Joint Committee On Human Rights

Joint Committee On Human Rights Twentieth Report

2 Civil Partnership Bill

Date introduced to the House of Lords

Date introduced to the House of Commons

Current Bill Number

Previous Reports

30 March 2004

5 July 2004

House of Commons 132

15th

Background

2.1 This is a Government Bill, introduced to the House of Commons on 5 July 2004 accompanied by Explanatory Notes.[12] The Secretary of State for Trade and Industry, Patricia Hewitt MP, has made a statement under s. 19(1)(b) of the Human Rights Act 1998, that she is unable (but only because of clause 2, Schedule 1 and related provisions)[13] to make a statement that in her view the provisions of the Bill are compatible with the Convention rights, but the Government nevertheless wishes the House to proceed with the Bill.

2.2 We reported on the Bill as it left the House of Lords.[14] We welcomed the Bill as a measure enhancing protection for the fundamental human rights of same-sex partners, and were generally satisfied that the Bill as introduced did achieve the aim of removing already established and likely future incompatibilities between domestic law and the right not to be discriminated against in the enjoyment of Convention rights on the grounds of sexual orientation.

2.3 We had two main concerns on human rights grounds. The first was whether justification existed for excluding opposite-sex unmarried couples from the scope of civil partnerships. The second was whether there was justification for treating same-sex couples and married heterosexual couples differently in relation to survivor's pension benefits under occupational pension schemes.

2.4 We reported that we had written to the Minister[15] asking a number of questions concerning both of these issues and that it might be necessary to return to them in a future report in light of the Government's answers.[16]

2.5 We received the Government's response to our questions in a letter dated 29 July 2004 from the Minister of State for Industry, Jacqui Smith MP.[17] The Government subsequently made an important announcement in relation to survivor's pensions on the Bill's Second Reading in the House of Commons.[18] We have considered the concerns raised in our earlier report in the light of both the Government's written response and its announcement at Second Reading. On the question of the exclusion of opposite sex couples from the scope of the Bill, we have nothing to add to the view we expressed in our earlier report, which remains our view. This further report is confined to the issue of survivor's pensions.

Survivor's Pensions

2.6 Strictly speaking, the problem of discrimination in relation to survivor's pensions does not arise on the face of the Bill. The Bill itself merely contains a power (in clause 245) for a Minister to amend pensions legislation for surviving civil partners. The problem arose because of the way in which the Government has stated in the Explanatory Notes to the Bill[19] that it intends to use this power to require pension schemes to calculate the value of survivor's pensions for civil partners on the basis of future contributions only.

2.7 In our earlier Report we expressed our view that under the Bill the Government proposes to treat surviving civil partners less favourably than surviving spouses in relation to survivor's pension benefits under occupational pension schemes, because the effect of the Bill will be that a surviving civil partner whose partner dies after the Act comes into force will be entitled to a less valuable pension than a surviving spouse whose husband or wife dies on the same day with the same contribution record.[20] In our view, this amounts to an obvious difference of treatment in relation to pension benefits which requires justification in order to be lawful. We pointed out that the onus was on the Government to demonstrate, by reference to evidence, why such difference of treatment was justifiable, and our questions to the minister on this question were intended to ascertain whether such justification exists as a matter of fact.

2.8 In its written response dated 29 July 2004 the Government maintained its statement of intention as set out in the Explanatory Notes to the Bill: only contributions made after commencement of the new Act would be taken into account when calculating survivor's pensions. The Government's reason for this position was that it did not accept that there was any difference of treatment in discrimination law terms and, even if there were, it was justified because of the risk of affecting the balance of pension schemes which have not budgeted for such liabilities.

2.9 On Second Reading, however, the Government announced that same-sex couples will be treated in the same way as married couples. Regulations will be introduced which will provide for same-sex partners to accrue survivor pensions in public service schemes from 1988.[21] The Bill already provides for same-sex couples to be treated in the same way as married couples for tax purposes,[22] and the Government's change is designed to ensure that the rights as well as the responsibilities of married couples are replicated for same-sex couples.

