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Preston & Ors v. Wolverhampton Healthcare NHS Trust & Ors, Fletcher & Ors v. Midland Bank (HoL No.2)


House of Lords

An employer could not rely on the two-year rule in s.2(5) Equal Pay Act 1970 to prevent part-time employees from retroactively gaining membership of a pension scheme as the rule was impossible in practice and therefore precluded by Community law. Further, the employer could not rely on the six-month limitation period in s.2(4) of the Act to require claims for membership of an occupational pension scheme to be brought within six months of the end of each employment contract where there was a stable employment relationship resulting from a succession of regular short-term contracts.
Appeal by part-time employees against an employment tribunal's decision that their claims under the Equal Pay Act 1970 were out of time because of the six-month limitation period laid down in s.2(4) of the Act. The facts and issues in the cases were set out on the previous occasion that the appellants were in the House of Lords (Preston and Ors v Wolverhampton Healthcare Trust and Ors : Fletcher and Ors v Midland Bank Plc (1998) 1 WLR 280). On that occasion the House of Lords referred two questions to the European Court of Justice, (Preston and Ors v Wolverhampton Healthcare Trust and Ors : Fletcher and Ors v Midland Bank Plc (2000) Times, May 19, 2000). In the light of the decision by the European Court of Justice, the House of Lords had to determine finally the following issues: (i) whether the six-month limitation period in s.2(4) of the Act satisfied the principle of effectiveness; (ii) whether the rule in s.2(5) of the Act that pensionable service could only be calculated by reference to service within the two years prior to the claim satisfied the principle of effectiveness; (iii) whether the limitation period was less favourable than periods for similar actions based on domestic law and so breached the principle of equivalence; and (iv) whether the employees had had a stable employment relationship with the employers.
HELD: (1) The six-month limitation period fell equally on those who launched actions in reliance on Community law or on domestic law and satisfied the Community law principle of effectiveness. (2) The rules in s.2(5) of the Act and in reg.12 Occupational Pension Schemes (Equal Access to Membership) Regulations 1976 SI 1976/142 were precluded by Community law because they rendered reliance on Community law impossible in practice (see Magorrian v Eastern Health & Social Services Board (1998) ICR 979). The respondents could not rely on that legislation to defeat claims for periods before the two years to be taken into account, subject to the employee having paid contributions for the period for which membership was retroactively claimed. The appellants succeeded in their appeal on that point. (3) Since a claim for damages in contract would provide the appellants with a similar benefit it could provide a comparison. The appellants' contract of employment was breached on each occasion that the respondents failed to make pension payments, and from each breach a six-year limitation period commenced. That compared to complaints to the employment tribunal with its lower costs, shorter and more informal proceedings, which could claim in respect of the beginning of a contract of employment (or to 8 April 1976: see Defrenne v Sabena (1976) ICR 547) so long as it was brought within six months of the termination of the contract. Those factors meant that the procedural rules under s.2(4) of the Act were not less favourable than those for contract claims. Therefore s.2(4) of the Act did not breach the principle of equivalence. (4) Intermittent contracts of service without a stable employment relationship each triggered separate six-month limitation periods which began at each contract's termination. Unless it could be agreed which of the appellants had a stable employment relationship, where the contracts were concluded at regular intervals and the limitation period ran from the end of the last contract forming part of that relationship, the issue of the stable employment relationship had to be remitted to the employment tribunal.
Appeal allowed to the extent indicated. Order of the Court of Appeal varied.

[2001] 2 AC 455 : [2001] 2 WLR 448 : [2001] 3 All ER 947

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