The Lord Chancellor and Secretary of State for Justice v V McCloud & Others
| Jurisdiction | England & Wales |
| Judge | Sir Patrick Elias,Sir Colin Rimer,Lord Justice Longmore |
| Judgment Date | 20 December 2018 |
| Neutral Citation | [2018] EWCA Civ 2844 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case Nos: A2/2018/0635, A2/2018/0636, A2/2018/0505 & A2/2018/0647 |
| Date | 20 December 2018 |
[2018] EWCA Civ 2844
THE RIGHT HONOURABLE Lord Justice Longmore
THE RIGHT HONOURABLE Sir Colin Rimer
and
THE RIGHT HONOURABLE Sir Patrick Elias
Case Nos: A2/2018/0635, A2/2018/0636, A2/2018/0505 & A2/2018/0647
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
THE HONOURABLE SIR ALAN WILKIE
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr John Cavanagh QC, Mr Raymond Hill and Ms Katherine Apps (instructed by the Government Legal Department) for the Appellants in the first appeal
Mr Andrew Short QC and Ms Naomi Ling (instructed by Leigh Day) for the McCloud Group of Respondents in the first appeal
Mr Michael Beloff QC and Mr Ben Jaffey QC (instructed by Bindmans LLP) for the Mostyn Group of Respondents in the first appeal
Mr John Cavanagh QC, Ms Katherine Apps and Mr Raymond Hill (instructed by the Government Legal Department) for the Appellants (the Secretary of State and the Welsh Ministers) in the second appeal
Mr Adrian Lynch QC and Mr Christopher Parkin (instructed by Bevan Brittan LLP) for the Appellants (the London Fire & Emergency Planning Authority and the three other Fire and Rescue Authorities) in the second appeal
Mr Andrew Short QC and Ms Lydia Seymour (instructed by Walkers Solicitors) for the Claimants/Cross Appellants in the second appeal
Hearing dates: 5 th, 6 th, 7 th, 8 th & 9 th November 2018
Judgment Approved
See Order at bottom of this judgment.
This is a judgment of the court:
Introduction
The first of these appeals is by the Lord Chancellor and the Ministry of Justice, from the decision of the Employment Appeal Tribunal of 29 th January 2018, affirming the decision of the Employment Tribunal of 16 th January 2017, in which the appellants were found to have treated the respondent younger judges less favourably than older judges on the grounds of age by reason of the transitional provisions contained in the Judicial Pension Regulations 2015 and that the appellants had failed to show that such treatment was a proportionate means of achieving a legitimate aim.
The second appeal, which was heard on the same occasion as the first appeal, concerns decisions in relation to the transitional provisions of the new Firefighters Pension Scheme and the equivalent Welsh scheme. They raise common or similar issues. Whilst the primary issue in both appeals is whether the respondents to the original claims have unlawfully discriminated on grounds of age, there are also claims that by implementing the transitional provisions, they have in addition breached the principles of equal pay and indirect race discrimination. The structure of this judgment is that it falls into four sections. We deal first with the background, which is common to both schemes; we then consider the age discrimination issue in the judges' case; then in the firefighters' case; and in the last section we analyse the equal pay and race discrimination issues in respect of both appeals.
Background to both schemes
In March 2011 the Independent Public Services Pension Commission published a review of Public Sector Pensions, the Hutton Report. It recommended wholesale public sector pension reform in order to place public sector pensions on a more sustainable footing. The Government largely accepted the recommendations of that Report and enacted pension reforms through the Public Service Pensions Act 2013.
Paragraph 7.34 of the Report stated:-
“The Commission's expectation is that existing members who are currently in their 50s should, by and large, experience fairly limited change to the benefits which they would otherwise have expected to accrue by the time they reached their current scheme NPA [normal pension age]. This would particularly be the case if the final salary link is protected for past service, as the Commission recommends. This limitation of impact will also extend to people below age 50, proportionate to the length of time before they reach their NPA. Therefore, special protections for members over a certain age should not be necessary. Age discrimination legislation also means that it is not possible in practice to provide protection from change for members who are already above a certain age.”
