LLG (Lawyers in Local Government) and ALACE (the Association of Local Authority Chief Executives and Senior Managers) have formally launched judicial review proceedings in a bid to quash the Exit Payment Cap Regulations.
The two organisations said the move came “amidst confusion caused by the Exit Payment Cap Regulations clashing with the requirements of the Local Government Pension Scheme” and “in the absence of any indication from HMT or MHCLG that they will take action to address the procedural and substantive legal flaws”.
LLG and ALACE, who have taken advice from Nigel Giffin QC of 11KBW, said they had taken the decision “reluctantly”.
They said Giffin had identified a number of "clear procedural flaws" in bringing the regulations forward and also substantive issues as to the basis on which the regulations had been made, some of which also affect the Ministry for Housing, Communities and Local Government’s draft pension regulations on which consultation has not yet concluded.
Quentin Baker, President of LLG, said: “The reason given for introducing a cap on these payments was stated as being to address excessive payments to high earners or so called ‘fat cats’. However, the government’s own figures show that the effect of these regulations, if they include pension strain, will impact on a large swathe of long serving local government officers across the income range, by retrospectively reducing a fundamental benefit of the LGPS pension scheme.”
LLG said that up to 86% of officers facing redundancy over the age of 55 were likely to be adversely affected.
It claimed that at a time when local government needed to transform the way it provided services, this retrospective removal of a key employment benefit would hamper attempts to reorganise council services.
Ian Miller, Honorary Secretary of ALACE, said: “This is not about protecting ‘fat cats’. The provisions in the statutory pension scheme are available to all serving local government officers who are made redundant at a late stage in their careers and who will find it more difficult to find work again, due to a perfect storm of their age and the current economic instability. We share the deep concern of LLG and our fellow local government unions about the impact on long-standing arrangements that exist to protect key workers.”
LLG and ALACE said that the Government could choose to remove the pension strain from the calculations completely, or the changes could apply solely for future pension contributions, protecting those rights earned to date.
“LLG and ALACE would expect the government both to protect employees' legal rights and legitimate expectations and, importantly, to follow proper process,” they said.
A spokesperson for the MHCLG said it would not comment on ongoing legal matters.