to becoming employed by the transferee.
(4B)	Where an employee so objects the transfer of the undertaking or part in which he is employed shall operate so as to terminate his contract of employment with the transferor but he shall not be treated, for any purpose, as having been dismissed by the transferor.
(5) ... without prejudice to any right of an employee arising apart from these Regulations to terminate his contract of employment without notice if a substantial change is made in his working conditions to his detriment; but no such right shall arise by reason only that, under that paragraph, the identity of his employer changes unless the employee shows that, in all the circumstances, the change is a significant change and is to his detriment.”

130	 The exclusion of certain rights in respect of pension schemes in the Directive Art 3.1 is mirrored in Regulation 7 
7 Exclusion of occupational pensions schemes
(1)	Regulations 5 and 6 above shall not apply -
(a) to so much of a contract of employment or collective agreement as relates to an occupational pension scheme within the meaning of the Social Security Pensions Act 1975 or the Social Security Pensions (Northern Ireland) Order 1975; or
(b) to any rights, powers duties or liabilities under or in connection with any such contract or subsisting by virtue of any such agreement and relating to such a scheme or otherwise arising in connection with that person’s employment and relating to such a scheme.
(2)	For the purposes of paragraph (1) above any provisions of an occupational pension scheme which do not relate to benefits for old age, invalidity or survivors shall be treated as not being part of the scheme.”

131	 Upon a TUPE transfer, the identity of the employer changes.  At common law such a change automatically terminates a contract of employment:  Nokes v Doncaster Amalgamated Colleries Ltd [1940] AC 1014 HL.  By TUPE Regulation 5(1) a relevant transfer does not terminate the contract of an employment of a person employed in the undertaking, or part of an undertaking, transferred.  Such a contract of employment has effect after the transfer as if originally made between the employee and the transferee.  The transferor’s liabilities are transferred by Regulation 5(2) to the transferee.  

132	 Exceptions to this regime are cases where the relevant employee objects, in which case her contract is not transferred:  TUPE Regulation 5(4)A.  But she is not to be treated as dismissed by the transferor:  Regulation 5(4)B.  The protective regime in Regulation 5(1) and 5(2) does not affect the right of an employee, apart from the Regulations, to terminate her contract of employment if a substantial change is made to her working conditions to her detriment:  Regulation 5(5).  There are two further express exceptions.  Criminal liability does not transfer: Regulation 5(4); nor does liability for “so much of a contract of employment” as relates to an occupational pension scheme:  Regulation 7.  

133	 In addition, certain “obligations tailored to the employer’s identity” to use the words of Dr John McMullen, Business Transfers Sweet and Maxwell 2nd Ed 1991 page 177 do not transfer eg rights to share options in the transferor’s business: Mitie Managed Services Ltd v French [2002] IRLR 512. In that case, there was no transfer for share options in the transferor Sainsbury’s scheme since that was impossible for the transferee to perform.  A literal reading of TUPE might yield that result, but a construction which did not lead to absurdity or impossibility was preferred so that what went across as a matter of contractual obligation was a right to an equivalent or comparable scheme, rather than the Sainsbury scheme itself.  For a full review of problematic transfer conditions see Bernadone v Pall Mall Services Group [2000] IRLR 487 CA at paragraphs 20 to 32 per Peter Gibson LJ.

134	 The only express exception in the Acquired Rights Directive related to pension schemes. The United Kingdom in its transposition of its obligations under the Directive fixed liability on the transferee.  It thus declined to go to the edge of the express margin of appreciation provided by Article 3(1) of making the transferor, in addition to the transferee, liable.  Although originally an issue in the Preston No, 3 test cases, it is now common ground that liability in respect of breach of an equality clause, deemed to be included by virtue of the Equal Pay Act and Regulation 12, to provide equal access to pensions rests with the transferor and not with the transferee.  The Applicants accept the binding nature of Walden Engineering Co Ltd v Warrener [1993] ICR 967 EAT Wood P, approved in Adams v Lancashire County Council [1997] ICR 834, 849 CA, per Morritt LJ, holding that liability for pensions did not transfer under TUPE.  Thus the Applicants assert that liability for breach of the equality clause rests with the transferors, and is actionable at any time before the end of six months following termination of employment with the transferees.  

