O’Brien v Ministry of Justice [2013] UKSC 6

A retired recorder claimed a judicial pension pro rata. Following a CJEU ruling, the Supreme Court held that fee-paid part-time judges are in an "employment relationship" and so are workers under the Part-time Workers Regulations 2000, and that denying them pensions was not objectively justified. Appeal allowed.

Facts

Dermot O’Brien, a barrister (QC from 1983), was appointed a recorder under section 21 of the Courts Act 1971 with effect from 1 March 1978 and sat, with regular extensions of his appointment, until 31 March 2005. Recorders are remunerated on a daily fee-paid basis, in practice at 1/220th of the annual salary of a full-time judge of the equivalent court, and are subject to terms and conditions of service issued in memoranda by the Lord Chancellor (the 1978 version required at least 20 sitting days a year; the April 2000 version guaranteed a minimum of 15 days and permitted up to 30). Part-time judges are entitled, where appropriate, to sick pay and maternity or paternity pay.

The office of recorder is not a “qualifying judicial office” under the Judicial Pensions and Retirement Act 1993, since section 1(6) confines that concept to offices in Schedule 1 held on a salaried basis. When Mr O’Brien asked in June 2005 for a retirement pension calculated pro rata temporis on the same basis as full-time judges doing the same or similar work, the Department for Constitutional Affairs refused, on the basis that his office was not a qualifying judicial office and that EU law imposed no obligation because he was an office-holder rather than a worker.

The relevant EU measure is Council Directive 97/81/EC (the Part-time Workers Directive, “PTWD”), which implements the Framework Agreement on part-time work. Clause 2.1 applies the Agreement to “part-time workers who have an employment contract or employment relationship as defined by the law, collective agreement or practice in force in each Member State”; clause 4.1 prohibits less favourable treatment of part-timers “unless different treatment is justified on objective grounds”, and clause 4.2 applies the pro rata temporis principle. The Directive was transposed by the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000. Regulation 1(2) defines “worker” by reference to contracts only; regulation 12 extends the Regulations to Crown employment; but regulation 17 provides that the Regulations do not apply to a holder of judicial office remunerated on a daily fee-paid basis.

Procedural history

Mr O’Brien began Employment Tribunal proceedings in September 2005. He succeeded in the tribunal but the EAT held the claim was out of time. By consent both the time-limit and substantive issues went to the Court of Appeal as a test case. In Department of Constitutional Affairs v O’Brien [2008] EWCA Civ 1448, [2009] ICR 593 the Court of Appeal allowed the appeal on time limits but directed dismissal of the substantive claim, holding that judges were not “workers” under regulation 1(2) or regulation 12.

On 28 July 2010 the Supreme Court (judgment delivered by Lord Walker, [2010] UKSC 34) referred two questions to the CJEU: whether it was for national law to determine whether judges are workers within clause 2.1, and, if judges are within clause 2.1, whether national law may discriminate between full-time and part-time judges, or between different kinds of part-time judge, in the provision of pensions. In that reference judgment the Court agreed with the observations of Sir Robert Carswell LCJ in Perceval-Price v Department of Economic Development [2000] IRLR 380 and said that judicial office “partakes of most of the characteristics of employment”, while expressing no concluded view pending guidance from Luxembourg. It noted particular concern that regulation 17 “has some appearance of being a deliberate ad hoc exclusion of a particular category”.

On 1 March 2012 the CJEU ([2012] ICR 955) ruled that member states define the concept of worker, subject to the condition that this does not lead to the arbitrary exclusion of judges from protection; exclusion is permissible only if the relationship between judges and the Ministry is by its nature substantially different from that between employers and employees treated as workers under national law. On pensions, the Framework Agreement precludes a distinction between full-time judges and daily fee-paid part-time judges unless justified by objective reasons, a matter for the national court.

Issues

The reference and ruling divided the case into two: (1) the worker issue — whether the relationship between judges (and specifically recorders) and the Ministry of Justice is, by its nature, substantially different from the relationship between employers and persons treated in national law as workers; and (2) the objective justification issue — whether the difference in treatment of recorders, as regards access to the judicial pension scheme, was justified by objective reasons. A subsidiary procedural issue was whether either issue required remission to the Employment Tribunal for fact-finding.

Arguments

For Mr O’Brien, Mr Allen QC relied on the Court’s earlier provisional view and on Perceval-Price, submitting that nothing in the CJEU’s judgment cast doubt on it. He pragmatically declined to press the Court to decide whether there was a contract of employment, so the case turned on “employment relationship”. On justification it was argued that fee-paid part-timers were deprived of the opportunity to earn and make pension provision elsewhere while sitting; that pension is deferred pay forming part of the remuneration package; that it would be unjustifiable to pay a lower daily rate and equally unjustifiable to strip out the pension element; that the State should be treated like any private employer; and that the Ministry’s case was at bottom a budgetary one.

For the Ministry, Mr Cavanagh QC no longer pursued the argument that judicial independence justified a different status, the CJEU having endorsed Advocate General Kokott’s view that a pension entitlement strengthens rather than threatens judicial independence. He argued instead that the memoranda did not tell the whole story, that the reality should be explored on remission (appointment and removal, organisation of work, sanctions for sitting less than the minimum, and whether booking sittings resembled booking counsel’s engagements), and that fee-paid part-timers resembled self-employed persons. On justification the Ministry pleaded three interrelated aims: fairness in distributing the limited State resources available for judicial pensions (subdivided into part-timers’ alternative retirement provision and full-timers’ greater contribution to the justice system); attracting high-quality candidates to salaried office; and keeping pension costs affordable and sustainable. It accepted cost alone could not justify discrimination but argued “cost plus” could, relying principally on Ju00f8rgensen (Case C-226/98).