Paragraph 1.132 of the Budget Report of the Government dated 23 rd March 2011 read as follows:-
“The Government accepts Lord Hutton's recommendations as a basis for consultation of public service workers, trade unions and others, recognising that the position of the uniformed services would require particularly careful consideration. The Government will set out proposals in the Autumn that are affordable, sustainable and fair to both the public sector workforce and the tax payer.”
The Government published a Green Paper on 2 nd November 2011 concerning public sector service pensions. It contained a foreword by the Chief Secretary to the Treasury (the Rt Hon Danny Alexander) in which he said:-
“I believe it is right that we protect those public service workers who, as of 1 st April 2012, have ten years or less to their pension age. It is my objective that these people see no change in when they can retire, or any decrease in the amount of pension they receive at their normal pension age …”
The Chief Secretary to the Treasury made a statement in Parliament on 2 nd November 2011 recorded in Hansard as follows:-
“In addition, I have listened to the argument that those closest to retirement should not have to face any change at all. That is the approach that has been taken over the years in relation to increases to the state pension age and I think it is fair to apply that here too. I can also announce that Scheme negotiations will be given the flexibility, outside the costs ceiling, to deliver.”
On the same day, the Chief Secretary to the Treasury wrote to the TUC General Secretary in the following terms:-
“9. …I have accepted your argument that there should be transitional protection. It is my objective to ensure that those closest to retirement should not have any detriment either to when they can retire nor any decrease in the amount of pension they receive at their current Normal Pension Age. Over and above the costs ceiling, the Government's objective is to provide this protection to those who on 1 st April 2012 are within ten years of Normal Pension Age. Schemes and Unions should discuss the fairest way of achieving this objective, and for providing some additional protection for those who are just over ten years from their Normal Pension Age. I would be willing to consider tapering of transitional protection over a further three to four years. Full account must be taken of equalities impacts and legislation, while ensuring that costs to the tax payer each and every year should not exceed the OBR forecast for public service pension costs – i.e. those forecasts made before the further reform set out in this letter …
11. … the Government's offer is conditional on reaching agreement. If agreement has not been reached, we may need to revisit our current proposals.”
The Changes in the Provisions in Respect of Judicial Pensions
Each of the claimants (save for one regional medical member whose circumstances are in all material respects the same) are full time judges appointed before 1 st April 2012 and are office holders appointed to public office within the meaning of section 50 of the Equality Act 2010. The first two appellants (as we shall refer to them in this part of the judgment) are the “relevant person” in relation to the claimants for the purposes of sections 50, 51 and 52 of the Equality Act 2010.
The salary of each of the claimants was set by the Lord Chancellor having regard to the recommendation of the review body on senior salaries. The compulsory retirement date of each claimant was their seventieth birthday.
Each claimant automatically became entitled to benefits under the Judicial Pension Scheme (“JPS”) established under the Judicial Pensions and Retirement Act 1993. Each claimant, as of 31 st March 2015, was an active member of the JPS whose current service entitled him or her to benefits under that scheme.
In broad terms, the key benefits provided by the JPS were:-
a) An annual pension of an amount equal to one fortieth of the Judge's final “pensionable pay” multiplied by the aggregate length of service in a qualifying judicial office to a maximum of twenty years.
b) A lump sum of 2.25 times the annual rate of pension was payable on retirement.
c) The normal pension age (the date from which the pension could be taken as of right without actuarial reduction) was sixty five.
d) A surviving spouse's, or civil partner's, pension was paid at half the rate of the member's pension. There was also provision for pension in respect of a dependant child.
Until 1 st April 2012 members were not required to contribute towards their own pension but were required to pay contributions towards survivors' pensions. From 2006, contributions in respect of survivors' pensions were 1.8% of the Judge's pension capped salary.
The Pensions Act 2011 empowered the Lord Chancellor, by regulation, to require members of the JPS to make contributions in respect of their own pensions. That power has been exercised a number of times so as to require an increasing level of contributions with effect from 1 st April 2012, 1 st April 2013 and 1 st April 2014 from which date members' contributions were 3.2% in addition to the 1.8% in respect of survivors' benefits.
The Judicial Pensions Regulations 2015, made pursuant to the Public...
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