135	 Before looking at the facts in these cases, it is important to bear in mind the practical effect of this submission in the context of cases where the doctrine of legal certainty has come to the fore.  Liability against the transferor crystallises at the time of the transfer, but an action against the transferor is not limited in time except by reference to the relationship between the Applicant and the transferee.  If she were 20 at the time of transfer her action against the transferor would still be available on retirement at age 60 from the transferee’s service.  The transferor might have ceased trading, become insolvent or disappeared.  The transferor would know that it had a contingent liability to the Applicant, but would not know whether the Applicant had ceased to be employed by the transferee, and thus time had begun to run against her.  These uncertainties, at first sight, point to the conclusion reached by the Chairman which is that time begins to run from the date of the transfer.  After all, why should a transferee, which inherits no liabilities in respect of pension schemes, have any role in the remedy sought by a transferred employee against the transferor? 

136	 The issue raised by the Applicants in this part of the appeal is whether time begins to run, for the purposes of Section 2(4) of the Equal Pay Act and Regulation 12 of the 1976 Regulations, for a claim against a transferor, from the date of the transfer, or from the date of the cessation of employment with the transferee, where there has been a relevant transfer under TUPE.

The facts
137	 Turning then to the facts common to each of the four Electricity Sector test cases on appeal issue 1 (Burroughs, Bartlett, Carey and Sheen):
(1)	Each of the Applicants was employed within the nationalised electricity industry and then by a company created upon the privatisation of the electricity industry.
(2)	During part of that period of employment each Applicant was excluded from the Electricity Supply Pension Scheme (“ESPS”) by virtue of working part-time.  The access requirements of the ESPS were equalised on 1 April 1988.
(3)	Following 1 April 1988, each of the Applicants joined their then employer’s Group within the ESPS and accrued pension benefits under the ESPS
(4)	On privatisation of the electricity industry in 1990, the ESPS was divided into 17 separate Groups, each aligned with the respective privatised businesses and the companies formed to run them.  Each Group within the ESPS is therefore to be regarded as, in effect, a discrete pension scheme (and the Applicants have formally abandoned a contention to the effect that the ESPS should be considered to be an “overarching pension scheme”: (see S.66 of the Decision).
(5)	The employment of each Applicant was transferred, in a TUPE transfer or transfers, to Powerhouse Retail Ltd (initially called E&S Retail Limited) in 1992.  The transfer took place in two stages:  the Applicants were transferred for a day to an intermediate company, which was a temporary participant in the ESPS, and then, the following day, to E&S Retail Ltd.
(6)	Prior to the transfer, the Applicants had each accrued pension benefits, which remained with their original employer’s ESPS Group for a short period after the transfer.  The accrued benefits were then, with the Applicants’ agreement, transferred to the Powerhouse Retail Group of the ESPS.
(7)	Each of the Applicants’ claims was presented to the Employment Tribunal substantially more than six months after the date of the transfer of their employment to Powerhouse Retail.

138	 It is common ground in this case that the effect of TUPE is to create a statutory novation of the contract of employment of an employee affected by a relevant transfer, save in the narrow circumstances described above.  The effect of Regulation 5(2) is that the transferee stands in the stead of the transferor for the purposes of the contract of employment.  The Chairman accepted Mr Paines’ submission that it is as if the transferor had never existed (Reasons para 71).  In my judgment, that is correct but only insofar as the terms of the contract of employment are transferred. 

Submissions
139	 Mr Jeans, and Mr Paines on behalf of the Secretary of State who continues to have an interest in this part of the appeal, contend that no approach to Regulation 5 can disregard Regulation 7.  It is submitted that on a TUPE transfer, insofar as a contract does not relate to a pension scheme, it is treated as always having subsisted between the employee and the transferee, whereas insofar as the contract does relate to a pension scheme the common law rule in Nokes above applies.  Mr Jeans relied on Lord Slynn’s speech in Preston No.1 [1998] ICR 228 at 237 F and 237 G to H, 238 H to 239 A to the effect that an equality clause is implied into a specific contract of employment, and not into an employment relationship, accepting again submissions made on behalf of employers. Lord Slynn noted that it was the judgment of the Chairman, the EAT and the Court of Appeal that in Section 2(4) “the employment” means the employment under the contract of service under which complaint is made ([1998] ICR 236 D).  That position was modified by the House of Lords following the ruling by the ECJ in connection with broken periods of service in a stable employment relationship.  

