Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
EMPLOYMENT TRIBUNALS
at:
Nottingham
BETWEEN:
Claimants
1) Mrs Sheila Brooks
and
Respondents
1) Staffordshire County Council
2) Secretary of State for Communities & Local
Government
2) Mrs Delia A Holt
1) Dorset County Council
2) Secretary of State for Communities & Local
Government
3) Mrs Janice Pinner
1) Surrey County Council
2) Secretary of State for Communities & Local
Government
4) Mrs Sylvia Stafford
1) Kent County Council
2) Secretary of State for Communities & Local
Government
Representation
For the Claimants:
For the Respondents:
1)
2)
Mr Michael Ford
Mr Jason Coppel
Mr Nicholas Paines QC
Mr Raymond Hill
REASONS
Introduction
1.
I have before me an application, by the Secretary of State for Communities and
Local Government and a number of employing respondents in the Local Government
sector, to strike out, on the grounds that they have no reasonable prospect of success,
1
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
complaints by four part-time employees that they have been unlawfully excluded from
the Local Government Pension Scheme by virtue of their part-time status in which they
invite the tribunal to grant them a Declaration of retrospective entitlement to
membership of the Scheme for the period of their exclusion. Although each of the
claimants has provided a witness statement explaining the circumstances in which
they failed to take up an offer to “buy back” their years of exclusion from the scheme, it
is the submission of Mr Paines QC and Mr Raymond Hill, who appear for the Secretary
of State, and Mr Jason Coppel who appears for the employing respondents, that the
claims must fail as a matter of law rather than on the basis of their individual facts and
it will not therefore be necessary for me to say very much about the circumstances of
each claimant. For the purpose of this hearing only it is agreed that I am to assume
that the claimants’ witness statements are truthful.
Background
2.
These cases are a sub-set of the part-time worker pension litigation, proceeding
under the generic title Preston and Others -v- Wolverhampton Healthcare NHS
Trust and Others (No. 3) [2004] IRLR 96 EAT. On 2 August 2002 I gave judgment
on a wide range of test issues. Some of my rulings were the subject of appeal to the
Employment Appeal Tribunal and the basis upon which one of them was overturned by
the EAT is relied upon by both Mr Paines and Mr Coppel as demonstrating that these
claimants’ claims have no reasonable prospect of success.
3.
Following that judgment and pending the hearing in the Employment Appeal
Tribunal, I listed for hearing on 31 March 2003 the issue of how the amount of the
contributions which employees whose claims succeeded as a result of my rulings must
make in order to be entitled to access to their employer’s occupational pension
scheme, should be calculated. At that hearing it was announced that terms of
settlement had been agreed between the parties in the public sector cases and were
being actively pursued in the private sector. The basis of the settlement in the public
sector was a complex formula devised by the Government Actuary’s Department and
agreed to by all of the trade unions representing public sector employees. It came to
be known as the public sector settlement model. With the agreement of the parties I
gave directions for the implementation of the unappealed parts of my 2002 decision in
he light of the agreed terms of settlement, reserving to myself any new points of law
which might arise as a result of the application of those terms.
4.
In March 2004 the Treasury Solicitor, on behalf of the Second Respondent,
raised just such an issue which affected the local government sector only. For ease of
reference the cases in which it arose became known as the Beswick cases, Mrs
Beswick’s claim having been designated as the lead claim. The issue was said to
affect approximately six thousand claimants and arose because of an arrangement
which was peculiar to the Local Government Pension Scheme, formerly known as the
Local Government Superannuation Scheme.
5.
I will deal with the statutory provisions in detail in due course but in brief the
issue had arisen as a result of a series of changes which were made to the Scheme.
