CASE OF STEC AND OTHERS v. THE UNITED KINGDOM
No violation of Art. 14+P1-1;Not necessary to examine victim status of third, fourth and fifth applicants
Anatoly Kovler;András Baka;Christos Rozakis;Dean Spielmann;Egbert Myjer;Javier Borrego Borrego;Jean-Paul Costa;John Hedigan;Josep Casadevall;Kristaq Traja;Lech Garlicki;Loukis Loucaides;Luzius Wildhaber;Margarita Tsatsa-Nikolovska;Matti Pellonpää;Nicolas Bratza;Rait Maruste;Stanislav Pavlovschi
14. The facts of the case, as submitted by the parties, may be summarised as follows. 15. On 18 January 1989 Mrs Stec injured her back at work and was unable to continue working. She was awarded Reduced Earnings Allowance (REA – see paragraph 26 below) from 24 January 1990. On 13 March 1993 she reached the age of 60 and as from 31 March 1996 her award of REA was replaced by an award of Retirement Allowance (RA – see paragraph 30 below). 16. The applicant appealed against this decision on the ground of sex discrimination to the Trent Social Security Appeals Tribunal (SSAT), which allowed her appeal on 4 October 1996, and the adjudication officer subsequently appealed to the Social Security Commissioner (“the Commissioner”). 17. The Commissioner joined Mrs Stec’s case to those of the other three present applicants, and also to that of Mrs Hepple. Having heard arguments on 11 and 12 December 1997, the Commissioner decided on 8 May 1998 to refer the following questions to the European Court of Justice (ECJ): “1. Does Article 7 of Council Directive 79/7/EEC permit a member State to impose unequal age conditions linked to the different pension ages for men and women under its statutory old-age pension scheme, on entitlement to a benefit having the characteristics of Reduced Earnings Allowance under a statutory occupational accident and disease scheme, so as to produce different weekly cash payments under that scheme for men and women in otherwise similar circumstances, in particular where the inequality: (a) is not necessary for any financial reason connected with either scheme; and (b) never having been imposed before, is imposed for the first time many years after the inception of the two schemes and also after 23 December 1984, the latest date for the Directive to be given full effect under Article 8? 2. If the answer to Question 1 is Yes, what are the considerations that determine whether unequal age conditions such as those imposed in Great Britain for Reduced Earnings Allowance from 1988 to 1989 onwards are necessary to ensure coherence between schemes or otherwise fall within the permitted exclusion in Article 7? 3. ...” 18. In his order of reference the Commissioner observed: “On the main issue, it is apparent from the information before me (and the adjudication officers so concede) that the imposition after 1986 of unequal age conditions on REA for the first time was not necessary to maintain the financial equilibrium or coherence (in so far as that word is understood in a financial sense) of the UK social security schemes. It is also apparent (and on the information before me I so decide as a fact) that such imposition was not necessary to enable the United Kingdom to retain the different pension ages under its old-age scheme. That difference had coexisted with the Industrial Injuries Scheme ... for nearly 40 years from 1948 without it, and REA could simply have been left as it was, or a non-discriminatory cut-off age adopted, without upsetting the pension system as it had always operated. The real question therefore is the more difficult one of whether a government which considers it a costly anomaly to go on paying a benefit such as REA to people too old to work is permitted to impose a new cut-off at unequal ages, claiming the benefit of the exclusion in Article 7 for the ‘possible consequences for other benefits’ having regard to what was said in the [ECJ’s] judgment in Graham, on the ground that the ages selected are the same as those for the pension, and ... the government take the view as a matter of policy that the income-replacement functions of REA should be performed after pension age by the pension, plus the very much smaller ‘Retirement Allowance’ instead.” 19. The ECJ gave judgment on 23 May 2000 (see paragraph 41 below). On 31 July 2000 the Commissioner, following the ECJ’s ruling, struck out the applicants’ cases where they were the appellants before him and allowed the appeals where the adjudication officers had been the appellants. 