O’Brien v Ministry of Justice [2017] UKSC 46

Mr O'Brien, a retired part-time recorder, sought a judicial pension based on all 27 years of his service. The Supreme Court considered whether service before the Part-Time Work Directive's transposition deadline should count, and referred the question to the CJEU.

Facts

Mr Dermod O’Brien QC, a self-employed barrister, served as a part-time, fee-paid recorder of the Crown Court between 1 March 1978 and his retirement at age 65 on 31 March 2005. Recorders were paid per diem and were not entitled to a judicial pension under the Judicial Pensions Act 1981 or the Judicial Pensions and Retirement Act 1993, which conferred pension rights on full-time and salaried part-time judges only.

Following retirement, Mr O’Brien sought a pension calculated pro rata temporis on the same basis as full-time judges performing equivalent work, relying on Council Directive 97/81/EC (the Part-Time Work Directive, extended to the UK by Directive 98/23/EC) and the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000. After a preliminary reference to the Court of Justice (Case C-393/10), the Supreme Court held in [2013] UKSC 6 that he was a part-time worker within the Framework Agreement, that no objective justification existed for the differential treatment, and that he was entitled to a pension equivalent to that of a circuit judge.

The case was remitted to the Employment Tribunal to quantify the pension. The Tribunal held that the whole 27 years’ service counted, but the Employment Appeal Tribunal and the Court of Appeal held that only service after the transposition deadline of 7 April 2000 (less than five years) was to be taken into account.

Issues

The central issue before the Supreme Court was whether, in calculating the amount of a retirement pension payable to a part-time worker who retired after the directive came into force, periods of service completed before the deadline for transposition of the directive must be taken into account, where comparable full-time workers would have such periods counted.

This required consideration of the temporal scope of Directive 97/81 and the general EU law principle against retroactive application of legislation: was Mr O’Brien’s non-entitlement to pension for service prior to 7 April 2000 a legal situation that had “arisen and become definitive” under the old law, or a continuing situation whose “future effects” the directive governed?

Arguments

Appellant (Mr O’Brien)

Mr O’Brien argued that the reasoning in Bruno (Joined Cases C-395/08 and C-396/08) and the earlier CJEU ruling in his own case meant that periods of employment before the directive entered into force must be taken into account when applying the directive to situations arising after the transposition deadline. He contended that pre-transposition service was relevant not only to qualification for a pension (which the Ministry conceded) but also to its quantification, since quantum depended on length of service.

Respondent (Ministry of Justice)

The Ministry argued that, following Ten Oever (Case C-109/91), an occupational pension constitutes deferred pay for past work, with entitlement accruing at the time of the work. By the principle of non-retroactivity, accrued rights (or the absence of such rights) become definitively fixed at that time and cannot be altered by subsequent legislation. Mr O’Brien’s non-entitlement in respect of his first 22 years of service had therefore been definitively established before the directive entered into force.

Judgment

Lord Reed, with whom Lady Hale, Lord Kerr, Lord Carnwath and Lord Hughes agreed, did not finally determine the issue. The Supreme Court reviewed the relevant principles of EU law on temporal application, citing European Commission v Moravia Gas Storage AS (Case C-596/13 P), which establishes that new rules apply immediately to the future effects of situations arising under the old law, though not to situations that have arisen and become definitive.

The Court noted that in Bruno the CJEU had held that the calculation of the period of service required to qualify for a retirement pension under Directive 97/81 included periods of employment before the directive entered into force. The CJEU had reaffirmed this in rejecting the admissibility challenge to the earlier reference in Mr O’Brien’s own case.

The majority of the Supreme Court were inclined to the view that the directive applies ratione temporis where the pension falls due for payment after the directive entered into force, and that the directive applies to the future effects of pre-existing service. However, the Court recognised that the CJEU had not yet directly considered the argument flowing from Ten Oever that, if occupational pensions are deferred pay accruing at the time of the underlying work, the non-retroactivity principle should preclude the directive from altering rights (or non-rights) that crystallised before its entry into force. Although the majority were inclined to think that Ten Oever was concerned with the exceptional temporal limitation imposed in Barber, which did not arise here, the position was not acte clair.

The Supreme Court therefore made a further preliminary reference to the Court of Justice, asking whether Directive 97/81, and in particular clause 4 of the Framework Agreement, requires periods of service prior to the transposition deadline to be taken into account when calculating a part-time worker’s pension if they would be taken into account for a comparable full-time worker.

Implications

The judgment is significant for clarifying the limits of the Supreme Court’s willingness to determine EU law questions without further guidance from Luxembourg, particularly where authorities on temporal scope and the deferred-pay characterisation of pensions appear to point in different directions. It illustrates the tension between the Bruno line of authority, which treats pre-directive service as relevant to post-directive entitlement, and the Ten Oever line, which treats pension rights as accruing at the time of underlying employment.

The outcome of the reference would directly affect Mr O’Brien and other fee-paid part-time judicial office-holders whose service largely predated the directive, and potentially other part-time workers across EU member states making analogous claims. The decision matters to those whose entitlement to occupational pensions turns on length of service spanning the directive’s entry into force, since the difference between counting all service or only post-transposition service may be substantial.

The judgment does not itself resolve the underlying question and so should not be read as a definitive statement on the temporal reach of Directive 97/81. Its importance lies in framing the issue precisely, identifying the doctrinal tension, and remitting the question for authoritative determination by the Court of Justice.

Verdict: The Supreme Court did not finally determine the appeal. It referred a further question to the Court of Justice of the European Union under article 267 TFEU, asking whether Directive 97/81 requires periods of service prior to the transposition deadline to be taken into account when calculating the retirement pension of a part-time worker, where such periods would be taken into account for a comparable full-time worker.

Source: O’Brien v Ministry of Justice [2017] UKSC 46