Until 1 April 1987 membership of the Local Government Superannuation Scheme was
compulsory for full-timers but part-timers were excluded. With effect from 1 April 1987
membership for full-timers ceased to be compulsory and certain part-time employees
2
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
were given the right to opt into the scheme. If they did so within 6 months (i.e. before 1
October 1987) their membership of the scheme could be backdated to 1 April 1986. If
they did so within 12 months (i.e. before 1 April 1988) they would be treated as though
they had “qualifying service” (which could be taken into account when determining
entitlement to certain benefits including a pension, but did not affect the amount of the
pension) backdated to 1 April 1974 or (subject to the need in some cases to have
served for 12 months before becoming eligible) the start of their employment
whichever was the later. It was at that time already envisaged that in due course
Regulations would be passed to enable those who had opted into the scheme before 1
April 1988 to translate that “qualifying service” into “reckonable service”, in effect
pensionable service, which would affect the amount of the pension. That would of
course be on the basis of the payment of contributions into the Scheme and the delay
in implementing the second stage of the process was due, at least in large part, to the
complexity of the exercise of determining the basis of calculation. The second stage of
the process occurred in 1990, and from 17 September of that year local government
employees who had opted into the Scheme before 1 April 1988 were allowed to buy
back as reckonable service the years which, by virtue of their opting in in 1987 or
1988, were until then being treated only as qualifying service.
6.
The Beswick issue was whether the terms on which the translation of the
qualifying service into reckonable service, which I will refer to for the sake of
convenience as the “buy back arrangements”, were sufficient to extinguish any cause
of action which the claimants might have had in respect of their exclusion from the
pension scheme up until that date. More precisely, were the buy back arrangements
on offer in 1990 more or less favourable than the public sector settlement model and, if
so, what was the consequence for these claims?
7.
The Scheme requires both employers and employees to make contributions.
The buy back arrangements only gave local government employers the option to make
a contribution in respect of the buy back period and not all elected to do so. This
meant that some, possibly many, local government employees who wished to take
advantage of the buy back arrangements were required to make the whole of the
contributions themselves. But set against that, those who had been members of the
State Earnings Related Pension Scheme (SERPS) or the Second State Pension (S2P)
would not be required to surrender the benefits which had accrued as a result of that
membership nor would they be required to pay the contributions necessary to achieve
the buy back in a lump sum. The payments would be spread over a period of time
equivalent to the length of the period being bought back or to the employee’s date of
retirement, whichever was the shorter.
8.
In a Case Management Discussion on 29 July 2004 at which all of the local
authority trade unions were represented by Mr Dan Stilitz QC, the definition of a
Beswick case was agreed to be as follows:
“One in which either the arrangements on which [a claimant] bought back past
years or the [claimant’s] failure to buy back past years is either the whole or part
of the cause of action or the whole or part of the defence.”
3
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
At the CMD, Mr Paines, for the Secretary of State, submitted that all such claims
should be struck out on the basis that any antecedent breach of the equality clause (a
term which I explain in paragraph 27 below) which had occurred during the period
when part-time employees were excluded from membership of the Scheme, was cured
by the availability of the right to buy back, because the terms of the buy back
arrangements were at least as favourable as the terms of the public sector settlement
model and in consequence none of the Beswick claimants had suffered a detriment as
a result of their earlier exclusion from the Scheme.
9.
It was agreed that the Beswick claims would be stayed to enable the Treasury
Solicitor to serve on all of the lead trade unions in the local government sector the
Government Actuary’s Department’s paper and supporting tables on the comparison of
the 1990 buy back arrangements with the public sector settlement model. Paragraph
3(b) of the Orders provided as follows:
“The unions are thereafter to inform the Treasury Solicitor 1.
Whether the paper and the conclusions reached in it are agreed, and if
so
2.
The consequences for the Beswick cases.”
10.
The Government Actuary’s Department’s report concluded with three comments
on the results of his analysis.
“6.1 Table B1 - relevant to those earning not more than the level of the LEL
(the lower earnings limit below which an employee would not be entitled to join
the pension scheme) - shows that, on the basis of the methodology and
assumptions described above, the 1990 method would have been more
favourable for all but a few of the range of all possible reinstatement periods,
and all except one of those ending prior to 1985.
6.2
Tables B2 and B3 show that in cases where earnings at the end of the
reinstatement period amounted to between 1.5 and 2 times the level of the LEL
at that time, there were very few reinstatement periods for which the PSSM was
more favourable.
