About 60,000 part-time workers yesterday won the right to pension benefits backdated to 1976 in a victory at the European court of justice in Luxembourg which could cost employers between £10bn and £17bn. The ruling means a potential multi-billion pound bill for the government, which is the principal employer involved.
The workers, backed by private and public sector unions, won a ruling in 1994 that excluding part timers, who are mainly women, from pension schemes constituted sex discrimination and a breach of European law on equal pay.
Employers, most of whom denied part timers access to occupational schemes, were forced to let them join, but it was unclear how far back those denied access could claim backdated contributions from employers. Unions fought up to the House of Lords and in the European court to establish 1976 as the date, rather than the two years' backdating allowed under UK equal pay law.
They lost in the industrial tribunal, employment appeal tribunal and court of appeal, but the House of Lords sent the question to Luxembourg for a ruling. Yesterday, the court ruled in 22 test cases, representing 60,000 applicants, that they can date pension scheme membership back to 1976, or when they started working part time if later. Britain at present has 6m part-time employees.
Employers hardest hit by the ruling include banks, the NHS and local education authorities, which all employ large numbers of part-time workers.
Workers whose employers run contributory pension schemes will have to put in the contributions they would have paid had they belonged to the scheme. But those working in some sectors, such as banking, where schemes are non-contributory, will get a large windfall without a contribution.
The National Union of Teachers said a typical teacher with 25 years' service who worked part time for 12 years of that time, retiring on a salary of £24,000, would get £1,800 a year additional pension and an extra £5,400 lump sum.
The NUT's general secretary, Doug McAvoy, said: "The government could have saved a fortune by accepting its responsibilities rather than fighting against women's rights. We have been arguing the case for our members since 1994. At last [part-time] teachers will be able to press their claims."
Many people who would have benefited have died while awaiting resolution of this case, and surviving spouses are extremely unlikely to receive a penny.
The case will now go back to the House of Lords for a decision on how to take the claims forward. The lords will also have to decide whether workers who filed claims more than six months after leaving their job will be able to claim.
Aside from the 60,000, there are hundreds of thousands of others who could benefit. Unions will be pressing the banks and public sector employers to extend the backdating of pension benefits, irrespective of whether a claim was lodged within six months of leaving employment, to all part-time workers since 1976 as a matter of equity.
The European court ruled that a six-month time limit would not necessarily breach European law. But the judges said it would be lawful only if a similar time limit applied to such claims under English law.
