Coloroll Pension Trustees Ltd v James Richard Russell, Daniel Mangham, Gerald Robert Parker, Robert Sharp, Joan Fuller, Judith Ann Broughton and Coloroll Group plc.
Date: 1994-09-28
18 As regards the first part of the question, the Court, in its judgment of 6 October 1993 in Case C-109/91 Ten Oever v Stichting Bedrijfspensioenfonds voor het Glazenwassers-en Schoonmaakbedrijf [1993] ECR I-4879, held that a survivor' s pension provided for by an occupational pension scheme falls within the scope of Article 119. It also held that the fact that such a pension, by definition, is not paid to the employee but to the employee' s survivor does not affect that interpretation because, such a benefit being an advantage deriving from the survivor' s spouse' s membership of the scheme, the pension is vested in the survivor by reason of the employment relationship between the employer and the survivor' s spouse and is paid to the survivor by reason of the spouse' s employment (paragraph 13).
19 It follows that since the right to payment of a survivor' s pension arises at the time of the death of the employee affiliated to the scheme, the survivor is the only person who can assert it. If the survivor were to be denied this possibility, this would deprive Article 119 of all its effectiveness as far as survivors' pensions are concerned.
20 As regards the question whether Article 119 may be relied on against the trustees of an occupational pension scheme, the Court in the Barber judgment, after finding that pensions paid under such schemes fall within the scope of Article 119, held that this conclusion remains valid even where the scheme has been set up in the form of a trust and is administered by trustees who are formally independent of the employer, since Article 119 also applies to consideration received indirectly from the employer (paragraphs 28 and 29).
22 The trustees themselves, although not party to the employment relationship, are required to pay benefits which do not thereby lose their character of pay within the meaning of Article 119. They are therefore bound, in so doing, to do everything within the scope of their powers to ensure compliance with the principle of equal treatment.
23 It is true that the trustees' obligations towards the members of the scheme and their dependants are laid down in the trust deed which is governed by national law. However, as the United Kingdom rightly points out, the effectiveness of Article 119 would be considerably diminished and the legal protection required to ensure real equality would be seriously impaired if an employee or an employee' s dependants could rely on that provision only as against the employer, and not against the trustees, who are expressly charged with performing the employer' s obligations.
26 As regards the first part of the question, it must be remembered that the principle of equal pay is one of the foundations of the Community and that Article 119 creates rights for individuals which the national courts must safeguard. Article 119 being mandatory in nature, the prohibition of discrimination between men and women applies not only to the acts of public authorities but also to all contracts between private individuals and to all collective agreements intended to regulate paid employment (see the judgment of 8 April 1976 in Case 43/75 Defrenne v Sabena [1976] ECR 455, paragraphs 12 and 39).
29 Furthermore, the Court has consistently held that national courts are bound to provide the legal protection which individuals derive from the direct effect of provisions of the Treaty (see the judgment of 19 June 1990 in Case C-213/89 The Queen v Secretary of State for Transport, ex parte Factortame Limited and Others [1990] ECR I-2433, paragraph 19). They are therefore bound, particularly in the context of Article 119, to the full extent of their discretion under national law, to interpret and apply the relevant domestic provisions in conformity with the requirements of Community law and, where this is not possible, to disapply any incompatible domestic provisions (see the judgment of 4 February 1988 in Case 157/86 Murphy and Others v Bord Telecom Eireann [1988] ECR 673, paragraph 11).
30 As regards the second part of the question, concerning the method to be used to achieve equal treatment, in paragraph 15 of the Defrenne judgment, cited above, where there was a claim in the main proceedings for compensation for discrimination in relation to pay, the Court ruled, in view of the connection between Article 119 and harmonization of working conditions while maintaining improvement, against the argument that compliance with Article 119 could be achieved otherwise than by raising the lowest salaries.
31 Moreover, in paragraphs 18 to 20 of its judgment of 7 February 1991 in Case
C-184/89 Nimz v Freie und Hansestadt Hamburg [1991] ECR I-297 the Court held that the national court must set aside any discriminatory provision of national law, without having to request or await its prior removal by collective bargaining or by any other constitutional procedure, and to apply to members of the disadvantaged group the same arrangements as those enjoyed by the other employees, arrangements which, failing correct implementation of Article 119 in national law, remain the only valid point of reference.
