Summary
Parties
Grounds
Decision on costs
Operative part
Keywords
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Social policy ° Male and female workers ° Equal pay ° Article 119 of the Treaty ° Applicability to private occupational pension schemes ° Finding in the judgment of 17 May 1990 in Case C-262/88 Barber ° Raising, for the purpose of bringing about equality, of the retirement age for women to that for men in relation to periods of service between the date of pronouncement of the judgment and the implementation of a uniform retirement age ° Justification based on financial difficulties ° Not permissible ° Application to men, in relation to those periods, of the arrangements applicable to women ° Abolition, in relation to periods of service completed after the date of equalisation of the retirement age, of the advantages previously granted to women ° Permissible ° Adoption of measures, if only transitional, limiting for women the unfavourable consequences of equalization ° Not permissible
(EEC Treaty, Art. 119)
Summary
Article 119 of the Treaty precludes an employer or an occupational pension scheme, which takes the necessary measures concerning the setting of a uniform retirement age for men and women in order to comply with the judgment of 17 May 1990 in Case C-262/88 Barber and to bring about equality, from raising the retirement age for women to that for men in relation to periods of service between the date of pronouncement of the judgment and the date of entry into force of those measures, even if it relies on its own financial difficulties or those of the undertaking concerned. In relation to that period, the pension rights of men must be calculated on the basis of the same retirement age as that for women. 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.
However, as regards periods of service after the date of entry into force of equalisation, Article 119, which merely requires that men and women should receive the same pay for the same work, does not preclude measures which achieve equal treatment by reducing the advantages of the persons previously favoured. However, measures, even if only transitional, designed to limit the adverse consequences which raising the retirement age may have for women are excluded.
Finally, as regards periods of service prior to 17 May 1990, the aforesaid judgment excluded application of Article 119 to pension benefits payable in respect of those periods. It follows that Community law imposed no obligation which would justify retroactive reduction of the advantages which women enjoyed.
Parties
In Case C-408/92,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Bedford Industrial Tribunal (United Kingdom) for a preliminary ruling in the proceedings pending before that court between
Constance Christina Ellen Smith and Others
and
Avdel Systems Limited
on the interpretation of Article 119 of the EEC Treaty concerning the different ways in which the retirement age for men and women under occupational pension schemes can be equalized,
THE COURT,
composed of: O. Due, President, G.F. Mancini (Rapporteur), J.C. Moitinho de Almeida and M. Diez de Velasco (Presidents of Chambers), R. Joliet, F.A. Schockweiler, G.C. Rodríguez Iglesias, F. Grévisse, M. Zuleeg, P.J.G. Kapteyn and J.L. Murray, Judges,
Advocate General: W. Van Gerven,
Registrar: L. Hewlett, Administrator,
after considering the written observations submitted on behalf of:
° Mrs Smith and the other applicants in the main proceedings, by Vereena Jones, Equal Opportunities Commission, and by the Honourable Michael J. Beloff QC and Clive Lewis, Barrister,
° Avdel Systems Limited, by P.J. Martin, Engineering Employers' Federation, and by David Pannick QC,
° the United Kingdom, by John E. Collins, Assistant Treasury Solicitor, acting as Agent, and by Stephen Richards and Nicholas Paines, Barristers,
° the German Government, by Ernst Roeder, Ministerialrat at the Federal Ministry of Economic Affairs, and Claus-Dieter Quassowski, Regierungsdirektor at the same Ministry, acting as Agents,
° the Commission of the European Communities, by Karen Banks, of its Legal Service, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of Mrs Smith and the other applicants in the main proceedings, Avdel Systems Limited, the Netherlands Government, represented by J.W. de Zwaan, Deputy Legal Adviser to the Ministry of Foreign Affairs, acting as Agent, the United Kingdom and the Commission at the hearing on 15 March 1994,
after hearing the Opinion of the Advocate General at the sitting on 4 May 1994,
gives the following
Judgment
Grounds
1 By judgment of 2 November 1992, received at the Court on 6 December 1992, the Bedford Industrial Tribunal referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Article 119 of that Treaty concerning the different ways in which the retirement age for men and women under occupational pension schemes can be equalized.
2 The questions have arisen in proceedings between Mrs Smith and four other women, on the one hand, and Avdel Systems Limited, on the other, concerning the equalization of retirement ages for men and women.
3 The applicants in the main proceedings were, or still are, members of the Avdel Pension & Life Assurance Plan, the occupational pension scheme run by their employer, Avdel Systems Limited.
4 The scheme, which is contracted out of the State Earnings Related Pension Scheme, is funded by contributions paid by both the employer and employees. It confers on members inter alia the right to receive an occupational pension when they reach retirement age.
5 Until 30 June 1991 the retirement age was set at 65 years for men and 60 years for women. With effect from 1 July 1991, that age was set uniformly at 65 years for both sexes. According to the national court, the change relates to benefits payable in respect of periods of service both prior and subsequent to 1 July 1991.