2.10 We welcome the Government's announcement that registered same-sex couples will be treated in the same way as married couples in relation to survivor pensions. We also welcome the Government's explanation for the change of policy, which recognises the importance of providing equality for same-sex partners in relation to their rights as well as their responsibilities. It meets the concern we expressed about this aspect of the Bill in our earlier report.

2.11 In view of the Government's detailed argument in its letter of 29 July 2004, which is now a matter of public record, and the general importance of the issue as a matter of the proper interpretation of discrimination law, we go on to explain for the record why in our view, as a matter of human rights law, the Government's reasoning in its letter of 29 July is wrong.

Difference of treatment

2.12 The Government's response in its letter of 29 July was that no question of justification arises because there is no relevant difference of treatment between civil partners on the one hand and spouses on the other. It accepted that "civil partners will have the right not to be discriminated against, in comparison with married people, in relation to all aspects of employment … including benefits payable to a surviving civil partner under an occupational pension scheme." However, it argued that there would be no discrimination because the relevant comparison between a surviving civil partner and a surviving spouse should take place, not at the time when the pension benefits are paid, but at the time when they accrue. There would be no relevant difference of treatment, it argued, because from the date on which the Act comes into force civil partners would be able to accrue benefits for their surviving partner through future pensionable service in exactly the same way as a married person accrues benefits for their surviving spouse. The fact that, after the Act comes into force, a surviving civil partner whose partner dies would receive a smaller survivor's pension than a surviving married partner whose wife or husband dies, despite having made the same contributions, was said by the Government not to be a relevant comparison on a proper understanding of discrimination law principles.

2.13 The Government argued that this is the approach adopted by the European Court of Justice in cases concerning pensions discrimination in the context of European Community law, and that the same approach is likely to be taken by the European Court of Human Rights under the Convention. It relied on the reasoning of the Advocate General in a case called Ten Oever, and the Court's judgment in the same case, from which it was said to follow that, for the purposes of Community law, the decisive moment for determining whether discrimination occurs is the time when the benefits accrue, not when pension falls to be paid.

2.14 Because of the importance of the issue, we have given the Government's argument in its letter of 29 July careful consideration, but we remain very firmly of the view that, on a proper understanding of discrimination law principles, the relevant comparison is between surviving civil partners and surviving spouses at the time when the benefit is paid. For the reasons we set out below, we do not agree that the approach adopted by the ECJ supports the Government's approach in its letter.

2.15 The ECJ cases relied on by the Government were concerned with limiting the effect of a finding that there had been a difference of treatment. In Barber, the main substantive question was whether it was discriminatory for a man made compulsorily redundant to be entitled to claim only a deferred pension payable at the normal retirement age when a woman in the same position was entitled to an immediate retirement pension, as a result of the application of an age condition reflecting the difference between state retirement ages for men and women. The ECJ held that there was a difference in treatment between the two, and that this difference in treatment was in breach of the principle of equal treatment in Article 119 of the EC Treaty. However, the Court went on to impose a temporal limitation on the effect of its judgment. It held, in effect, that its judgment was to have prospective effect only.[23]

2.16 The reason for limiting the effect of its judgment in this way was made explicit by the Court: "overriding considerations of legal certainty".[24] The UK Government had argued that the Court's interpretation of Article 119 would have serious financial consequences.[25] It said that the number of workers affiliated to contracted-out schemes is very large in the UK, and that those schemes in question frequently derogate from the principle of equality between men and women, in particular by providing for different pensionable ages. The Court recognised that there were important considerations of legal certainty at stake, and that there was a risk of upsetting retroactively the financial balance of many contracted-out pension schemes. It was those considerations of legal certainty, of not wishing to upset legal relations entered into in good faith, which led the Court to take the exceptional course of limiting in time the effect of its judgment.