32 It follows that, once the Court has found that discrimination in relation to pay exists and so long as measures for bringing about equal treatment have not been adopted by the scheme, the only proper way of complying with Article 119 is to grant to the persons in the disadvantaged class the same advantages as those enjoyed by the persons in the favoured class.
33 The situation is different as regards periods of service completed after the entry into force of rules to eliminate discrimination, since Article 119 does not then preclude measures to achieve equal treatment by reducing the advantages of the persons previously favoured. Article 119 merely requires that men and women should receive the same pay for the same work without imposing any specific level of pay.
34 Finally, as regards periods of service prior to 17 May 1990, the date of the Barber judgment, it is sufficient here to say, as will be explained below in reply to the second question, that the Barber judgment excluded application of Article 119 to pension benefits payable in respect of those periods, so that employers and trustees are not required to ensure equal treatment as far as those benefits are concerned.
35 It follows that, as far as those latter periods are concerned, Community law imposed no obligation which would justify retroactive reduction of the advantages enjoyed by women.
36 The answer to be given to the second part of the first question must therefore be that in so far as national law prohibits employers and trustees from acting beyond the scope of their respective powers or in disregard of the provisions of the trust deed, they are bound to use all the means available under domestic law, such as recourse to the national courts, in order to eliminate all discrimination in the matter of pay. Moreover, as regards periods of service completed after the Court' s finding of discrimination but before the entry into force of the measures designed to eliminate it, correct implementation of the principle of equal pay requires that the disadvantaged employees should be granted the same advantages as those previously enjoyed by the other employees. However, as regards periods of service subsequent to the entry into force of those measures, Article 119 does not preclude equal treatment from being achieved by reducing the advantages which the advantaged employees used to enjoy. Finally, as regards periods of service prior to 17 May 1990, the date of the Barber judgment, Community law imposed no obligation which would justify retroactive reduction of the advantages enjoyed by the favoured employees.
Question 1(3)
42 The fact that there are difficulties in applying the principle of equal pay because the funds held by the trustees are insufficient or the employer cannot provide additional funds is a problem to be resolved in accordance with national law which cannot affect the answers given to the previous questions. However, as the United Kingdom rightly points out, the national law in question must be applied in accordance with the principle of equal pay.
43 The answer to the fourth part of the first question must therefore be that any problems arising because the funds held by the trustees are insufficient to equalize benefits must be resolved on the basis of national law in the light of the principle of equal pay and that such problems cannot affect the answers to the previous questions.
Question 2(1)
45 The Court has already pointed out in its judgment in the Ten Oever case, cited above, that the limitation in question was imposed in the specific context of benefits (in particular, pensions) provided for by private occupational schemes which were held to be pay within the meaning of Article 119 of the Treaty (paragraph 16).
46 That ruling took account of the fact that it is a characteristic of this form of pay that there is a time-lag between the accrual of entitlement to the pension, which occurs gradually throughout the employee' s working life, and its actual payment, which is deferred until a particular age (paragraph 17).
47 The Court also took into consideration the way in which occupational pension funds are financed and thus of the accounting links existing in each individual case between the periodic contributions and the future amounts to be paid (paragraph 18).
48 Given the reasons explained in paragraph 44 of the Barber judgment for limiting its effects in time, it must be made clear that equality of treatment in the matter of occupational pensions may be claimed only in relation to benefits payable in respect of periods of service subsequent to 17 May 1990, the date of the Barber judgment, subject to the exception in favour of workers or those claiming under them who have, before that date, initiated legal proceedings or raised an equivalent claim under the applicable national law (paragraph 19).
49 The answer to the first part of the second question must therefore be that by virtue of the Barber judgment the direct effect of Article 119 of the Treaty may be relied upon, for the purpose of claiming equal treatment in the matter of occupational pensions, only in relation to benefits payable in respect of periods of service subsequent to 17 May 1990, subject to the exception in favour of workers or those claiming under them who have, before that date, initiated legal proceedings or raised an equivalent claim under the applicable national law.
Question 2(2) and (3)
50 The second and third parts of the second question do not call for reply since they assume a different answer to the first part, namely that equal treatment may also be required in relation to benefits payable in respect of periods of service prior to 17 May 1990.
Question 2(4)
51 By the fourth part of the second question the Court is asked whether, and how, the temporal limitation on the effects of the Barber judgment applies to survivors' pensions.
52 As was pointed out above in paragraph 18, survivors' pensions provided for by occupational schemes fall within the scope of Article 119 of the Treaty.
