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Survivors pensions and sexual orientation discrimination

One of our top 10 cases to look out for in 2014 was Innospec Ltd and ors v Walker. The EAT’s judgment was published last week.

Mr Walker was a member of Innospec’s pension scheme from 1980 until 2003, at which point he retired on an annual pension of £85,000. He entered into a civil partnership in 2006. Under the rules of the scheme, if Mr Walker had been married his wife would have been entitled to a two-thirds pension if she survived him. However, because his service occurred entirely prior to coming into force of both the European law prohibiting discrimination on the ground of sexual orientation and the Civil Partnership Act 2004, in his case the most his partner could receive should he survive him was around £500 per year.

Schedule 9 of the Equality Act 2010 allows pension schemes not to provide the same pension rights to civil partners, as they do for spouses, for pensionable service before 5 December 2005 (the date the Civil Partnership Act 2004 came into force).

Initially, the employment tribunal found that Innospec had directly discriminated against Mr Walker in refusing to provide a spouse’s pension in relation to service accrued before 5 December 2005, and that such discrimination was prohibited by the Equal Treatment Framework Directive (which prohibits discrimination on the ground of sexual orientation in employment).

However, on appeal, the EAT decided that the Equality Act 2010 exception was compatible with the Directive and Innospec was entitled to rely on it. The Directive does not require the prohibition on sexual orientation discrimination to be implemented retrospectively. Therefore, employers cannot incur liability for sexual orientation discrimination on the basis that pre-2005 they only offered benefits, such as survivor pensions, to married couples.

This is not the last we will hear on this issue as the government is undertaking a review of pension rights and civil partnerships / same sex married couples (due by 1 July 2014). It will be interesting to see to what extent the government is influenced by the EAT’s decision.

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