Retired businessman John Walker brought the case to the Supreme Court over equal pension rights for his husband upon his own death.
Walker has lived with his now-husband since 1993. They entered into a civil partnership on 23 January 2006 and are now married.
In 2006, Walker asked his employer to confirm that, in the event of his death, it would pay the spouse’s pension to his civil partner. His employer refused because his service pre-dated 5 December 2005, the date that civil partnerships were introduced in the UK, and any discriminatory treatment would therefore be permitted under the Equality Act.
The Act provides that it is lawful to discriminate against an employee who is in a civil partnership or same-sex marriage by preventing or restricting them from having access to a benefit, facility or service the right to which accrued before 5 December 2005 or which is payable in respect of periods of service before that date.
If Walker was married to a woman she would be entitled on his death to a spouse’s pension of about £45,700 per annum. Based on the Equality Act provision, Walker’s husband would only have been entitled to a pension of about £1,000 per annum.
The Supreme Court found that the Equality Act provision is incompatible with the EU's Framework Directive to counter discrimination.
The case turned on what 'retrospective effect' for the Directive might mean in these circumstances.
"The salary paid to Mr Walker throughout his working life was precisely the same as that which would have been paid to a heterosexual man," the Supreme Court said. "There was no reason for the company to anticipate that it would not become liable to pay a survivor’s pension to his lawful spouse. The date when that pension will come due, provided Mr Walker and his partner remain married and his partner does not predecease Mr Walker, is the time at which denial of a pension would amount to discrimination on the ground of sexual orientation."
Because non-discrimination on grounds of sexual orientation is now a principle of EU law, the offending provision was to be dis-applied, it said. Any companies taking advantage of the exemption will now be breaking the law.
Pensions expert Alastair Meeks of Pinsent Masons, the law firm behind Out-Law.com, said: “The Supreme Court has surfed on the fast-changing social currents to consign to the scrapheap a compromise established a dozen years ago on the introduction of civil partnerships. At the time the compromise was not particularly remarked upon as unfair, but now it looks distinctly out of date to many."
"The Supreme Court used principles of EU law to strike down UK statute. In these days of Brexit, that will attract attention. It is unlikely in practice that post-Brexit any government would seek to reverse this decision, even if it could. But it does suggest that the law might develop very differently from how it would otherwise develop once Britain has left the EU. Social changes might well take considerably longer to work their way through into legal consequences," Meeks said.
The Employment Appeals Tribunal had ruled in 2014 that a surviving civil partner's entitlement could be restricted to rights the scheme member built up from 5 December 2005, the date that civil partnerships were introduced, because the Equality Act allows pension scheme trustees to take account only of benefits built up from 5 December 2005 in calculating pensions payable on the death of a member in a civil partnership.
An appeal was then dismissed by the Court of Appeal in 2015. EU legislation does not have retroactive effect "unless, exceptionally, it is clear from its terms or general scheme that the legislator intended such an effect, that the purpose to be achieved so requires and that the legitimate expectations of those concerned are duly respected", the Court of Appeal said at the time.