Judgment

The judgment was given by the Court, with the introduction and the worker issue prepared by Lord Hope and the objective justification reasoning prepared by Lady Hale.

The worker issue

The Court declined to remit, holding it had sufficient evidence, and expressly declined to decide “the very large question of whether all or any servants of the Crown have contracts of employment”. Applying the criteria in paras 43–46 of the CJEU’s judgment, it took account of: the character of a recorder’s work in the public service as distinct from that of a self-employed person; the rules for appointment and removal, “to which no self-employed person would subject himself”; the organisation of their work and the expectation that they sit during defined times and periods; and their entitlement to the same in-service benefits as full-time judges.

The Court rejected the submission that the terms and conditions did not reflect reality, noting that Mr O’Brien had on one occasion been required to explain and apologise for failing to achieve the required sittings: recorders are expected to observe their terms and may be disciplined for failure. Drawing the essential distinction between the employed and the self-employed, the Court said:

“The self-employed person has the comparative luxury of independence. He can make his own choices as to the work he does and when and where he does it. He works for himself. He is not subject to the direction or control of others.”

Citing Lady Hale’s observations in Percy v Board of National Mission of the Church of Scotland [2005] UKHL 73, [2006] 2 AC 28, and Sir Robert Carswell’s statement that judges “are not free agents to work as and when they choose, as are self-employed persons”, the Court held that recorders are in an employment relationship within clause 2.1 and, since the result to be achieved by the PTWD binds the United Kingdom, must be treated as “workers” for the purposes of the 2000 Regulations.

Objective justification

The Court applied the test in para 64 of the CJEU judgment and para 62 of the Advocate General’s opinion: the unequal treatment must respond to a genuine need, be appropriate and necessary, and be justified by precise, concrete factors on objective and transparent criteria. Regulation 17’s exclusion was “neither here nor there”: a difference provided for by a general, abstract norm is not itself justification. The Ministry was not precluded from advancing a justification now, but the Court noted it is likely to treat with greater respect a justification carefully thought through when the policy was adopted (citing Belfast City Council v Miss Behavin’ Ltd [2007] UKHL 19 and R (Elias) v Secretary of State for Defence [2006] EWCA Civ 1293).

The Court declined to remit the five disputed factual areas, being content to take the Ministry’s factual case at its highest. It rejected each aim: rewarding those thought to need it most lacked precise and transparent criteria and amounted to “blanket discrimination”; the Ministry had failed to show that fee-paid part-timers as a class contribute less than full-timers (the proper response to extra responsibilities being extra responsibility payments), and the argument ignored the flexibility benefits of a fee-paid cadre; and recruitment of a high-quality judiciary is a legitimate aim but applies to part-timers too, with no evidence that denying part-timers pensions assists full-time recruitment. On cost, the Court reviewed Roks, Ju00f8rgensen and Commission v Netherlands (Case C-542/09), concluding that a member state may decide how much to spend, but within that system choices must respect equal treatment. It expressly found it unnecessary to express a view on whether Woodcock v Cumbria Primary Care Trust [2012] EWCA Civ 330 was rightly decided. Lady Hale concluded:

“But the fundamental principles of equal treatment cannot depend upon how much money happens to be available in the public coffers at any one particular time or upon how the State chooses to allocate the funds available between the various responsibilities it undertakes.”

Accordingly no objective justification was shown for departing from pro rata temporis, and Mr O’Brien was entitled to a pension on terms equivalent to those applicable to a circuit judge.

Implications

The decision establishes, for the purposes of the PTWD and the 2000 Regulations, that fee-paid part-time judges are in an “employment relationship” and thus workers, notwithstanding their status as statutory office-holders and their judicial independence. The Court’s reasoning on the worker issue is framed by reference to recorders but rests on principles of general application, and the CJEU’s endorsement of the point that a pension strengthens rather than undermines judicial independence removes that argument from future cases. Importantly, the Court did not decide whether Crown servants generally, or judges, have contracts of employment; nor did it formally address the status of every category of part-time judge, expressly confining the justification analysis to recorders — though it observed that it “seems unlikely that the Ministry’s argument could be put any higher than it has been”.

On justification, the case confirms that a statutory or regulatory exclusion cannot itself justify less favourable treatment; that justification requires precise, transparent and concrete criteria rather than blanket class-based distinctions; that differences in workload are better met by responsibility payments than by wholesale exclusion; and that budgetary constraint cannot justify discriminatory allocation within a scheme, the State being in no better position than a private employer. The decision matters to fee-paid judicial office-holders across the courts and tribunals (many of whom, as the Council of Immigration Judges’ intervention showed, sit at or near full-time levels and lack alternative retirement provision), to the Ministry of Justice, and more broadly to employers seeking to justify differential benefits for part-timers. Considerable practical questions of quantification remained, which is why the matter was sent back to the tribunal.

Verdict: The appeal was allowed. The Supreme Court set aside the Court of Appeal’s order of 19 December 2008, held that recorders are in an employment relationship within clause 2.1 of the Framework Agreement and must be treated as “workers” for the purposes of the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, and held that no objective justification had been shown for denying fee-paid part-time judges a pension. Mr O’Brien was held entitled to a pension on terms equivalent to those applicable to a circuit judge, and the case was remitted to the Employment Tribunal to determine the amount of that pension.

Source: O'Brien v Ministry of Justice [2013] UKSC 6