6 The effect of raising the retirement age for women is that as from 1 July 1991:
(a) If a woman retires at the age of 60, her pension will be subject to an actuarial reduction of 4% per annum for each year by which her retirement precedes the age of 65, whereas under the old rule she would have received a pension at the full rate;
(b) If a woman leaves the scheme before she is 65 years of age, the pension rights already accrued, which can be transferred to another scheme or applied towards the purchase of an insurance policy, will be calculated on the basis of a retirement age of 65;
(c) If a woman retires at the age of 60, the pension benefits previously earned with another employer on the basis that she would retire at 60, the rights to which have been transferred to her present scheme, will be subject to an actuarial reduction equivalent to that mentioned in (a) above. However, the overall pension payments made in respect of these benefits cannot fall below the level of a monetary guarantee given at the time when the rights concerned were transferred to the scheme.
7 The Bedford Industrial Tribunal has to deal with 78 applications brought by women who, because their retirement age has been raised to that for men, are now in a less favourable financial situation than they had come to expect under the old rule.
8 The five applicants in the main proceedings have been chosen as being representative of different types of situation:
(a) Female workers who retired after 1 July 1991 aged between 60 and 65. Under the new rules, their pensions have been reduced by up to 20%;
(b) Female workers who are still in work but no longer belong to the scheme. They can claim a deferred pension by virtue of the rights accrued during their membership of the scheme, although the value of this pension will be calculated on the basis of a normal retirement age of 65;
(c) Female workers who are still in work, having transferred to the scheme the pension rights acquired under a previous employer. If they retire between 60 and 65, their pension rights are subject to an actuarial reduction of 4% per annum until their 65th birthday.
9 In those circumstances, the Bedford Industrial Tribunal considered it appropriate to stay proceedings and refer the following questions to the Court for a preliminary ruling:
"1. Where an occupational pension scheme has different normal pension ages for men and women (65 and 60 respectively), and where an employer seeks, in the light of Case C-262/88 Barber v Guardian Royal Exchange Assurance Group, to eliminate that discrimination, is it inconsistent with Article 119 of the Treaty of Rome for the employer to adopt a common pension age of 65 for men and women
(i) in respect of occupational pension benefits received by employees which are based on years of service after the date of equalization which was 1 July 1991;
(ii) in respect of occupational pension benefits received by employees which are based on years of service on or after 17 May 1990, but before the date of equalization, when the date of equalization was 1 July 1991;
(iii) in respect of occupational pension benefits received by employees which are based on years of service prior to 17 May 1990, when the date of equalization was 1 July 1991?
2. If the answer to all or part of Question 1 above is in the negative, does Article 119 impose any obligation on the employer to minimize the adverse consequences to women whose benefits are affected by the employer' s decision to eliminate the difference in pension ages?
3. If the answer to all or part of Question 1 above is in the affirmative, may the employer, consistently with Article 119, rely on the principle of objective justification by reference to the needs of the undertaking or the needs of the occupational pension scheme as justifying any reduction in the benefits paid to women, and, if so, what factors are relevant in establishing whether such objective justification is established?"
The first question
10 The point of the national court' s first question is to establish the leeway available to an occupational pension scheme when, in light of the ruling that setting different retirement ages for men and women is incompatible with Article 119 of the Treaty, it takes steps to achieve equality for the past as well as for the future.
11 In its judgment in Case C-262/88 Barber v Guardian Royal Exchange Assurance Group [1990] ECR I-1889 ("the Barber judgment"), the Court ruled that pensions paid under a contracted-out pension scheme fall within the scope of Article 119 of the Treaty (paragraph 28), which prohibits any discrimination between men and women in relation to pay, whatever the arrangements giving rise to such inequality. Accordingly, it is contrary to Article 119 to impose an age condition which differs according to sex, even if the difference between the pensionable ages for men and women corresponds to that provided for by the national statutory scheme (paragraph 32).
12 However, overriding considerations of legal certainty led the Court to rule that the direct effect of Article 119 may be relied on, 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 (point 5 of the operative part of the Barber judgment, as clarified by the Court in, inter alia, 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).
13 It was in order to comply with the Barber judgment that the occupational scheme concerned in the main proceedings adopted the measure now in dispute. In order to do so, it opted for one of the two possible ways of achieving equal treatment: instead of granting men the same advantage as that enjoyed by women and thus lowering their retirement age to that for women, the scheme raised the retirement age for women to that for men, even for the past, including the period prior to the Barber judgment, and as a result the position of women was made less favourable.
14 That being so, the point raised is whether it is permissible, for the purpose of achieving equality, to take away from the favoured class (in this case, women), both for the past and for the future, the advantage enjoyed by that class, the reference date being either the date of entry into force of such a measure (in this case, 1 July 1991) or the date of the Barber judgment (17 May 1990), which identified the discrimination to be eliminated.
15 At paragraph 15 of its judgment of 8 April 1976 in Case 43/75 Defrenne v Sabena [1976] ECR 455, 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.