53 Moreover, survivors' pensions are, like the determination of retirement age, among the exceptions provided for by Article 9 of Council Directive 86/378/EEC of 24 July 1986 on the implementation of the principle of equal treatment for men and women in occupational social security schemes (OJ 1986 L 225, p. 40). It was precisely the existence of those exceptions which led the Court to hold that the Member States and parties concerned were reasonably entitled to consider that Article 119 did not apply in this context and consequently to limit the effects in time of the Barber judgment (paragraphs 42 and 43).
54 That limitation is therefore also applicable to survivors' pensions.
55 Since a survivor' s pension is an advantage stemming from the survivor' s spouse' s membership of the occupational scheme, the pension vesting in the survivor by reason of the employment relationship between the employer and the survivor' s spouse, and since the pension is financed by contributions paid by the survivor' s spouse during that spouse' s working life, a survivor may claim equal treatment in this matter only in relation to periods of service subsequent to 17 May 1990.
56 The answer to the fourth part of the second question must therefore be that the limitation of the effects in time of the Barber judgment applies to survivors' pensions and that consequently equal treatment in this matter may be claimed only in relation to periods of service subsequent to 17 May 1990.
Question 2(5)
57 By the fifth part of its second question the national court asks whether, and how, the limitation of the effects in time of the Barber judgment applies to benefits payable under occupational social security schemes which are not linked to the length of actual service.
58 The problem for the national court relates, as appears from the file, to benefits such as a lump-sum payment in the event of an employee' s death during his employment.
59 Since such a benefit is payable solely by reason of an employment relationship existing at the time of the event triggering payment of the benefit, irrespective of the length of previous periods of service, the limitation of the effects in time of the Barber judgment applies only where that operative event occurred before 17 May 1990. After that date, such benefits must be granted in accordance with the principle of equal treatment without any need to distinguish between periods of service prior to the Barber judgment and periods of service subsequent to that judgment.
60 The answer to be given to the fifth part of the second question must therefore be that the limitation of the effects in time of the Barber judgment is applicable to benefits not linked to the length of actual service only where the operative event occurred before 17 May 1990.
Question 3
61 By its third question the High Court asks whether the Barber judgment, and more particularly the limitation of its effects in time, concern not only contracted-out occupational pension schemes but also non-contracted-out occupational pension schemes.
62 The Court has already held in its judgment of 14 December 1993 in Case C-110/91 Moroni v Collo GmbH [1993] ECR I-6591 that the Barber judgment also applies to the German type of supplementary occupational scheme at issue in that case.
63 However, in arriving at that conclusion, the Court, while accepting that the facts of Barber concerned a contracted-out occupational scheme, pointed out that, in ruling that pensions paid under such a scheme fell within the scope of Article 119, it had applied the same criteria as those to which it had referred in its earlier case-law to distinguish statutory social security schemes from occupational pension schemes (paragraphs 12 and 13).
64 Thus, in paragraphs 7 and 8 of its judgment of 25 May 1971 in Case 80/70 Defrenne v Sabena [1971] ECR 445, the Court held that the concept of pay could not cover social security schemes or benefits, such as retirement pensions, which were directly governed by statute to the exclusion of any element of negotiation within the undertaking or occupational sector concerned, and which were obligatorily applicable to general categories of workers. Such schemes give workers the benefit of a statutory scheme, to whose financing the contributions of workers, employers and possibly the public authorities are determined not so much by the employment relationship between employer and workers as by considerations of social policy.
65 In its judgment of 13 May 1986 in Case 170/84 Bilka-Kaufhaus GmbH v von Hartz [1986] ECR 1607, concerning a German occupational scheme, the Court held that, although adopted in accordance with the provisions laid down by German legislation, the scheme was the result of negotiation between the employer and the employees' representatives, supplemented the statutory social security scheme and received no financial support from the State. A scheme with such characteristics therefore fell within the scope of Article 119 of the Treaty.
66 There is no doubt that all those identifying characteristics are likewise present in non-contracted-out occupational schemes.
67 Such schemes are also the result of negotiation between employers and employees or their representatives, or of a unilateral decision of the employer. They are also funded entirely by the employer or by both the employer and the employees, with no contributions from the State.
68 Furthermore, such schemes are not compulsory for general categories of workers. They concern only the workers employed by particular undertakings, membership of the schemes flowing automatically from the employment relationship with a specific employer. Finally, although the schemes in question are set up in accordance with national legislation, they are governed by their own specific rules.
