(back to preceding text)

    19.  Mr Cavanagh QC for the appellants said that the Court of Appeal were wrong to separate out the contract containing the equality clause relating to the pension rights from the contract with the transferee. He said that the effect of regulation 5(1) of TUPE was that the contract with the transferor was not brought to an end on the transfer. The same contract continued in existence after that date as a contract with the transferee. Regulation 7 had two consequences only: first, the terms of the transferor's contract relating to the pension rights were not transferred to the transferee; and second, the transferee had no responsibility to provide a pension for any period before the date of the transfer. The liability for claims as to the operation of an equality clause relating to periods before the transfer remained with the transferor. But it was going too far to say that, as a side-effect of these provisions, time started to run against the claimant on the date of the transfer. It was the contract itself that was transferred. So it was the contract itself which identified the claimant's "employment" within the meaning of section 2(4) for the purposes of the time limit.

    20.  He sought to find support for this argument in a passage in the speech of Lord Slynn of Hadley in Preston and others v Wolverhampton Healthcare NHS Trust and others [1998] ICR 227 (HL), 237G-H, where, having noted that there was no provision in the 1970 Act that different contracts of employment are to be treated as continuous employment, Lord Slynn said:

"… section 2(4), as amended, refers to a claim in respect of the operation of 'an equality clause relating to a woman's employment.' That equality clause is a clause in a contract of employment which as I see it can only be the specific contract in respect of which the claim is made and which for the purposes of the industrial tribunal's jurisdiction must cover employment which has ended within six months of the claim before the industrial tribunal."

    21.  Mr Cavanagh also submitted that his argument was supported by the fact that the provision in the contract that was relied on in the appellants' claims was the equality clause. This was a term that was introduced into every contract of employment by section 1(1) of the 1970 Act, and it sat above all the other terms of the contract. It was this clause, which he described in his written case as an umbrella equality clause and which plainly did transfer over to the transferee, rather than any specific terms about the right to participate in a pension scheme, on which the claims were based. This, he said, reinforced his argument that, as it was wrong to see the equality clause relating to the pension rights as part of a separate contract from that which the claimant had with the transferee, the time limit in section 2(4) was not affected by the transfer.

    22.  I am unable to accept these arguments. As with any other issue of statutory construction, the question begins and ends with the words of the statute. The first point that must be made is that the word "contract" does not appear anywhere in section 2(4). It was used by Lord Slynn in the passage from his speech in the first Preston case, but that was in a different context. The question which he was addressing in that case was how the word "employment" was to be applied to a situation where the woman was employed by the same employer but under a succession of different contracts. For the reason that he gave, the argument that a succession of contracts could be treated as a single contract for the purposes of the time limit had to be rejected. Where there was a succession of contracts with the same employer, the contract in respect of which the claim was made in respect of the operation of the equality clause was the relevant contract of employment for the purposes of the time limit. But in my opinion his analysis does not provide the answer to the quite different question that has been raised in this case about the operation of the time limit where there has been a TUPE transfer.

    23.  The second point is that the word that the subsection uses to identify the moment which starts the running of the time limit is the word "employment". The question which it asks is whether the woman was employed "in the employment" within the six months preceding the reference of the claim to the tribunal. The claim to which the time limit is to be applied is, of course, the claim in respect of the operation of an equality clause relating to the woman's employment: see the opening words of the subsection. When the subsection is read as whole, its plain and natural meaning is that the claim must be brought within six months of the end of the employment to which the claim relates.

    24.  It comes as no surprise, then, to find that the first question that was referred by the House to the European Court of Justice at the conclusion of the first Preston case [1998] ICR 227 was, so far as relevant to this case, framed in these terms:

"1.  Is … a national procedural rule which requires that a claim for membership of an occupational pension scheme (from which the right to pension benefits flows) which is brought in the industrial tribunal be brought within six months of the end of the employment to which the claim relates…compatible with the principle of Community law that national procedural rules for breach of Community law must not make it excessively difficult or impossible in practice for the claimant to exercise her rights under article 119?" [emphasis added]

The European Court adopted the same wording when it answered this question in the negative: Preston and others v Wolverhampton Healthcare N H S Trust and others (Case C-78/98) [2000] ICR 961 (ECJ), para 35.