16 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 a 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 other workers, arrangements which, failing correct implementation of Article 119 in national law, remain the only valid point of reference.
17 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.
18 Application of this principle to the present case means that, as regards the period between 17 May 1990 (the date of the Barber judgment) and 1 July 1991 (the date on which the scheme adopted measures to achieve equality) the pension rights of men must be calculated on the basis of the same retirement age as that for women.
19 As regards periods of service prior to 17 May 1990, 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.
20 It follows that, as far as those latter periods are concerned, Community law imposed no obligation which would justify retroactive reduction of the advantages which women enjoyed.
21 As regards periods of service completed after the entry into force, in this case on 1 July 1991, of rules designed to eliminate discrimination, Article 119 of the Treaty does not preclude measures which 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.
22 The answer to the first question must therefore be that Article 119 of the Treaty precludes an employer who adopts measures necessary to comply with the Barber judgment from raising the retirement age for women to that for men in relation to periods of service completed between 17 May 1990, the date of that judgment, and the date on which those measures come into force. On the other hand, as regards periods of service completed after the latter date, Article 119 does not prevent an employer from taking that step. As regards periods of service prior to 17 May 1990, Community law imposed no obligation which would justify retroactive reduction of the advantages which women enjoyed.
The second question
23 The point of the second question is whether, if Article 119 allows the retirement age for women to be raised to that for men, occupational pension schemes which equalize retirement ages in that way must minimize the adverse consequences of that change for women.
24 In view of the answer given to the first question, the second question arises only in relation to periods of service subsequent to the entry into force of the measures taken to achieve equality by raising the retirement age for women.
25 In reply to that point it is sufficient to say that equal treatment between men and women in relation to pay is a fundamental principle of Community law and that, given the direct effect of Article 119, its application by employers must be immediate and full.
26 It follows that, once discrimination has been found to exist, and an employer takes steps to achieve equality for the future by reducing the advantages of the favoured class, achievement of equality cannot be made progressive on a basis that still maintains discrimination, even if only temporarily.
27 The answer to the second question must therefore be that the step of raising the retirement age for women to that for men, which an employer decides to take in order to remove discrimination in relation to occupational pensions as regards benefits payable in respect of future periods of service, cannot be accompanied by measures, even if only transitional, designed to limit the adverse consequences which such a step may have for women.
The third question
28 The substance of the third question is whether, in those cases in which Article 119 precludes raising the retirement age for women in order to achieve equal treatment, an occupational scheme may nevertheless take such a step by reason of objectively justifiable considerations relating to the needs of the undertaking or to the needs of the scheme itself.
29 This question concerns pension benefits payable in respect of periods of service completed between 17 May 1990, the date of the Barber judgment, and the date of the entry into force of the measures designed to achieve equal treatment by raising the retirement age for women. As explained above, it is only in relation to these periods that such a step is not permissible.
30 Even assuming that it would, in this context, be possible to take account of objectively justifiable considerations relating to the needs of the undertaking or of the occupational scheme concerned, the administrators of the occupational scheme could not reasonably plead, as justification for raising the retirement age for women during this period, financial difficulties as significant as those of which the Court took account in the Barber judgment, since the space of time involved is relatively short and attributable in any event to the conduct of the scheme administrators themselves.
31 The answer to the third question must therefore be that Article 119 of the Treaty precludes an occupational scheme, relying on its own difficulties or those of the undertaking concerned, from retrospectively raising the retirement age for women in relation to periods of service completed between 17 May 1990 and the date of entry into force of the measures by which equality is achieved in the scheme in question.
Decision on costs
Costs
32 The costs incurred by the German Government, the Netherlands Government, the United Kingdom and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.
Operative part
On those grounds,
THE COURT,
in answer to the questions referred to it by the Bedford Industrial Tribunal, by judgment of 2 November 1992, hereby rules:
1. Article 119 of the EEC Treaty precludes an employer who adopts measures necessary to comply with the judgment in Case C-262/88 Barber v Guardian Royal Exchange Assurance Group [1990] ECR I-1889 from raising the retirement age for women to that for men in relation to periods of service completed between 17 May 1990, the date of that judgment, and the date on which those measures come into force. On the other hand, as regards periods of service completed after the latter date, Article 119 does not prevent an employer from taking that step. As regards periods of service prior to 17 May 1990, Community law imposed no obligation which would justify retroactive reduction of the advantages which women enjoyed.
2. The step of raising the retirement age for women to that for men, which an employer decides to take following the Barber judgment in order to remove discrimination in relation to occupational pensions as regards benefits payable in respect of future periods of service, cannot be accompanied by measures, even if only transitional, designed to limit the adverse consequences which such a step may have for women.
3. Article 119 of the Treaty precludes an occupational scheme, relying on its own difficulties or on those of the undertaking concerned, from retrospectively raising the retirement age for women in relation to periods of service completed between 17 May 1990 and the date of entry into force of the measures by which equality is achieved in the scheme in question.
Full & Egal Universal Law Academy