2.17 The question in the Ten Oever group of cases, which was heavily relied on by the Government in its letter of 29 July, was "the precise scope of the limitation of the effects in time of the Barber judgment".[26] The Court in Barber had left it unclear whether the temporal limit it imposed applied to pension benefits based on contributions made before the date of the judgment, or only to benefits based on contributions made after that date. By the Treaty of Maastricht 1992 the Member States had added a Protocol to the EC Treaty providing that, for the purposes of Article 119, "benefits under occupational social security schemes shall not be considered as remuneration if and in so far as they are attributable to periods of employment prior to [the date of the Barber judgment]."

2.18 The Court in Ten Oever held that, "given the reasons explained by the Court in Barber for limiting the effects of its judgment in time", it had to be made clear that equality of treatment in the matter of occupational pensions may be claimed only in relation to benefits payable in respect of periods of employment subsequent to the date of the Barber judgment.[27] In Ten Oever itself the applicant had sought to rely on Article 119 to claim a widower's pension in circumstances where the rules of the occupational pension scheme provided only for widow's pensions, and his wife had died before the Court's judgment in Barber. The ECJ in effect decided to give effect in its case-law to the Protocol agreed as part of the Maastricht Treaty.

2.19 We accept that these cases are legally technical but in our view it is clear that the ECJ in Barber and Ten Oever and related cases was concerned not with the question of what, as a matter of the proper application of discrimination law principles, is a relevant comparison in the context of occupational pension schemes, but with the policy question of when it is justifiable to impose a temporal limit on a finding that a particular difference of treatment is discriminatory and therefore unlawful. In our view, the ECJ cases demonstrate very clearly that differences of treatment in relation to the benefits paid under occupational schemes are discriminatory,[28] but there may be competing considerations, for example of legal certainty, which justify limiting the temporal effect of such a finding of discrimination in a particular case. Whether the competing considerations justify the temporal limitation will depend on evidence of the extent of the impact on other interests, for example by reference to the number of people affected and the scale of the economic implications.

2.20 That this is the approach of the ECJ is demonstrated by its judgment in a more recent pensions discrimination case, Griesmar, in which it rejected a Government argument that there were grounds for limiting the temporal effects of its judgment that there was an unlawful difference of treatment in the way in which the French civil service retirement scheme awarded a service credit to female civil servants in respect of each of their children when calculating their pension, but did not award the same service credit to men with children.[29] The Court accepted that calculating the pension entitlement of women but not of men in this way amounted to a difference in treatment on grounds of sex and therefore infringed the principle of equal pay in Article 119 of the Treaty.[30]

2.21 It then went on to consider the request of the French Government that the Court limit in time the effects of the Court's judgment. The Government's arguments for limiting the effects of the judgment were twofold.[31] First, that any misinterpretation of EU law by the French authorities stemmed from a legal uncertainty discernible in the Court's case-law concerning positive action in favour of women. Second, that the financial equilibrium of retirement pensions for civil servants would be thrown into disarray if the credit provided for were to be granted with retroactive effect to all retired male civil servants who had children (it estimated the cost at between 3 and 5 billion French Francs a year).

2.22 The Court in Griesmar responded by stressing that it is only exceptionally that the Court may limit the effects of its judgments in time—

73. It must be pointed out that the interpretation which the Court gives to a provision of Community law clarifies and defines its meaning and scope only as it should have been understood and applied from the time of its entry into force …

74. It is only exceptionally that the Court may, in application of the general principle of legal certainty inherent in the Community legal order, be moved to restrict the possibility for any person concerned to rely upon a provision which it has interpreted with a view to calling into question legal relationships established in good faith …

75. It is also settled case-law that the financial consequences which might ensue for a Member State from a preliminary ruling do not in themselves justify limiting the temporal effect of the ruling …

76. The Court has taken that step only in quite specific circumstances, where there was a risk of serious economic repercussions owing in particular to the large number of legal relationships entered into in good faith on the basis of rules considered to be validly in force and where it appeared that both individuals and national authorities had been led into adopting practices which did not comply with Community law by reason of objective, significant uncertainty regarding the implications of Community provisions, an uncertainty to which the conduct of other Member States or the Community institutions may even have contributed."