140	 Mr Cavanagh contends that the division of the contract between, in this case, terms which transfer, and occupational pension scheme terms which do not, is not a sufficient analysis, for the contract of employment remains the same notwithstanding that the term relating to pensions differs. He relies on two authorities, which while not directly on the point, offer some guidance. 

Conclusion on appeal issue 1
141	 Section 2(4) of the Equal Pay Act was considered in Young v National Power Plc [2001] ICR 328 CA.  Mrs Young worked in department A until 1994 and in department B until 1996 when she left.  She commenced proceedings in 1997 relating to her claim of unequal pay prior to 1994.  Applying Section 1(6) an Employment Tribunal on a preliminary point held that “employed in the employment” referred to work in department A and she was out of time to make a complaint.  The EAT allowed the appeal and the Court of Appeal upheld the EAT.  Smith J, giving the judgment with which Mance and Schiemann LJJ agreed, said this at paragraph 18, page 335:
“18	We have concluded that the appeal tribunal’s interpretation of section 2(4) was correct.  It appears to us that, on the ordinary natural meaning of the words, section 2(4) requires an applicant to lodge her application within six months of the termination of her employment.  We think that the definitions provided in section 1(6) must be applied to section 2 as well as section 1.  So ‘employed in the employment’ in section 2(4) must mean ‘employed under a contract of service’.  That accords with the House of Lords decision in Preston [1998] ICR 227.  There is a distinction within sections 1 and 2 between the words ‘employment’ and ‘work’.  In our view, the distinction intended is that ‘employment’ refers to the contract of employment and ‘work’ refers o the actual job the employee was doing.  So, for example, for a claim under section 1(2)(c) the woman has to prove two distinct things:  first that she was doing work of equal value to that of a man whom she names as her comparator and second that she and the male comparator were in the ‘same employment’.  It is clear that the man and woman may be doing different jobs while in the same employment.  So ‘employment’ must relate to the contract of employment.  Section 2(4) imposes a limitation period by reference to the termination of employment.  In our view, there is jurisdiction provided that the applicant brings her claim within six months of the termination of her contract of employment.”

142	 Mr Cavanagh says this points to an approach to the interpretation of Section 2(4) for TUPE purposes.  The Court of Appeal had the judgment in Preston No 1 and applied it. 

143	 In HQ Service Childrens’ Education (MOD) v Davitt [1999] ICR 978 EAT, it was held that time does not begin to run against a person who is under notice but required not to work. As I noted above, His Honour Judge Peter Clark in the EAT says that time does not begin until a contract is materially varied or terminated (at page 983 G). This case was not cited to the Court of Appeal in Young and there is no indication as to whether or not the Court considered the difference in work in departments A and B was a material variation.  The observation in Davitt was not necessary for the decision which the EAT was there making but it does assist me in the decision on appeal.

144	 In my view, the treatment of the definition of “employed in the employment” in Young does assist. The Court of Appeal took a broad view of the expression “employed in the employment” in Section 2(4) of the Equal Pay Act. Since the “employment” means no more than the contract of employment, and the contract is, by TUPE Regulation 5, deemed not to have terminated by reason of the transfer, the Applicant is still in the employment in the course of which she suffered, on this footing, a breach of the equality clause at a time when her relationship was with the transferor.
  
