The House of Lords’ clarification
on pension schemes has also confirmed a time limit for equal pay claims
Employees recently received some
good news from the House of Lords. In a long-awaited decision, in Preston &
others v Wolverhampton Healthcare NHS Trust, 2001, 2 WLR 448, their Lordships
overturned a rule limiting the damages which can be recovered in an equal pay
They were considering cases where
female employees had been excluded from their employers’ occupational pension
schemes on the basis that they were part-time workers.
The employees had successfully
established that this amounted to a breach of the equal pay legislation.
However, under UK law, they were only able to claim retrospective membership of
their respective pension schemes for the two year period before lodging their
Treaty of Rome
This meant that if they had been
excluded from their employers’ pension scheme for 20 years before bringing the
claim, they could do nothing about the first 18 of those years.
The House of Lords held that this
rule meant that UK law failed to provide an effective remedy for breach of
Article 119 of the Treaty of Rome, which states that men and women should
receive equal pay for equal work.
They said that instead, these women
should be allowed to claim membership of their employers’ pension schemes as
far back as 1976 (if they were excluded for that long).
The date of 1976 was chosen because
that was the year when the European Court of Justice decided that Article 119
had direct effect – that is, it could be enforced against employers directly.
The women could then claim the benefits of membership of the scheme provided
they paid the contributions which they would have paid had they been members
from the start.
The only disappointing news for
employees was the decision (in the same case) to uphold the time limit for
bringing an equal pay claim. Equal pay claims may be brought either during
employment or within six months of the employment terminating.
The House of Lords was asked to
consider whether this time limit was less favourable than for similar actions
based on domestic law. Subject to one exception, considered below, their
Lordships concluded that it was not, and that it should remain as before.
The only situation where the House
of Lords thought that the time limit should be changed was where the employee
had been employed in a series of short- term contracts in a “stable employment
This mostly applies to teachers. In
this situation, they said that the time limit should be extended to six months
after the final contract.
So where a teacher believes that
she was underpaid, compared to her male colleagues, during a one-year contract
in 1997, she could bring that equal pay claim now, so long as she could show a
series of short-term contracts after that, and that she was working for the
same local authority up to six months beforehand.
– Part-time workers should not be
excluded from their employer’s pension schemes
– Where an employee has been
employed in a series of short-term contracts within a “stable employment
relationship” an equal pay claim may be brought within six months of the final
– Otherwise, equal pay claims must
be lodged within six months of termination of employment
– Damages and/or retrospective
membership of pension schemes can be awarded as far back as 1976, following a
successful equal pay claim, provided that the employee pays the contributions
she would have made if a member.
By Nicholas Moore, national head of
employment at Osborne Clarke OWA