1 By order of 14 October 1991, received at the Court on 24 April 1992, the Court of Appeal of England and Wales referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Article 119 of the Treaty.
2 Those questions were raised in a dispute between Mrs Roberts and her former employer, Birds Eye Walls Limited, concerning the amount of the bridging pension paid to Mrs Roberts under Unilever' s occupational pension scheme, to which she had been affiliated before taking early retirement on 14 August 1987 at the age of 57 years and two months on grounds of ill health.
3 The bridging pension, financed in its entirety by the employer, constitutes an ex gratia payment to employees who are compelled on grounds of ill health to take early retirement before reaching the statutory retirement age which, in the United Kingdom, is 60 for women and 65 for men.
4 The additional payment in question is therefore made where the employee is not yet entitled to payment of the State pension and is entitled to the occupational pension only at a reduced rate on the basis of the number of years still to be completed until the statutory retirement age.
5 The main purpose of the bridging pension is, on the one hand, to place the employee in the financial position in which he would have been if he had not been compelled by ill health to discontinue his employment, by making up the difference between what he actually receives and what he would have received if he had worked until the statutory retirement age and, on the other hand, to place on an equal footing the overall financial treatment of men and women in identical situations.
6 The method of calculating the bridging pension, which is based on a number of factors such as the employee' s final rate of pay, the number of years of service he would have completed until the age of 60 or 65 and the State and occupational pensions to which he would be entitled, means that the amount paid to a particular individual varies according to the changes occurring in that person' s financial position with the passage of time.
7 Thus, until the age of 60, when neither a woman nor a man taking early retirement has yet reached the age required for payment of the State pension, the bridging pension includes inter alia, for both men and women, an amount corresponding to the proportion of the State pension attributable to periods of service with the employer paying the bridging pension. From the age of 60, on the other hand, the amount of the bridging pension paid to a woman is reduced on the ground that she is in receipt of the State pension, while the bridging pension paid to a man is not reduced until five years later, when he in turn becomes entitled to the State pension.
8 It should be emphasized that reference is made to a deemed State pension in so far as it does not take account of whether the employee is entitled to receive it or whether he has exercised his rights in that regard.
9 Mrs Roberts challenges that method of calculation which, in the case of persons aged between 60 and 65, entails payment to a woman of a smaller bridging pension than that paid to a man whose position is comparable in all other respects. Mrs Roberts claims that the bridging pension constitutes pay within the meaning of Article 119 of the Treaty and that, accordingly, a difference of that kind is contrary to the principle of equal treatment laid down by that provision.
10 That allegation by Mrs Roberts has led the Court of Appeal to seek a preliminary ruling from the Court on the following questions: "1. Is it a breach of Article 119 of the EEC Treaty for an employer to operate a discretionary occupational pension scheme, using a formula common to male and female ex-employees, whereby the same total retirement pension (occupational and State in the aggregate) is calculated for them and there is deducted from that total that part of the State retirement pension in respect of which contributions were paid by the employer and the ex -employee during the ex-employee' s pensionable employment with that employer, and the employer pays directly to the employee that reduced amount, the object being to equalize the total retirement pension (as calculated under the common formula) for male and female ex-employees alike, with the result that between the ages of 60 and 65 the employer pays less to a female employee than to a male employee because a deduction is made for female ex-employees by reason of their entitlement to State pension from the age of 60 whereas no such deduction is made for male ex-employees since they are not entitled to State pension until the age of 65? 2. Is the answer to Question 1 affected in circumstances where the female is not entitled to a State pension because, as a married woman, she has a choice of paying national insurance contributions at the full rate, entitling her to a full State pension in her own right, or at a reduced rate, not entitling her to a State pension (or entitling her to only a reduced pension) and she chooses the latter? 3. Are the answers to the foregoing affected in circumstances where the employee, though not entitled to a State retirement pension (or entitled only to less than the full pension) is in fact entitled to, and receives, a State widow' s pension equal in amount to a full State retirement pension?"
11 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the procedure and the written observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court. Question 1
12 It is common ground that the bridging pension falls within the concept of pay within the meaning of the second paragraph of Article 119 of the Treaty, as defined by the Court, which comprises any other consideration, whether in cash or in kind, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment from his employer (see, in particular, the judgment in Case C-262/88 Barber v Guardian Royal Exchange Assurance Group [1990] ECR 1889, paragraph 12).
13 The dispute in the main proceedings arises from the fact that a woman aged between 60 and 65 who draws a bridging pension receives from her former employer under the occupational scheme a smaller amount than that paid to a man of the same age who is in the same position, the difference corresponding to the proportion of the State pension which is paid to her as from the age of 60 and which corresponds to the periods of service with that employer.
14 According to Mrs Roberts, that difference of treatment constitutes direct discrimination on grounds of sex, which is prohibited by Article 119 of the Treaty and cannot therefore be justified on any ground whatsoever.
15 While sharing Mrs Roberts' view as to the existence of direct discrimination, the Commission considers however that this does not mean that because the discrimination is direct it cannot be justified, since the very concept of discrimination, whether direct or indirect, involves a difference of treatment which is unjustified. The Commission takes the view that, in this case, there is justification and points to the fact that Birds Eye Walls is attempting to achieve substantive equality between the sexes by compensating for an inequality arising from the difference in pensionable ages in a particular set of circumstances where such inequality would cause considerable hardship. The Commission refers, in particular, to the situation of a male employee who is obliged to take early retirement on grounds of ill health and who, unlike his female counterpart, does not qualify for a State pension until the age of 65.