6.3
Table C1 shows that, even for those not benefiting from the SERPS/S2P
employer rebate, with a maximum 50% employer subsidy, the 1990 method was
more favourable for all possible reinstatement periods. “
11.
On 24 June 2005 Ms Deborah Alexander, a legal officer in Unison’s
Employment Rights Unit, wrote to the tribunal in compliance with paragraph 3(b) of the
Order. The third paragraph of her letter made what Mr Ford now accepts to have been
a blanket concession applying to all of the Beswick claims.
“I write on behalf of UNISON to confirm that an expert actuary was instructed to
critique the GAD Report and in essence its conclusions have been agreed.
UNISON therefore confirms that it is not in a position to pursue the argument
that Beswick Claimants have suffered a detrimental (sic).”
4
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
The Transport & General Workers Union made a similar concession. The GMB trade
union did not formally concede the point but left it to their local officers to decide one
way or the other. In addition to the claimants represented by the three major trade
unions, there are an unknown but undoubtedly significant number of unrepresented
claimants in the Beswick cases who were neither asked to make nor made, the
concession.
12.
Following the making of the concession, letters were sent to all Beswick
claimants inviting them to show cause why their claim should not be struck out on the
grounds that they had no reasonable prospect of success because the 1990 buy back
arrangements meant that they had not suffered a detriment as a result of their prior
exclusion from the pension scheme. This hearing has become necessary because on
7 November 2005, some months after the operation to strike out the Beswick
claimants had begun, Messrs Thompsons Solicitors for the UNISON represented
claimant’s queried whether the concession was apt to cover those Beswick claimants
who, for various reasons, had not been in a position to exercise the buy back offer.
They suggested that the tribunal had been in error in concluding (as the tribunal had
announced on its website shortly after Ms Alexander’s letter) that the concession had
not only been made in respect of those to whom the buy back offer had been made but
also in respect of those claimants to whom the buy back offer would have been made
had they exercised their right to opt into the scheme prior to 1 April 1988.
13.
It is not necessary to rehearse the course which the correspondence then took
but by the time the Case Management Discussion which set up this hearing took place
on 24 October 2006, the issues had refined considerably although they had not, as it
turned out, quite reached their final form. The Beswick cases had by that time, with
the agreement of UNISON, been divided into two categories. The Category 1 cases
were those where the claimant, as a consequence of opting into the scheme, had had
the right to buy back the lost years and either had or had not exercised that right. It
was not sought to withdraw the concession in respect of the Beswick Category 1
claimants and the strike out exercise in respect of them accordingly resumed. Before
me, Mr Ford, perhaps tentatively, has suggested that it might be possible for a Beswick
Category 1 claimant to succeed if she decided not to take up the buy back
arrangement for some compelling reason. No such test issue is however before me
and formally UNISON’s position must therefore remain that their concession that
Beswick cases fail continues to apply to all Beswick Category 1 claimants. Mr Ford
invited me to speculate on the circumstances in which such a Beswick Category 1
claimant might succeed, but I indicated during the course of the hearing that I would
regard it as unacceptably dangerous to do so. It seems to me, however, that as a
result of the conclusion which I have reached on the issues which are before me, that
a claim by such a Beswick Category 1 claimant could not succeed.
The issues
14.
This hearing has therefore been concerned with what have come to be known
as the Beswick Category 2 claimants. The Case Management Discussion identified
three possible scenarios. First, that the claimant was informed both of her right to join
the pension scheme and of the possibility of buying back the lost years but did not
exercise that right. Secondly, the claimant was informed of her right to join the pension
scheme but not the possibility of buying back the lost years and, in consequence,
5
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
could not exercise that right. Thirdly, the claimant was informed neither of her right to
join the pension scheme nor of the possibility of buying back the lost years and, in
consequence, could not exercise either right.
15.
None of the four test cases falls into the first category. Mrs Stafford falls into
the second category, although in perhaps a rather unexpected way, as despite being
informed of her right to join the pension scheme in 1987 she decided against doing so
because she had taken out a private pension and (her witness statement is not entirely
clear but this seems to be her case) decided against surrendering it and transferring
into the Local Government Scheme. Mrs Pinner, Mrs Brooks and Mrs Holt all fall into
the third category. They claim simply to have been completely unaware of either the
right to opt into the scheme or to exercise the buy back arrangements despite what in
each case appear to have been the best endeavours of their employing authority to
ensure that their employees were fully informed.
