The exclusion of part-time female employees from a Littlewoods Pools pension scheme was a breach of equality laws but Littlewoods did not have to allow all the women to join the scheme retrospectively because this was not always a remedy proportionate to their loss, the Court ruled.
In the unanimous judgment, Lord Justice Elias said that if the part-time women could not show on the balance of probabilities that they would have joined the pension scheme if they had been eligible, they were not entitled to retrospective membership.
If the women had been entitled to retrospective membership of the scheme after the barrier to entry was lifted it would have put them in a better position than male full-time workers who chose not to join the scheme, the judge said.
"Although there has been a breach of the equality clause for the opt-out women, they are not entitled to be granted a declaration of entitlement to retrospective membership of the scheme because they have lost nothing from the denial of access... The remedy sought [by them] would be disproportionate to their loss and would create an inequality with the full time men which would be wholly contrary to the principle of non-discrimination," he said.
Lord Justice Elias said that this meant the 'opt out' principle was therefore compatible with EU discrimination laws.
Selwyn Blyth, an employment law expert with Pinsent Masons, the law firm behind Out-Law.com, said that the test case was a "significant decision" for employers who may have historically denied access to pension schemes to part-time employees.
"It is well established that excluding part-time employees from access to a pension scheme can be indirectly discriminatory towards women. The question then becomes what is the appropriate remedy, because pensions-related questions are not as easy to determine as ones connected with salary," he said. "As the women in this case did not join the pension scheme within three months of becoming eligible, it becomes more difficult for them to prove they would have done so."
Blyth said that in this case, the Court decided that it was legitimate to take into account the fact that the women had not joined the pension scheme within three months of becoming eligible when deciding whether they ever would have done.
Once discrimination has been established regarding equal access to an occupational pension scheme, the court has a discretionary remedy to admit the employee into a scheme from a date not earlier than 8 April 1976, when the relevant regulations came into force - providing the employee pays the necessary pension contributions.
The women in this case were part-time employees of Littlewoods Pools, who alleged discrimination because they were denied access to the pension scheme during certain "closed periods" when membership of the same scheme was voluntary for full-time employees. Littlewoods conceded that the part-timers had suffered indirect discrimination which was not justified, but refused to allow certain women to join the scheme with retrospective effect because "if a woman had failed to join the scheme within three months of being eligible to do so, it would assume that she would not have joined it earlier even if eligible".
However the part-time workers argued that this 'opt-out principle' was "wrong as a matter of law", as EU law provides that there must be a proper and effective remedy where the equality principle is breached.
The original employment tribunal found that some women would have joined the pension scheme had they been able to do so, regardless of whether there had been a delay in them joining once they became eligible. These women were entitled to a declaration of membership for the relevant closed period. However, in other cases where it concluded that they would not have joined they were not entitled to such a declaration.
Both the Employment Appeal Tribunal and the Court of Appeal agreed that the failure of the women to join the scheme when eligible could be "powerful evidence" in support of the inference that the women would not have previously joined when they had not been eligible. This did not impose too high a burden of proof on the women, the courts said, because the alternative would have put the women in a better position than male full-timers who not joined the pension scheme.
"Human experience tells us that if a woman had really wanted to join the scheme, one might have expected her to join once she became eligible to do so," Lord Justice Elias said in his Court of Appeal judgment.
To grant retrospective access to the scheme in those circumstances would "distort equality law" and "be inconsistent with both EU and domestic law", he said.