20. On 11 November 1973 Mr Lunn suffered a work-related injury to his right hand, as a result of which he had to stop working. From 12 May 1974 he received Special Hardship Allowance, which was converted to REA from 1 October 1986. On 19 May 1988 he reached the age of 65 and from May 1993, when he turned 70, he received a statutory retirement pension. On 26 March 1996 an adjudication officer reviewed the award of REA and decided that, with effect from 31 March 1996, it should be replaced by an award of RA, paid at approximately 25% of the REA rate. 21. The applicant appealed on the ground that a woman in the same circumstances would have been treated as having retired on or before 19 May 1988 and would have been entitled to a frozen rate of REA for life, a more valuable benefit. On 24 September 1996 the Stockport SSAT dismissed his appeal, and Mr Lunn appealed to the Commissioner, who referred the case to the ECJ (see paragraphs 17-19 above). 22. Mrs Spencer suffered a work-related injury to her neck on 17 July 1966. She was awarded Special Hardship Allowance from 15 January 1967 and from 1 October 1986 this was converted to an award of REA. Her sixtieth birthday was on 11 December 1986 and she received a retirement pension from 23 December 1986. It was decided on 10 May 1993, with effect from 11 April 1988, to freeze for life her award of REA at 25.28 pounds sterling (GBP) per week. 23. The applicant appealed to the Bolton SSAT on the ground that, had she been a man, she would have continued to receive unfrozen REA. The SSAT allowed her appeal on 30 November 1994, and the adjudication officer appealed to the Commissioner, who referred the case to the ECJ (see paragraphs 17-19 above). 24. On 12 March 1982 Mr Kimber injured his back at work and was unable to continue working. He was awarded Special Hardship Allowance from 15 September 1982, converted to REA from 1 October 1986. He reached the age of 65 on 30 September 1989 and received a retirement pension from 29 September 1994. On 29 April 1996 an adjudication officer reviewed his award of REA and decided that with effect from 31 March 1996 it should be replaced by an award of RA. 25. The applicant appealed to the Eastbourne SSAT, on the ground that a woman in his circumstances could have chosen to have been treated as retired from 10 April 1989, and so would have been entitled to frozen REA for life, a more valuable benefit than RA. The SSAT allowed his appeal on 2 October 1996 and the adjudication officer appealed to the Commissioner, who referred the case to the ECJ (see paragraphs 17-19 above). 26. Reduced Earnings Allowance (REA) is an earnings-related additional benefit under the statutory occupational accident and disease scheme which was put in place in 1948. Originally the benefit was known as Special Hardship Allowance, but it was recast and renamed by the Social Security Act 1986. At the time of the introduction of these applications, the relevant legislation was Part V of the Social Security Contributions and Benefits Act 1992. 27. REA has, since 1990, been funded by general taxation rather than the National Insurance scheme. It is payable to employees or former employees who have suffered an accident at work or an occupational disease, with the purpose of compensating for an impairment in earning capacity. The weekly amount is based on a comparison between the claimant’s earnings prior to the accident or disease and those in any actual or notional alternative employment still considered suitable despite the disability, subject to a maximum weekly award of GBP 40. It is a non-contributory benefit, in that eligibility is not conditional on any or a certain number of contributions having been made to the National Insurance Fund. 28. Under more recent legislation the benefit is being phased out altogether and no fresh right to REA can arise from an accident incurred or a disease contracted on or after 1 October 1990. In addition, a succession of legislative measures after 1986 attempted to remove or reduce it for claimants no longer of working age, in respect of whom the government considered any comparison of “earnings” to be artificial. Before these changes, there had been a continued right to REA notwithstanding the attainment of retirement age and REA had been payable concurrently with the State pension. 29. The method chosen to reduce eligibility was to impose cut-off or limiting conditions by reference to the ages used by the statutory old-age pension scheme, namely 65 for men and 60 for women until 1996, then tapering up to eventual equality at 65 in 2020 (Part II of the Social Security Contributions and Benefits Act 1992, as amended by the Pensions Act 1995 – see paragraphs 31-35 below). 