2.23 The Court held that there were no grounds for limiting the temporal effects of its judgment that awarding the service credit to women and not men was unequal treatment. The French Government could not show any objective and significant legal uncertainty, nor had it established that the number of retired male civil servants who are able to prove that they assumed the task of bringing up their children was such as to give rise to serious economic repercussions.[32]

2.24 We therefore maintain our view that the way in which the Government had indicated it intended to exercise its regulation making power under the present Bill would have given rise to a difference of treatment of people in a comparable position which requires justification by evidence. Indeed, we found it extremely surprising that the Government in its letter of 29 July contended that there is no difference of treatment where a surviving civil partner receives a smaller survivor's pension than a surviving spouse or unmarried opposite-sex partner notwithstanding that the deceased civil partner and spouse both had identical contribution records. We regard it as a matter of common sense that this amounts to a difference of treatment. We are also in no doubt that, on a proper application of discrimination law principles, this constitutes a difference of treatment on grounds of sexual orientation which requires justification. We welcome the fact that this now appears to be accepted by the Government. We now turn to consider the Government's answers in relation to justification.[33]

Justification

2.25 As far as justification is concerned, the Government in its letter relied in general terms on the risk of affecting the balance of pension schemes which have not budgeted for them. It argued that backdating changes to pensions would impose an unexpected burden on pension schemes by reference to past periods when the trustees or managers would have had no reason to take account of this potential liability. It stated that this was also consistent with the Government's long-standing policy that improvements to occupational pension provisions to reflect changing social attitudes and expectations should not be made retrospectively at the cost of employers or the taxpayer.

2.26 We note, however, that the Government in its letter produced very little in the way of concrete evidence about the precise scale of the additional burden which it alleged would be imposed on existing occupational pension schemes. In our earlier report, we pointed out that the onus rests on the Government to demonstrate sufficiently weighty reasons for discrimination on grounds of sexual orientation, and that if the justification relied on were that it would upset the balance of existing schemes, "evidence must be provided of the precise impact on those schemes".[34] Such evidence could be expected to show the number of people who would benefit if survivor's pensions were available to surviving same-sex partners in respect of their whole period of pensionable service; the number of schemes which currently confine survivor's pensions to married partners; the number of schemes in which members make different contributions according to whether they are married or unmarried; and the assumptions on which the pension schemes project their future liabilities. All of this is information which would be necessary in order to assess the extent to which paying survivor's pensions to same-sex partners would exceed the expected liabilities of the scheme.

2.27 In Barber, for example, the UK Government supported its argument that the Court's interpretation of Article 119 would have serious financial consequences for the UK by referring to the large numbers of workers affected and the fact that pension schemes frequently provide for different pensionable ages for men and women.[35] The Court accepted its argument. In Griesmar, by contrast, the Court held that the French Government had not established that the number of retired male civil servants who would be able to prove that they had been treated unequally was such as to give rise to serious economic repercussions.

2.28 In light of the Government's answers in its letter to our questions concerning justification, we consider the question of survivor's pensions for same-sex partners to be closer to Griesmar than Barber. The Government asserted in its letter that backdating survivor's pensions for civil partners to 1988 would add £125 million to the liabilities of public service pension schemes, but its assumptions in arriving at this figure are not clear. There is no concrete evidence of the number of same-sex partners likely to claim a survivor's pension, nor of the number of existing schemes which confine survivor's pensions to married spouses, nor of the actuarial assumptions about the number of survivor's pensions likely to be claimed. If, for example, most pension schemes now provide for survivor's pension for unmarried opposite-sex couples, as well as spouses, actuarial assumptions based on marriage statistics can no longer be relevant to such schemes. No evidence has been provided to demonstrate the basis on which schemes which already grant survivor's pensions to unmarried partners calculate their future liabilities. In these circumstances, we were not satisfied that the Government in its letter went beyond mere assertion in stating that paying survivor's pensions to same-sex partners would upset the balance of existing schemes and/or cause serious economic repercussions.

2.29 In our view therefore the onus of justification in relation to the difference of treatment had not been made out by the Government in its letter responding to our concerns. In the absence of such justification, we conclude that the difference of treatment would be incompatible with Article 14 in conjunction with Article 1 of Protocol 1. We welcome the fact that this now appears to be accepted by the Government.