69 Lastly, the Court dealt in the Barber judgment for the first time with the question of how inequality of treatment arising from the setting of different retirement ages for each sex was to be assessed with reference to Article 119. There is no question that such differentiation is not peculiar to contracted-out occupational schemes. On the contrary, it is to be found in other types of occupational schemes and produces the same discriminatory effects.
70 It follows that the scope of the principles laid down in the Barber judgment cannot be regarded as being limited to contracted-out occupational schemes and that those principles also concern non-contracted-out occupational schemes like the German type of supplementary occupational scheme dealt with in the Moroni judgment cited above.
71 The answer to the third question must therefore be that the principles laid down in the Barber judgment, and more particularly the limitation of its effects in time, concern not only contracted-out occupational schemes but also non-contracted-out occupational schemes.
Question 4
72 The essence of the High Court' s fourth question is whether Article 119 precludes actuarial factors differing according to sex from being taken into account in occupational pension schemes and, if so, how the limitation of the effects in time of the Barber judgment applies in this context.
76 In its judgment of 22 December 1993 in Case C-152/91 Neath v Hugh Steeper Ltd [1993] ECR I-6935, the Court has already ruled that the use of actuarial factors differing according to sex in funded defined-benefit occupational pension schemes does not fall within the scope of Article 119 of the Treaty.
77 In arriving at that conclusion the Court first reiterated that the concept of pay, within the meaning of the second paragraph of Article 119, comprises any consideration, whether in cash or in kind, whether immediate or future, provided that the worker receives it, albeit indirectly, from his employer in respect of his employment (paragraph 28).
78 It then found that the assumption underlying that approach was that the employer commits himself, albeit unilaterally, to pay his employees defined benefits or to grant them specific advantages and that the employees in turn expect the employer to pay them those benefits or provide them with those advantages. Anything that is not a consequence of that commitment and does not therefore come within the corresponding expectations of the employees falls outside the concept of pay (paragraph 29).
79 In the context of defined-benefit occupational pension schemes, such as those in question in the Neath case and in the present case, the employer' s commitment to his employees concerns the payment, at a given moment in time, of a periodic pension for which the determining criteria are already known at the time when the commitment is made and which constitutes pay within the meaning of Article 119. However, that commitment does not necessarily have to do with the funding arrangements chosen to secure the periodic payment of the pension, which thus remain outside the scope of Article 119 (paragraph 30).
80 Since the schemes involved are contributory schemes, that funding is provided through the contributions paid by the employees and those paid by the employers. The contributions paid by the employees are an element of their pay since they are deducted directly from their salaries, which, by definition, constitute pay (see the judgment of 11 March 1981 in Case 69/80 Worringham and Humphreys v Lloyds Bank [1981] ECR 767). The amount of those contributions must therefore be the same for all employees, male and female, which is indeed so in the instant case. This is not so in the case of the employer' s contributions which ensure the adequacy of the funds necessary to cover the cost of the pensions promised, so securing their payment in the future, that being the substance of the employer' s commitment (paragraph 31).
81 The Court accordingly concluded that, unlike periodic payment of pensions, inequality of employers' contributions to funded defined-benefit schemes, due to the use of actuarial factors differing according to sex, is not struck at by Article 119 (paragraph 32).
82 The Court considered that this conclusion necessarily extended to the specific aspects raised in the questions submitted, which, as in the present case, concerned the conversion of part of the periodic pension into a capital sum and the transfer of pension rights, whose value depends on the funding arrangements that are chosen (paragraph 33).
86 By the first part of its fifth question the High Court asks whether the principle of equal treatment laid down in Article 119 applies to all pension benefits paid by occupational schemes or whether a distinction is to be drawn according to the kind of contributions to which those benefits are attributable, namely employers' contributions or employees' contributions, the latter being either compulsory or voluntary.
87 In the Barber judgment the Court held that pensions paid by occupational schemes constitute a consideration offered to workers by the employer by reason of the workers' employment. They are therefore to be regarded as pay within the meaning of Article 119 since they are wholly financed by the employer, or by both the employer and the workers, without any contribution on the part of the public authorities in any circumstances (paragraph 25).
88 It follows that Article 119 applies to all benefits payable to an employee by an occupational pension scheme, irrespective of whether the scheme is contributory or non-contributory. Whether contributions are payable by the employer or the employees has no bearing on the concept of pay when applied to occupational pensions, which must conform to the principle of equal treatment in their entirety, whatever the source of their funding.