30. Under the new provisions (Social Security Contributions and Benefits Act 1992), all REA recipients who, before 10 April 1989, had reached either (a) 70, if a man, or 65, if a woman, or (b) the date of retirement fixed by a notice, at age 65+ for a man or 60+ for a woman, would receive a frozen rate of REA for life. All other REA recipients would cease to receive REA, and would instead receive Retirement Allowance (RA) either on reaching (a) 70, if a man, or 65, if a woman, or (b) the date of retirement fixed by a notice, at age 65+ for a man or 60+ for a woman or on giving up employment at 65 for a man or 60 for a woman. 31. State retirement pensions are funded entirely from the National Insurance Fund, to which all employers and the majority of the working population, whether employed or self-employed, are liable to pay compulsory contributions. The individual’s liability for such contributions ceases at “pensionable age”. 32. Men and women born before 6 April 1950 attain pensionable age at 65 and 60 respectively (Schedule 4 to the Pensions Act 1995). The present pension age for women was introduced in 1940 by the Old Age and Widows’ Pensions Act. Prior to that, State pension age was 65 for both men and women. According to the government’s Green and White Papers entitled respectively “Options for Equality in State Pension Age” (Cm 1723, December 1991) and “Equality in State Pension Age” (Cm 2420, December 1993), the lower age for women was introduced in response to a campaign by unmarried women, many of whom spent much of their lives caring for dependent relatives, and also as part of a package to enable married couples, where the wife was usually younger than the husband and financially dependent on him, to receive a pension at the couples’ rate when the husband reached 65. 33. In the 1993 White Paper, the government pointed out that while, historically, women’s entitlement to a State pension was frequently reduced because their traditional role of caring for the family in the home led to fragmented employment records, the number of women in employment had greatly increased in recent years: in 1967, 37% of employees were women, compared with 50% in 1992 (although the statistics did not differentiate, for example, between full- and part-time workers). Moreover, a home responsibilities provision, introduced in 1978, now helped those whose working life was shortened because of time spent caring for a child or sick or disabled person to build up entitlement to a basic pension, and the concession which allowed married women to pay reduced-rate National Insurance contributions, leaving them dependent on their husbands’ contributions, was withdrawn in 1977. The Sex Discrimination Act 1986 had amended the Sex Discrimination Act 1975 to make it unlawful for an employer to have different retirement ages for men and women. The view of the government, expressed in the White Paper, was that the preferential pension age for women had no place in modern society and it was proposed to equalise pensionable age for men and women. 34. It was decided to equalise at 65, rather than a lower age, because people were living longer and healthier lives and because the proportion of pensioners in the population was set to increase. It was estimated that any move towards paying male State retirement pensions earlier than 65 would cost in the order of GBP 9.8 billion per year gross (representing additional pension payments to men between 60 and 65 and lost income from National Insurance contributions from these men) or a net sum of GBP 7.5 billion per year (when account was taken of savings on payment of other, non-National Insurance Fund benefits to such men). It was decided to introduce the change gradually to ensure that women affected by the change and their employers had ample time to adjust their expectations and arrange their financial affairs accordingly. 35. In order to bring male and female pensionable age into line with each other, therefore, section 126 of the Pensions Act 1995, together with Schedule 4, provide for the pensionable age of women born between 6 April 1950 and 5 April 1955 to increase progressively. With effect from 2010, the pensionable age of men and women in the United Kingdom will begin to equalise, and by 2020 both sexes will attain pensionable age at 65. 36. According to information provided by the Government in December 2004, men and women became eligible to receive an old-age pension at the same age in Andorra, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Liechtenstein, Luxembourg, Monaco, the Netherlands, Norway, Portugal, San Marino, Slovakia, Spain and Sweden. 