16.
None of the claimants suggests that they have been the victim of any kind of
conscious impropriety by their employers, merely the victims of circumstance. It is
therefore very important to note that I do not have before me any case in which the
claimant contends that her ignorance of her right to opt into the pension scheme or of
her right to exercise the buy back was the result of a deliberate policy by her employer
to continue to disadvantage part-time employees. I understand from Mr Ford that
there were some local authority employers who did not inform their employees directly
of the changes to the Scheme rules, but whether it could be said that a mere failure to
so inform amounts to such a policy is not a matter on which I am asked to comment or
to decide.
17.
The Case Management Orders of 24 October 2006 identified, by consent, not
merely that the issue before me would be whether the claims of the test case claimants
should be struck out under either rule 18(7)(a) on the grounds that they were not
entitled to bring the proceedings, or rule 18(7)(b) on the grounds that they had no
reasonable prospect of success, but also whether they required leave to withdraw the
concession previously made by Ms Alexander. At the start of this hearing, in an
attempt to ascertain precisely the extent to which Mr Ford was seeking to withdraw that
concession, I suggested to him an alternative formulation of the three Beswick
Category 2 sub-categories. The first was claimants who claimed to have had neither
notice of the right to opt in nor of the right to buy back. The second was claimants who
accepted that they had had notice of the right to opt in to the Scheme but who had
decided not to opt in for a reason which, if this was a purely opters issue, (see
paragraph 181 of my Reasons in Preston (No. 3) of 2 August 2002) would not have
disqualified them from succeeding in respect of an earlier period of exclusion from the
scheme. The third was claimants who had been notified of their right to opt into the
scheme but who had decided not to do so for any other reason.
18.
Mr Ford accepted that the concession must continue to apply in respect of the
third category, and that in respect of the second category he faced a considerably
greater difficulty than he submitted that faced him in respect of the first category. The
issue therefore seems very similar to, and Mr Paines and Mr Coppel submit is identical
with, Test Issues 5.2(b) and (c) of Preston (No. 3). In connection with those issues I
held as follows.
6
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
“1.
There is a continuing breach of the equality clause, and therefore [a
claimant’s] cause of action continues beyond the date on which she became
eligible to join her employer’s pension scheme, if, after the removal of any
qualifying hours threshold with which she could not comply, [a claimant’s]
continued failure to join, or inability to gain access to, the scheme a) is directly
referable to her status as a part-time employee; b) the circumstances do not
apply to full-time employees, and c) is to her detriment.
2.
This would be the case where [a claimant] on becoming eligible to join a
pension scheme, did not do so because she was unaware of her right to join
because of her employer’s failure to inform her of the right; or where [a claimant]
who believed she might have the right to join was misled by her employer,
intentionally or unintentionally, into believing that she did not have the right or
whose employer denied that she had the right.
3.
There would not be a breach of the equality clause if on seeking to join
the scheme [a claimant] was either discouraged or dissuaded from joining
unless this was as a result of a policy of the employer aimed at part-timers and
involved the imposition of conditions not imposed on full-timers, or a campaign
of deliberate misinformation or otherwise amounted in practice to a denial of the
right to membership of the scheme.”
19.
On appeal, that holding was largely overturned.
Judgment, His Honour Judge McMullen said,
At paragraph 79 of his
“I would therefore substitute for … paragraphs 1 and 2 … the following:
‘Where her reason for not opting into the scheme was because of her
employer’s failure to alert her to the possibility of doing so, her employer may be in
breach of implied terms of the contract of employment but not of the Equality Clause.’
Paragraph 3 remains.”
For an explanation of this ruling see paragraphs 27 to 29 below.
The concession issue
20.