    25.  Why then should the subsection be given a different meaning when the time limit is invoked in the context of a claim relating to the operation of an equality clause which relates to a period of employment prior to the date of a TUPE transfer? It is true that section 2(4) of the 1970 Act was enacted before the coming into effect of the Acquired Rights Directive and, consequently, before the making of the TUPE regulations which transferred all the transferor's rights, powers, duties and liabilities under or in connection with the contract of employment to the transferee but left any rights, powers, duties and liabilities under or in connection with an occupational pension scheme with the transferor: see regulations 5(2)(a) and 7 (1)(b) of TUPE. But I do not think that the subsection can be taken to mean different things depending upon the part of the TUPE arrangements to which the claim relates.

    26.  It is often said that a statute is always speaking. This is so, and where the language permits there is this element of flexibility. It can be adapted to contexts that were not foreseen when it was enacted. But the metaphor must not be pressed too far. A statute cannot speak with two different voices at one and the same time. The rule that section 2(4) originally laid down was that a claim in respect of the operation of an equality clause must be brought within six months of the end of the employment to which the claim related. It applied to each and every claim that might be made in respect of the contravention of a term modified or included by virtue of an equality clause: see regulation 2(1). The same rule must be applied where there has been a TUPE transfer. The only question is: to which employment does the claim relate? The answer, where the claim is in relation to the operation of an equality clause relating to an occupational pension scheme before the date of the transfer, is that it relates to the woman's employment with the transferor.

    27.  Mr Jeans QC for the respondents submitted that this interpretation of section 2(4) had the advantage of certainty. Why, he said, should time begin to run from a date that had nothing to do with the claim in question? It was to be assumed that the rule was intended to enable potential defendants to know exactly when it was that time had run out for the making of claims against them. The effect of the appellants' argument was that a transferor would be exposed to claims relating to its occupational pension scheme indefinitely. The problems that it would face in maintaining the necessary records long after the business had been transferred should not be underestimated. One of aims of TUPE was to achieve a smooth and orderly transfer. This would be inhibited if the transferor's liability in respect of occupational pension schemes was subject to a time limit which had nothing to do with the transferor, but was linked instead to the woman's employment with a transferee who was excluded by regulation 7 from any share in the liability.

    28.  Mr Cavanagh said that some lack of legal certainty was inevitable, given that the time limit ran not from the date of the breach or from loss sustained as a result of it but from the end of the employment. He gave various examples of how uncertainty could arise even on the respondents' interpretation of section 2(4). I think that on balance greater uncertainty is likely to be produced by the appellants' interpretation of it. But there is much more force in Mr Jeans' point that the best way of achieving the purpose of the time limit is to link it as closely as possible to the liability which is the subject of the claim. This is achieved if the period of six months within which the claim relating to the operation of an equality clause with regard to an occupational pension scheme provided by the transferor must be brought runs from the end of the claimant's employment with the transferor, to whom the liability belongs, rather than the end of her employment with the transferee. The fact that, where disputes arise, it is the link between the employee and the employer whose rights and obligations are in issue that matters is demonstrated by section 2(1A) of the 1970 Act, which enables an employer to apply to an employment tribunal for an order declaring the rights of the employer and the employee where a dispute arises in relation to the effect of the operation of an equality clause. There is an element of symmetry here which supports the meaning that is conveyed by the words of the subsection. It is reassuring too that it was this interpretation of the subsection that the European Court of Justice had in mind when it ruled that the limitation period was compatible with the fundamental principle of legal certainty and did not make the exercise of rights conferred by Community law virtually impossible or excessively difficult.

    29.  For these reasons I would dismiss the appeal. The appellants must pay the respondents' costs before this House. Mr Paines QC for the First Minister accepted that no order for costs should be made in his case.

LORD SCOTT OF FOSCOTE

My Lords,

    30.  I have had the advantage of reading in advance the opinion of my noble and learned friend Lord Hope of Craighead and for the reasons he gives, with which I agree and to which I cannot usefully add, I too would dismiss this appeal.

LORD RODGER OF EARLSFERRY

My Lords,

    31.  I have had the advantage of considering the speech of my noble and learned friend, Lord Hope of Craighead, in draft. I agree with it and, for the reasons which he gives, I too would dismiss the appeal.

LORD CARSWELL

My Lords,

    32.  I have had the advantage of reading in draft the opinion prepared by my noble and learned friend Lord Hope of Craighead. I agree with his reasons and conclusions, and for those reasons I too would dismiss the appeal.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,