Supreme Court refers part-time pensions entitlement case to EU court


The Supreme Court has referred to the Court of Justice of the European Union (CJEU) to clarify the amount a retired part-time judge can receive in pension income.

The case, O’Brien v Ministry of Justice, relates to retiree O’Brien, who in addition to his work as a barrister also worked on a part-time basis for the Ministry of Justice as a judge of the Crown Court between 1978 and 2005. His position was not salaried, but paid on a fee basis, and the position did not have a provision for a judicial pension on retirement.

An EU directive that prevents part-time workers from being treated less favourably than full-time workers was passed into UK law in 2000. These regulations expressly did not apply to fee-paid, part-time judges.

In June 2005, O’Brien requested to be paid a retirement pension on a pro-rata basis, comparable to former full-time judges who performed similar work. The Ministry of Justice refused this request. O’Brien took his complaint to the Employment Tribunal (ET) in September 2005. He argued that under the EU directive and its transposition into UK law, he was entitled to a judicial pension.

The Supreme Court initially referred to the CJEU in July 2010 to clarify whether it was the position of national law to identify the working relationship of judges with regards to EU law, and also whether national law could discriminate between full-time and part-time judges, or even different types of part-time judges, with regards to pension provision.

In 2012, following a response from the CJEU, the Supreme Court upheld O’Brien’s claim. It stated that O’Brien was entitled to a pension on equivalent terms to a comparable full-time judge because no objective justification had been shown for remunerating fee-paid, part-time judges differently to full-time judges. The case was then remitted to the ET to determine the amount of pension O’Brien was entitled to.

The ET ruled that the whole of O’Brien’s 27 years of service should be taken into account when calculating his pension, however, the Employment Appeal Tribunal (EAT) maintained that only the service after the deadline for transposing the EU directive into UK law should be taken into account due to EU rules on the non-retroactivity of legal judgements. This would then equate to five years’ service. The Court of Appeal concurred with the EAT, and O’Brien took his appeal to the Supreme Court.

Under EU law, a new law cannot apply to legal situations that arise before the law comes into force but it can apply to the future effects of a situation that arose under the old law.

In the case of O’Brien v Ministry of Justice, the two parties differ on whether O’Brien’s pension entitlement in respect to his service before the directive came into effect should be regarded as a legal situation that arose under the old law or whether it should be regarded as a future effect of a legal situation that arose under the old law. The latter would mean that the directive would apply to the period before the year 2000.

O’Brien presented to the Supreme Court that periods of employment before the directive came into force should be taken into account when applied to situations that arise after it has been transposed. The Ministry of Justice argued that a pension payable under an occupational pension scheme constitutes deferred pay for past work, and therefore accrues at the time of employment. This would mean that the entitlement is fixed at the time it is accrued, rather than being determined at retirement, and so O’Brien would not be entitled to a pension for the 22 years of service he undertook before the directive came into force.

In light of these arguments, the Supreme Court has again referred to the CJEU for clarification. It asks that concerning the principle of non-discrimination, does the EU directive require that periods of service prior to the deadline for transposing be taken into account when calculating the amount of retirement pension for a part-time worker, if they would also be taken into account when calculating the pension of a comparable full-time worker?

In the judgement, Lord Reed stated: “The majority of the court are inclined to think that the effect of Directive 97/81 is that it is unlawful to discriminate against part-time workers when a retirement pension falls due for payment. The directive applies ratione temporis where the pension falls due for payment after the directive has entered into force. In so far as part of the period of service took place prior to the directive’s entry into force, the directive applies to the future effects of that situation.

“However, the Court of Justice has not yet considered the argument that if an occupational pension is treated as deferred pay, the right to which is acquired at the time of the work to which the pay relates, then it follows from the general principle of non-retroactivity that the directive does not alter or affect rights acquired (or, in Mr O’Brien’s case, not acquired) before it was brought into force, there being no provision in the directive which overrides that general principle.”

Caroline Jones, solicitor at Browne Jacobson, who is acting on behalf of O’Brien, said: “A majority in the Supreme Court was not inclined to agree with the Court of Appeal. However, since the result was not sufficiently clear cut, a reference to the [European Court of Justice] became necessary. Mr O’Brien welcomes the decision to refer the case and he is optimistic that parity will eventually be achieved for part-time workers with pre-2000 service.

“Depending on the judgment of the [European Court of Justice], the effect on the value of the pension for those affected by this appeal could be very significant. As well as ensuring fair treatment for part-time judges, this decision also has wider implications and will be an important yardstick for part-time workers in ensuring that they cannot be treated less favourably than full-time workers in respect of pension entitlement.”

Shane O’Reilly, of counsel in the pensions team at Norton Rose Fulbright, added: “The Supreme Court has referred a question to the CJEU, on the principle of non-discrimination between part-time and full-time workers. It will be interesting to see their stance on whether members’ service prior to the date of a legal change should be taken into account, as, if Mr O’Brien is successful, this could lead to additional funding strains for schemes.”

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Penny Cogher, pensions lawyer at Irwin Mitchell, said: “Looking back now with today’s concerns with gig economy workers being treated like second class citizens, this original exclusion looks extraordinary, as does the fact that it took eight years to gain the successful challenge in the [European Court of Justice]. It is a shame the case continues to rumble on and the Supreme Court was not firmer in [its] judgement about Mr O’Brien’s position. The cost of the Ministry of Justice pursuing this action, with two referrals to the [European Court of Justice] seems to be disproportionate and is probably not one which another UK employer would take.” 

The Ministry of Justice declined to comment at this time.