Civil service union wins key employment contract judicial review
The Public and Commercial Services union (PCS) has won a key High Court verdict against government plans to reduce the redundancy provisions of civil service employment contracts.
Expert pensions lawyers said the ruling has significant implications for a range of public sector employees, not just those employed by the Civil Service.
The union successfully argued that the government's unilateral changes to the Civil Service Service Compensation scheme were unlawful, leading the judge, Mr Justice Sales, to order the government to reverse the changes, which came into effect on 1 April this year.
The amendments to the Civil Service Service Compensation scheme reduced the potential benefits available for many civil servants on redundancy or early retirement. The PCS argued that the Superannuation Act 1834 and later Superannuation Acts included provisions which appeared to set out entitlements or rights of civil servants to receive pension when certain conditions were fulfilled, although it was clearly established that such entitlements did not constitute legal entitlements to payments.
The judge ruled that the Superannuation Act 1972 (as amended) should be interpreted as conferring protection in relation to all entitlements in the Scheme referable to length of service and contributions paid. Under s. 2(3) of the 1972 Act, the claimant's agreement is required before the terms governing the amount of those benefits may be altered.
The precise terms of what the quashing order should say and how far the effects of this judgment extend have yet to be considered and the judge has given directions to the parties to try to agree the terms of the order to be made to give effect to the judgment and to return to court for further argument if no agreement is reached.
After the ruling in London, the PCS's solicitor Richard Arthur told the BBC: "If the government wants to alter rights which have been agreed for civil servants then it has to get the agreement of the unions. That is what the law says, and that is what the judge has ruled today."
Ralph McClelland, a solicitor at leading pensions law firm Sackers, said the most numerous group of employees which will be affected by the ruling will be people employed by the Civil Service but added that it will also affect anyone else who has a pension scheme set up under s.1 of the 1972 Act.
Organisations listed in schedule 1 of the Act that could have such a scheme include:
- The Metropolitan Police Authority
- Transport for London
- The Electoral Commission
- The National Audit Office
- Regional Development Agencies
- The Gambling Commission
- The Greater London Authority, and
- The Commission for Equality and Human Rights.
However, local authorities are unaffected as the Local Government Pension Scheme was set up under s. 7 of the 1972 Act, to which section 2(3) does not apply.
McLelland said the case should be considered in the context of the public sector cutback proposals that will almost certainly be brought forward under the Conservative/Liberal Democrat coalition government. The Conservatives’ plans for an emergency budget survived the negotiations between the two parties.
He said: “This judgement has clarified that redundancy benefits are included in the scope of protected accrued benefits. These are the very benefits that were going to be the mainstay of the savings introduced by the reforms to the Civil Service Compensation Scheme, which formed the basis of this appeal.
“One of the key issues that was decided in this case was whether or not the protections of section 2(3) were designed only to cover ordinary pension payments and death benefits or whether compensation for early loss of office or employment should be included in the scope of that provision. The balance has really moved towards covering all of those kinds of benefits.
“If this decision stands, it will mean making affected civil servants redundant much more expensive.”
Short of new primary legislation, the options for the government will be to try and appeal the judgement or to go back to the unions to try and obtain agreement to their proposed reforms, McLelland added.