145	 In a case where the operation of the equality clause relates to pay, there is no difficulty in a transferee being liable in respect of inequality perpetrated by a transferor.  It is by virtue of TUPE Regulation 5 a liability properly transferred.  But there is something different about pensions, because of the exclusion by Regulation 7.  The difference is this.  The equality clause operates in respect of service with the transferor so as to provide equality of access to the pension scheme.  The clause providing equality of access to the pension scheme does not transfer to the transferee.  Instead, a new equality clause applies in respect of the contract with the new employer.  I agree that the effect of the transfer is to transfer the contract of employment, but not those terms relating to pensions.  

146	 I return therefore to the first impression of this point.  It is not sustained on analysis.  TUPE provides for the contract of employment to continue under the new employer. Such continuity is not affected by the exclusion by the Directive and by TUPE of pension rights. Since 1981, in every transfer of an undertaking where the employees enjoyed pension rights, their contracts of employment have transferred notwithstanding their being denuded of pension rights by that transfer. As a matter of construction of the limitation provision in Section 2(4) of the Equal Pay Act and Regulation 12, the contract of employment continues, albeit shorn of pension rights, so that a claim against the transferor may be maintained for as long as the employer remains within the transferee’s employment, plus six months.  In my view, the fiction, which is created by TUPE Regulation 5 so as to deem employment with the transferor to have been always with the transferee, extends the limitation period against the transferor more or less indefinitely.  “Employment” means employment under the contract which is deemed to continue. The equality clause in relation to pensions, said to have been breached, remains actionable throughout the period of employment (with the transferee) plus six months.

147	 The only objection to this conclusion is its apparent conflict with the doctrine of certainty. But in a case where breach of the equality clause occurred years earlier and was corrected, as was the case in Young, the employer remains at risk to a claim for as long as employment continues, plus six months. Similarly, where a transferee inherits such a liability, the exposure is the same. No court has held that this elastic, and in a sense uncertain, limitation period is unlawful. As a matter of principle, why should it be struck down where the liability remains with a transferor? An employee who has a vested right to complain of unequal access to a pension scheme would be well advised to take action shortly after a relevant transfer, so as to minimise the risk of the transferor going out of business or disappearing or losing the records. It is not in her interest to wait for long into her career with the transferee, or until she leaves. But that is a risk for the employee to run and ought not to count against her when considering her right to complain. Similarly, a transferor can make certain its liabilities by insuring, or making provision for possible claims, or by recognising such a risk in the terms of a negotiated transfer, if there is one. Such liability for pension loss is, after all, capped as at the date of transfer, whereas other equal pay losses continue. Once it is accepted that such inherent uncertainty as there is, when a claim can be made, say, 40 years after the offending term has been equalised, is not repugnant to the doctrine of legal certainty, it cannot matter that the potential liability is with a transferor. 

148	 In short, I can see no grounds for effectively implying into section 2(4) of the Equal Pay Act, and Regulation 12, a requirement that a claim for breach of the entitlement to equal access to pensions must be brought within six months of the end of employment with a transferor when the contract of employment, defined by section 1(6) but shorn of pension rights,  transfers to a transferee.
A way forward
149	 The Chairman ended his formidable work, to which I again pay tribute, with an epilogue in which he uttered a cri de coeur:
252.	I trust I may be forgiven for concluding this decision with a plea.  It is now 7½ years since the part-time worker pension case flood began and 6½ years since I gave my decision on the preliminary issues.  In the public sector, the cases seem no nearer resolution.   The unions who have been represented before me act on behalf of many but by no means all of the public sector applicants.  It seems more than likely that many of those applicants will have good claims, at least for part of the periods of their exclusion from the various pension schemes concerned.  Many have retired since the litigation began, some have died.  None, it would appear, can have their claims resolved until at least this batch of test cases has exhausted the appeal process …

150	 I associate myself entirely with that view, and was pleased to be told that substantial work has been done on a formula created by the Government Actuary’s Department for establishing figures to be paid by the Applicants to join the schemes and settle the cases. In the banking sector, most claims have been met. It is nine years since the claims were made, and the period to which some relate goes back to 1976. I urge the Applicants to continue the work of settlement with realism, in order to avoid further delays to the recognition of the just claims made by the thousands of part-time women workers in this litigation.
Disposal
151	 Having canvassed the prospective orders with Counsel I will make the orders as drafted by Counsel.