As Mr Ford acknowledges, he cannot resist the respondents’ combined
application to strike out these claims unless I first grant the claimants leave to depart
from the concession made by Ms Alexander to the limited extent necessary to
encompass the circumstances which explain the test case claimants’ failure to take up
the buy back arrangements. I pause here to note that the Transport and General
Workers Union, the only other local government union to expressly make the
concession, are not a party to these proceedings and it must therefore be presumed
that they accept that the original concession was rightly made in respect of all
Beswick claimants. However, as I have previously noted, there are an unknown but
presumably not insubstantial number of claimants who, because they were not
represented by either UNISON or the Transport and General Workers Union, are not
bound by the concession in any event.
7
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
21.
In seeking to persuade me to grant the necessary leave, Mr Ford relies on a
judgment of the Court of Appeal, Stoke-on-Trent City Council v. Walley 2006 EWCA
Civ 1137, at paragraphs 34 and 35. In that case the appellant local authority was
permitted to withdraw an admission made in pre-litigation correspondence on the basis
that to do so would not be an abuse of the process of the court and that they were not
acting in bad faith. Mr Ford submits, correctly, that there is here no allegation that the
claimants or UNISON are acting in bad faith. He also submits that it would not be an
abuse of the process of the tribunal for the concession to be withdrawn because of the
peculiar circumstances in which it was made. It was not an admission of fact or of
liability but an admission which involved a mistaken understanding of the legal
consequences of accepting the accuracy of the Government Actuary’s Department’s
report in the context of litigation which was highly complex with a multiplicity of factual
scenarios and where all parties had from time to time misunderstood their legal
position.
22.
Mr Paines and Mr Coppel submit that because the concession sought to be
withdrawn in Walley had been made prior to the commencement of the proceedings, it
has little or no bearing on a situation where the concession sought to be withdrawn
had been made in the course of proceedings. The withdrawal of such a concession is
governed by CPR 14.1(5), guidance on the application of which is to be found in
Braybrook -v- Basildon and Thurrock University NHS Trust (2004) EWHC 3352
(QB) which was approved by the Court of Appeal in Sowerby -v- Charlton 2005
EWCA Civ 16.10 at paragraph 35.
23.
Mr Ford’s rejoinder to that submission is that there is no equivalent to CPR 14.1
in the Employment Tribunals Rules of Procedure 2004 and in consequence the matter
is subject to the exercise of the tribunal’s discretion under rule 10 “General Power to
Manage Proceedings” in the light of the overriding objective which is to be found at
regulation 3 of the Employment Tribunals (Constitution and Rules of Procedure)
Regulations 2004 to which the Rules of Procedure are appended as Schedule 1. The
overriding objective provides “1.
The overriding objective of these Regulations and the Rules … is to
enable tribunals and chairmen to deal with cases justly.
2.
Dealing with a case justly includes so far as practicable,
a)
ensuring that the parties are on an equal footing
b)
dealing with the case in ways which are proportionate to the
complexity or importance of the issues
c)
ensuring that it is dealt with expeditiously and fairly
d)
saving expense.
3.
A tribunal or chairman shall seek to give effect to the overriding objective
when it or he
a)
exercises any power given to him by … the rules in Schedule 1 …”
24.
I accept that rule 10 is the appropriate rule and that I must interpret it in
accordance with the overriding objective. However, that, in essence, seems to me to
8
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
be precisely what I am enjoined to do by the Court of Appeal in Sowerby which
approved the judgment of Sumner J in Braybrook where his Lordship said thus,
“1.
In exercising its discretion the court will consider all the circumstances of
the case and seek to give effect to the overriding objective.
2.
Amongst the matters to be considered will be
a) the reasons and justification for the application which must be made
in good faith
b) the balance of prejudice to the parties
c) whether any party has been the author of any prejudice they may
suffer
d) the prospects of success of any issue arising from the withdrawal of an
admission
e) the public interest in avoiding where possible satellite litigation,
disproportionate use of court resources and the impact of any strategic
manoeuvring.
3.
The nearer any application is to a final hearing the less chance of
success it will have even if the party making the application can establish clear
prejudice. This may be decisive if the application is shortly before the hearing.”