37. Women were entitled to receive a pension at a younger age than men in Albania, Armenia, Austria, Azerbaijan, Belgium, Bulgaria, Croatia, the Czech Republic, Estonia, Georgia, Hungary, Italy, Latvia, Lithuania, Malta, Moldova, Poland, Romania, the Russian Federation, Serbia and Montenegro, Slovenia, Switzerland, “the former Yugoslav Republic of Macedonia” and Ukraine. Many of these countries were phasing in equalisation of pensionable age. This was to take place in Austria between 2024 and 2033; in Azerbaijan by 2012; in Belgium between 1997 and 2009; in Estonia before 2016; in Hungary by 2009; in Latvia by 2008; and in Lithuania by 2006. 38. Council Directive 79/7/EEC of 19 December 1978 (“the Directive”) concerns the progressive implementation of the principle of equal treatment for men and women in matters of social security. Article 4(1) of the Directive prohibits all discrimination on grounds of sex, in particular as concerns the calculation of benefits. Such discrimination can be justified only under Article 7(1)(a), which provides that the Directive is to be without prejudice to the right of member States to exclude from its scope the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits. Under Article 7(2), “[m]ember States shall periodically examine matters excluded under paragraph 1 in order to ascertain, in the light of social developments in the matter concerned, whether there is justification for maintaining the exclusions concerned”. 39. In case C-9/91 The Queen v. Secretary of State for Social Security, ex parte Equal Opportunities Commission (“EOC”) [1992] European Court Reports (ECR) I-4297, the ECJ found that Article 7(1)(a) must be interpreted not only as authorising the retention of a statutory pensionable age which differed according to sex, but also forms of discrimination affecting access to certain benefits which were “necessarily linked” to the difference in pensionable age. Inequality between men and women, with respect to the contribution periods required in order to obtain a pension of an identical amount, constituted such discrimination where, having regard to the financial equilibrium of the national pension system in the context of which it appeared, it could not be disassociated from the difference in pensionable age. 40. In case C-328/91 Secretary of State for Social Security v. Evelyn Thomas and Others [1993] ECR I-1247, the ECJ held that the reasoning from the EOC decision extended to benefits linked to differential State retirement ages where “such discrimination is objectively necessary in order to avoid disrupting the complex financial equilibrium of the social security system or to ensure consistency between retirement pension schemes and other benefit schemes”. 41. In the present applicants’ case, C-196/98 Hepple and Others v. Adjudication Officer [2000] ECR I-3701, the ECJ applied the reasoning of Evelyn Thomas and Others to find, first, that “removal of the discrimination at issue ... would have no effect on the financial equilibrium of the social security system of the United Kingdom as a whole” (§ 29). However, it went on to hold that it had been objectively necessary to introduce different age conditions based on sex in order to maintain coherence between the State retirement pension scheme and other benefit schemes, since (§§ 31-34) “... the principal aim of the successive legislative amendments ... was to discontinue payment of REA – an allowance designed to compensate for an impairment of earning capacity following an accident at work or occupational disease – to persons no longer of working age by imposing conditions based on the statutory retirement age. Thus, as a result of those legislative amendments, there is coherence between REA, which is designed to compensate for a decrease in earnings, and the old-age pension scheme. It follows that maintenance of the rules at issue in the main proceedings is objectively necessary to preserve such coherence. That conclusion is not invalidated by the fact that REA is replaced, when the beneficiary reaches retirement age and stops working, by RA, the rate of which is 25% of REA, since RA is designed to compensate for the reduction in pension entitlement resulting from a decrease in earnings following an accident at work or occupational disease. It follows that discrimination of the kind at issue in the main proceedings is objectively and necessarily linked to the difference between the retirement age for men and that for women, so that it is covered by the derogation for which Article 7(1)(a) of the Directive provides.”