Conclusion

2.30 In its letter of 29 July the Government disagreed with the view we expressed in our earlier report that, on the basis of the reasoning of the House of Lords in Mendoza, the denial of survivor's benefits to same-sex partners may in certain circumstances already be in breach of Article 14 ECHR in conjunction with Article 1 of Protocol 1, even before the enactment of the Civil Partnership Act.[36] The Government inferred from this that it is also our view that the service which should be taken into account goes back to the date of implementation of the Human Rights Act 1998.

2.31 This is a misunderstanding of the view we expressed in our earlier report. In order to clarify that position and in the hope of avoiding future uncertainty on this important question, we now conclude by summarising our understanding of the position under both the current law and following enactment of the Civil Partnership Act. The correct analysis seems to us to be as follows.

(1) A difference of treatment in relation to pension benefits on the basis of sexual orientation is within the scope of Article 14 ECHR in conjunction with Article 1 of Protocol 1 and requires weighty justification if it is to be compatible with Convention rights (Karner v Austria).

(2) This has been the position in UK law since 2 October 2000 (when the HRA came into force).

(3) Where a benefit is available to unmarried heterosexual couples as well as married couples, it is discriminatory to exclude same-sex couples from the same benefit without justification (Mendoza). The right to complain of such discrimination is only available to those whose partner died since 2 October 2000.

(4) Anybody whose same-sex partner has died since 2 October 2000, when the HRA came into force, and who was a participating member in a pension scheme which pays survivor's pensions to unmarried opposite-sex partners in return for the same contributions, should be entitled to a survivor's pension on the same terms as the unmarried opposite-sex partner in the same position, unless there is justification for the difference of treatment.

(5) When the Civil Partnership Act comes into force, so that same-sex partners can become civil partners, it would have been discriminatory to exclude a surviving same-sex registered partner from the pension available to a surviving spouse, without weighty justification for such difference of treatment. This only applies to people whose registered partner died after the Civil Partnership Act came into force.

(6) It follows that, in order to be compatible with Article 14 and Article 1 of Protocol 1, the new Regulations made under the enabling provision in the Bill would have to require that pension funds which provide survivor's pensions to married partners, where married and unmarried members of the scheme make the same contribution, also make such pensions available to surviving civil partners on the same terms.

(7) In these circumstances, the onus is on the Government to justify any difference of treatment by reference to evidence of the impact on existing schemes. In our view, on the basis of its letter of 29 July, it had not established that the number of surviving civil partners who will be entitled to a survivor's pension on the basis of their deceased partner's full contribution record is such as to give rise to serious economic repercussions, or that the impact on existing schemes will be so grave as to justify a difference of treatment. We welcome the fact that this is no longer necessary because the Government has agreed to remove the difference in treatment.

12 Bill 132-EN Back

13 These provisions, which were added by amendment at Report stage in the House of Lords, enable civil partnerships to be formed by persons within the specified degrees of family relationship who are over 30 and have lived together for 12 years. Back

14 Fifteenth Report, Session 2003-04, Civil Partnership Bill, HL Paper 136, HC 885 Back

15 Ibid., see Appendix Back

16 Ibid., at paras 26 and 47 Back

17 Appendix 1 Back

18 HC Deb., 12 October 2004, cols 176 and 249-250. Back

19 EN para. 472 Back

20 Fifteenth Report, Session 2003-04, op cit Back

21 HC Deb., 12 October 2004, cols 249-250 (Anne McGuire MP, Parliamentary Under-Secretary of State for Scotland).The Government rightly states that there is no need to amend the Bill in order to give effect to the change of policy: the change will be achieved by way of regulations (see above). Back

22 Clause 244 of the Bill Back

23 "It must therefore be held that the direct effect of Article 119 of the Treaty may not be relied upon in order to claim entitlement to a pension with effect from a date prior to that of this judgment", Douglas Harvey Barber v. Guardian Royal Exchange Group, Case C-262/88, para. 45. Back