The Court of Appeal emphasised that the exercise of the discretion is always
dependant on the facts of the particular case and in consequence the words ‘will
consider all the circumstances of the case’ have a particular resonance in this context.
25.
Mr Paines and Mr Coppel submit that I should not grant leave because the
concession as originally made was clearly correct and that being so, to grant the leave
which Mr Ford seeks would be futile as it could only result in the immediate striking out
of these claims. Because of the number of claimants who are not bound by the
concession it is inevitable that I must in any event consider whether the propositions
which Mr Ford advances do have any reasonable prospect of success. I accept the
submissions made on behalf of the respondents that if I conclude that they do not it
would be pointless to grant leave and I therefore propose at this stage to examine
whether, if leave were granted, the claims of these claimants could succeed.
The strike-out application: the law
26.
These claims are brought under section 1 of the Equal Pay Act 1970 which falls
to be interpreted in accordance with Article 141 of the Treaty of Rome. I do not
propose to set out either provision nor to explain the inter-relationship between them
as this exercise has been undertaken at considerable length both in my judgment in
Preston (No. 3) of 2 August 2002 and in the judgment of the Employment Appeal
Tribunal on appeal from it. That at least is one aspect of the part-time worker pension
litigation which now seems to be free from controversy.
27.
The machinery by which the Equal Pay Act secures the right to equality of
treatment in matters of pay (of which entitlement to equal access to membership of a
pension scheme is part) is by implying into the contract of employment of every woman
an equality clause. A complaint to an employment tribunal that a claimant is not in
9
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
receipt of equal pay for either like work or work which is of equal value to a male
comparator, is therefore in essence a complaint of breach of contract. That is the
foundation upon which Mr Ford makes his submissions to me. The existence of the
equality clause explains in part the reasoning of the Employment Appeal Tribunal in
overturning the first and second paragraphs of my ruling on test issues 5.2(b) and (c).
28.
The other part of that explanation is to be found in the judgment of the House of
Lords in Scally -v- Southern Health and Social Services Board [1991] ICR 771 HL.
In that case, employees of the Health Service of Northern Ireland who had
commenced employment too late in life to complete 40 years service and thus qualify
for a full pension, were given the right by Statutory Instrument to buy added years to
compensate for the deficiency, but to derive the maximum benefit, that right had to be
exercised within a relatively short time limited period. If not exercised within that
period, the right became significantly less favourable. Some medical practitioners
were not informed of that right and brought proceedings against their employing Health
Board alleging that in failing to inform them of the existence of the right the Board was
in breach of contract. The claim succeeded and the Board’s appeal to the House of
Lords failed. At page 781D to 782B, Lord Bridge, giving the only speech, said this “I think there is force in the submission that, since the employee’s entitlement to
enhance his pension rights by the purchase of added years is of no effect
unless he is aware of it and since he cannot be expected to become aware of it
unless it is drawn to his attention, it is necessary to imply an obligation on the
employer to bring it to his attention to render efficacious the very benefit which
the contractual right to purchase added years was intended to confer… I would
define (the category of contractual relationship in which such an obligation can
be implied) as the relationship of employer and employee where the following
circumstances obtain:
1.
The terms of the contract of employment have not been negotiated with
the individual employee but result from negotiation with a representative body or
are otherwise incorporated by reference:
2.
A particular term of the contract makes available to the employee a
valuable right contingent upon action being taken by him to avail himself of its
benefit:
3.
The employee cannot, in all the circumstances, reasonably be expected
to be aware of the term unless it is drawn to his attention. I fully appreciate that
the criterion to justify an implication of this kind is necessity, not
reasonableness. But I take the view that it is not merely reasonable, but
necessary, in the circumstances postulated, to imply an obligation on the
employer to take reasonable steps to bring the term of the contract in question
to the employee’s attention, so that he may be in a position to enjoy its benefit.
Accordingly I would hold that there was an implied term in each of the plaintive’s
contracts of employment of which the Boards were in each case in breach.”
29.