16 Birds Eye Walls denies discriminating against Mrs Roberts, whether directly or indirectly, since, in its view, the difference of treatment at issue is based on an objective factor beyond its control, namely receipt at a given age of the State pension.
17 It should be noted that the principle of equal treatment laid down by Article 119 of the Treaty, like the general principle of non-discrimination which it embodies in a specific form, presupposes that the men and women to whom it applies are in identical situations.
18 However, that would not appear to be so where the deferred payment which an employer makes to those of his employees who are compelled to take early retirement on grounds of ill health is regarded as a supplement to the financial resources of the man or woman concerned.
19 It follows clearly from the mechanism for calculating the bridging pension that the assessment of the amount thereof is not frozen at a particular moment but necessarily varies on account of changes occurring in the financial position of the man or woman concerned with the passage of time.
20 Accordingly, although until the age of 60 the financial position of a woman taking early retirement on grounds of ill health is comparable to that of a man in the same situation, neither of them as yet entitled to payment of the State pension, that is no longer the case between the ages of 60 and 65 since that is when women, unlike men, start drawing that pension. That difference as regards the objective premise, which necessarily entails that the amount of the bridging pension is not the same for men and women, cannot be considered discriminatory.
21 What is more, given the purpose of the bridging pension, to maintain the amount for women at the same level as that which obtained before they received the State pension would give rise to unequal treatment to the detriment of men who do not receive the State pension until the age of 65.
22 Furthermore, it is common ground that as from the age of 65 the bridging pension for men is also reduced by the amount of the State pension to which they are entitled. In view of the fact that their periods of service with the employer paying the bridging pension are longer than those completed by women, they receive a State pension in respect of those periods which is higher than that of their female counterparts and, consequently, an amount by way of bridging pension which is smaller than that paid to women.
23 It must therefore be held that the mechanism for calculating the bridging pension is neutral, which confirms the absence of any discrimination.
24 On the basis of the foregoing considerations, the answer to Question 1 must be that it is not contrary to Article 119 of the Treaty, when calculating the amount of a bridging pension which is paid by an employer to male or female employees who have taken early retirement on grounds of ill health and which is intended to compensate, in particular, for loss of income resulting from the fact that they have not yet reached the age required for payment of the State pension, to take account of the amount of the State pension which they will subsequently receive and to reduce the amount of the bridging pension accordingly, even though, in the case of men and women aged between 60 and 65, the result is that a female ex-employee receives a smaller bridging pension than that paid to her male counterpart, the difference being equal to the amount of the State pension to which she is entitled as from the age of 60 in respect of the periods of service completed with that employer. Questions 2 and 3
25 Question 2 was prompted by the reference which is made to the deemed State pension mentioned above (paragraph 8) in calculating the bridging pension. It relates to female employees who, as married women, have exercised the option available to them under English law of paying pension contributions at a reduced rate, entitling them to a reduced State pension only, or not entitling them to a pension as in the case of Mrs Roberts.
26 However, Mrs Roberts draws a widow' s pension equal in amount to a full retirement pension. Question 3 was prompted by that factor and the effect which it may have on the answers to Questions 1 and 2.
27 It should be noted, in that regard, that the option of paying lower contributions towards their State pension is a matter in which married women, who in so doing undoubtedly derive financial benefit, have freedom of choice.
28 It would be irrational to disregard that factor and to calculate the bridging pension by reference to the amount of the State pension which the woman concerned actually receives.
29 As the Advocate General pointed out in paragraph 21 of his Opinion, to compel a company to make up for the loss of State pension arising directly from the woman' s decision to pay contributions at a reduced rate would amount to conferring an unfair advantage on married women taking early retirement who have opted to pay contributions at that rate, in relation to persons who had no such choice and have always had to pay contributions at the full rate, namely men and unmarried women, as well as to married women who have not exercised the option available to them.
30 Article 119 cannot therefore be interpreted in such a way as to create unequal treatment whereby some women gain a twofold benefit, namely by paying contributions at a reduced rate and receiving a bridging pension that compensates for the corresponding reduction in the State pension, in relation to other persons whose position is comparable in every other respect.
31 The same reasoning applies a fortiori where, instead of a State pension, the woman concerned draws a widow' s pension equal in amount to a full State pension. In view of the purpose of the bridging pension, as explained in paragraph 5 above, it would be unfair not to take account of the payment of a widow' s pension equivalent to a full State pension, inasmuch as that would also give rise to unequal treatment by favouring women in receipt of a widow' s pension in relation to men and to married women entitled to a full State pension which would be taken into account in calculating the amount of the bridging pension.
32 The answer to Questions 2 and 3 must therefore be that it is not contrary to Article 119 of the Treaty, when calculating the bridging pension, to take account of the full State pension which a married woman would have received if she had not opted in favour of paying contributions at a reduced rate, entitling her to a reduced pension only, or not entitling her to a pension, or of the widow' s pension which may be drawn by the woman concerned and which is equivalent to a full State pension.