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Background
Mr. Barber was an employee of Guardian Royal Exchange
(GRE) and a pension scheme member. The GRE pension was
established as a contracted out non
contributory scheme with a normal pensionable age
of 62 for men and 57 for women. On redundancy an immediate
pension income would be paid at age 55 for men and 50
for women.
Mr. Barber was made redundant at the age of 52 receiving
cash benefits and statutory redundancy payments but was
not entitled to the GRE retirement
benefits due to his age in contrast to similarly aged
women that would receive an immediate pension.
Mr. Barber complained
that this difference was sex discrimination and in breach
of article 119 of the Treaty of Rome concerning equal
pay for equal work when the case was referred to the
European
Court of Justice (ECJ). Initially in European law
the burden of proof is on the employee to show that
they are doing similar work in similar employment, or
that for similar work the other contract contains more
faviourable terms.
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Court judgement
The ECJ first considered whether the benefits paid to Mr. Barber
by the employer as a result of his redundancy could fall under
the concept of 'pay' in article 119. This concept required a
consideration in cash or benefits
in kind payable immediately or in the future in respect
to his employment with the employer. For Mr. Barber the court
held that as compensation was made as a result of his redundancy
this constituted pay and so the case did fall under the concept
of article 119. The ECJ then considered whether the concept
of pay could be extended to retirement benefits in the form
of pension
income paid by a contracted out scheme.
The ruling established in Defrenne v Belgium
(1971) showed that article 119 does not apply to social security
schemes where a pension income is governed by legislation
and have a compulsory element without agreement. The court
ruled that in the case of Mr. Barber and the employer the
private occupational
pension scheme represents either an agreement or a unilateral
decision by the employer whereby the pension scheme forms
part of the consideration to the employees. This consideration
is not compulsory and although it conforms to legislation,
it will be governed by their own scheme rules as determined
by the company and applied by scheme trustees.
The retirement benefits for Mr. Barber therefore
form part of his terms of employment and his remuneration
will be covered by article 119. The European Court of Justice
also held that by allowing a man to have only a deferred
pension at the normal
pension age (NPA) where women would receive an immediate
pension income and this being due to Mr. Barber's age based
on sex, the action of the employer was contrary to article
119. The principle of transparency also meant that the system
appeared to operate to the substantial disadvantage of one
sex and therefore the onus of proof is now on the employer
to prove that their system of pay difference is not discrimination.
The ECJ rules of direct effect and primacy
would ensure that European law would apply to national courts
in a similar case in the future. The ECJ decision would apply
only to pensionable
service from the ruling being the 17 May 1990. This decision
meant that now an occupational pension scheme and redundancy
pay count as 'pay' under article 119 as well as equalisation
rules requiring the equalisation of retirement ages for
men and women, this being incorporated in the UK through the
Pensions Act 1995.
Article 119 amendments
Further development by the European Court of Justice to counter
discrimination based on sex has been formalised in a legal
sense through the Treaty of Amsterdam that came into force
on the 1 May 1999. Here the Treaty states that the Community
will aim to eliminate inequalities and promote equality between
men and women.
The Treaty broadens article 119 from 'equal
pay' to article 141 referring to 'equal pay for male and female
workers for equal work or for work to which equal value is
attached'. It also goes on to state that where a job classification
system is used for the determination of pay, there must not
be discrimination based on sex and the same criteria used
for both men and women. This has been the instruction of the
Equal Pay Directive to member states to ensure national legislation
conforms with European law.
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