It is immediately apparent that the factual similarities between Scally and the
cases of Mrs Pinner, Mrs Brooks and Mrs Holt are striking. Mr Ford accepts, following
10
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
the judgment of the Employment Appeal Tribunal in Preston (No. 3) on test issues
5.2(b) and (c), that, absent an allegation of a policy aimed at part-timers of deliberate
misinformation, the mere failure by the respondents (I should, of course, say alleged
failure) to inform them of their rights to join the pension scheme does not amount to a
continuing breach of the equality clause, giving them a right of action under the Equal
Pay Act in respect of any period of time after they became eligible to join the pension
scheme, being either from 1 April 1986 (the date pleaded in their respective claim
forms) or 1 April 1987 (the date which Mr Ford submits should have been pleaded in
their claim forms). Such a failure may however give them or, because of the lapse of
time which has almost certainly resulted in such a claim being statute barred, may
have given them, the right to complain of breach of contract (which is not of course the
basis on which they complain to this tribunal) but, it is important to understand, the
breach of which they could complain is not of the equality clause but of the Scally
implied term.
The submissions
30.
In the light of that concession, Mr Paines and Mr Coppel submit that it is simply
paradoxical for Mr Ford to contend that whilst the 1987 and 1990 rule changes
admittedly deprive the claimants of a prospective claim, they do not deprive them of
the retrospective claim for the period of exclusion prior to the rule change. Mr Ford
submits that there is no paradox because a complaint under the Equal Pay Act is a
complaint of breach of the equality clause implied into each claimant’s contract of
employment, and once there has been a breach of contract it cannot be eradicated.
Rules may be changed so that for the future there is no longer a breach of the equality
clause but that cannot effect what has already happened: history cannot be re-written.
A sum of money may be tendered in recompense to remedy the past breach but the
breach nonetheless, as a matter of historical fact, continues to exist. The effect of the
1987 and 1990 Regulations was simply to provide that recompense or remedy. It was
merely mitigation of any claim the claimants’ might have had arising from the past
breach but it left the breach itself untouched. Moreover, it was only a remedy in
practice as opposed to being merely a remedy in theory if a claimant was made aware
of her rights. If she was not made aware of her rights, the remedy remained
contingent, the breach not merely unrectified but also unrecompensed. The claimants
continue to have a right of action in the employment tribunal under its jurisdiction in
equal pay because they have continued to suffer a detriment as a result of the
uneradicated breach of the equality clause. That detriment was the fact that, unlike
their full-time comparators, during the period of the breach on each occasion when
payment of remuneration was made they were not members of the pension scheme
and were not accruing pension rights. The failure to inform them of their new rights to
join the scheme means they continue to suffer that detriment.
31.
In response Mr Paines, whose submission Mr Coppel adopted with one
modification, submitted that Mr Ford’s analysis was flawed. It was flawed not merely
because the Regulations had retrospective effect and therefore did re-write history, it
was flawed because the time to look at the question of whether the claimants were
suffering a detriment and therefore whether there was a breach of the equality clause
was not 1984 or 85 or 86 when they were excluded from the pension scheme, but from
the moment when they retired. Mr Coppel submits that the time to consider whether
there is a breach of the equality clause is when the proceedings were commenced.
11
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
32.
Mr Paines submits that it is only on retirement that it is possible to know whether
a claimant has suffered a detriment, namely whether she is drawing a smaller pension
than her comparator as a direct consequence of rules of the Scheme which have in the
past discriminated against women. By the time the claimants retired, had they opted
into the pension scheme in 1987 and taken up the buy back arrangements in 1990, the
effect would have been that their pension would have been calculated as though they
had actually been a member during the whole of the buy back period, and therefore
they were in the same position as a full-time colleague who had in fact been a member
of the scheme throughout the buy back period. Mr Coppel submits that at the time
when these proceedings were commenced the offending rules having been removed
and the buy back arrangements being in place, it was already clear that employees
who had opted into the scheme and taken up the buy back arrangements would not
suffer a detriment. By whichever route the problem is approached the result is the
same: no difference in outcome therefore no detriment. And in consequence, Mr
Paines and Mr Coppel both submit, the point having already been established by the
Preston litigation, the absence of detriment means there is no breach of the equality
clause.