89 This is so here a fortiori since the documents show that, as a matter of accounting, once the employer' s and the employees' contributions have been paid into the scheme, they are managed as a single fund and it is no longer possible to distinguish them.
90 However, the situation is different in the case of additional voluntary contributions paid by employees to secure additional benefits such as, for example, an additional fixed pension for the member or the member' s dependants, an additional tax-free lump sum or additional lump-sum benefits on death.
91 The order for reference shows that these additional benefits are calculated separately, solely on the basis of the value of the contributions paid, which are credited to a special fund managed by the trustees as a distinct fund, separate from that created by the employer' s and employees' contributions under the normal occupational pension scheme.
92 Given also the fact that, as the order for reference again shows, section 12 of the Social Security Act 1986 requires occupational schemes only to provide the necessary administrative framework to enable members who so wish to pay additional contributions to secure benefits additional to those which they are entitled to expect by reason of their employment, such benefits cannot be regarded as pay within the meaning of Article 119.
93 The answer to the first part of the fifth question must therefore be that the principle of equal treatment laid down in Article 119 applies to all pension benefits paid by occupational schemes, without any need to distinguish according to the kind of contributions to which those benefits are attributed, namely employers' contributions or employees' contributions. However, in so far as an occupational pension scheme does no more than provide the membership with the necessary arrangements for management, additional benefits stemming from contributions paid by employees on a purely voluntary basis are not covered by Article 119.
Question 5(2)
94 The essence of the second part of the High Court' s fifth question is whether, in the event of the transfer of pension rights from one occupational scheme to another owing to a worker' s change of job, the second scheme is obliged, on the worker reaching retirement age, to increase the benefits it undertook to pay him when accepting the transfer so as to eliminate the effects, contrary to Article 119, suffered by the worker in consequence of the inadequacy of the capital transferred, this being due in turn to the discriminatory treatment suffered under the first scheme.
95 The rights accruing to the worker from Article 119 cannot be affected by the fact that he changes his job and has to join a new pension scheme, with his acquired pension rights being transferred to the new scheme.
96 Consequently, when the worker enters retirement he is entitled to expect the scheme of which he is then a member to pay him a pension calculated in accordance with the principle of equal treatment.
97 Where, particularly in consequence of insufficient funding, this does not happen, the paying scheme should in principle do everything to bring about a situation of equality, if need be by making a claim under national law for the necessary additional sums from the scheme which made an inadequate transfer.
98 However, since in the Barber judgment the Court limited the direct effect of Article 119 so as to allow it to be relied upon in claims for equal treatment in the matter of occupational pensions only in relation to benefits payable in respect of periods of service subsequent to 17 May 1990, neither the scheme which transferred rights nor the scheme which accepted them is required to take the financial steps necessary to bring about a situation of equality in relation to periods of service prior to 17 May 1990.
99 The answer to the second part of the fifth question must therefore be that in the event of the transfer of pension rights from one occupational scheme to another owing to a worker' s change of job, the second scheme is obliged, on the worker reaching retirement age, to increase the benefits it undertook to pay him when accepting the transfer so as to eliminate the effects, contrary to Article 119, suffered by the worker in consequence of the inadequacy of the capital transferred, this being due in turn to the discriminatory treatment suffered under the first scheme, and it must do so in relation to benefits payable in respect of periods of service subsequent to 17 May 1990.
Question 6
101 In its judgment of 27 March 1980 in Case 129/79 Macarthys Ltd v Smith [1980] ECR 1275 the Court held that comparisons in cases of actual discrimination falling within the scope of the direct application of Article 119 are confined to parallels which may be drawn on the basis of concrete appraisals of the work actually performed by employees of different sex within the same establishment or service (paragraph 15).
102 The Court accepted that such comparisons are also possible between workers of different sex performing the same work but at different periods. In such a case, however, it will be for the national court to decide whether any difference of treatment may be explained by factors which are unconnected to any discrimination on grounds of sex (paragraphs 11 and 12).
103 It follows that a worker cannot rely on Article 119 in order to claim pay to which he could be entitled if he belonged to the other sex in the absence, now or in the past, in the undertaking concerned of workers of the other sex who perform or performed comparable work. In such a case, the essential criterion for ascertaining that equal treatment exists in the matter of pay, namely the performance of the same work and receipt of the same pay, cannot be applied.