33.
Mr Coppel, in his skeleton argument, relies on three passages from my previous
judgments which, he submits, support that last proposition, none of which have been
the subject of an appeal. They must therefore be binding at least on the UNISON
represented claimants. In particular, he relies on paragraph 180 of my judgment in
Preston (No. 3). The issue was whether claimants who did not opt into the scheme
when they became eligible to join it could successfully sustain a claim in respect of an
earlier period of time during which they were excluded from the scheme but full-time
comparators were not obliged to be members. The respondents contended that such
claimants could not sustain a claim because their failure to opt in demonstrated that
they would not have opted in during the earlier period of time even if they had been
eligible to do so and they had therefore not suffered a detriment by being excluded
from the scheme by virtue of the scheme rules.
34.
At paragraph 180, so far as material, I said:
“….In these cases, the [claimant’s] failure to join the scheme upon becoming
eligible to do so, or only after a significant delay … may be highly relevant in
determining whether there has been a breach of the equality clause. Here I
think the respondents are right when they submit that there has been no less
favourable treatment or the [claimant] has not suffered a detriment if, although
excluded from membership by the rules of the scheme, she would not have
joined even if she had been given the opportunity. But even if I am wrong about
the legal analysis and there remains a breach of the equality clause, the
applicant’s failure to subsequently join the scheme must be highly relevant to
the exercise of the tribunal’s discretion to grant her a declaration for the period
of exclusion by virtue of the rules. To do so would be akin to affording her the
luxury of changing her mind. But in my judgment, the better view is that there is
no breach of the equality clause in the first place.”
35.
Subsequently, in Sanderson -v- Pennine Acute Hospitals NHS Trust (ET 15
September 2006) paragraph 49, I said:
12
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
“The claim under the Equal Pay Act and Article 141 EC cannot succeed if,
despite the existence of a provision, criterion or practice which adversely
impacts on women, the claimant has herself suffered no detriment.”
And in Betts and Others -v- The Boots Company PLC (Case Number
2600121/1996) at paragraph 11, I said:
“To amount to a breach of the equality clause a mere difference in treatment is
not enough: the difference in treatment must be to the claimant’s detriment and
not to be eligible for membership of something which one would not (or perhaps
because of one’s personal circumstances, could not) have joined even if
eligible, is clearly no detriment.”
36.
In Dennison -v- University College of St Mark and St John and Others (UK
EAT/0196/06), the EAT, as Mr Coppel submits, endorsed paragraph 180 of Preston
(No. 3) and the guidance based on it subsequently issued to parties in the Preston
litigation.
37.
I have no reason to depart from my earlier views. In my judgment it must be the
case that if an claimant has not suffered a detriment as a result of an indirectly
discriminatory provision, criterion or practice, there is no breach of the equality clause
in her case. Although, as Mr Ford rightly submits, paragraph 180 of Preston (No. 3)
was examining the position of claimants who had failed to opt into the scheme when
membership for their full-time comparators was no longer compulsory, whereas in this
case we are dealing with a period of time when membership for full-time comparators
was compulsory, I do not think that that detracts in any respect from the principle which
it established.
38.
On that basis Mr Paines and Mr Coppel submit, looked at from the only point in
the narrative where it really matters, indeed the only point from which it would be
possible to ascertain whether or not there was a detriment, the previous breach of the
quality clause had, contrary to Mr Ford’s submission, not merely been recompensed or
even cured. The detriment had gone and with it any breach of the equality clause.
39.
In response, Mr Ford submitted that the artificiality of the respondent’s position
could be seen from this hypothetical situation. Suppose each claimant in this case had
had the foresight to commence proceedings in 1986. Such a claim would inevitably
have succeeded because it pre-dated the 1987 Regulations. The tribunal would
therefore necessarily have held that there was a breach of the equality clause. But, if
Mr Paines is correct, by 1990 the tribunal’s decision would by some mysterious
process be rendered a nonsense because the breach which they had declared had
existed had not in fact existed. If not a paradox, that is certainly a contradiction.
40.
Before now turning to the Regulations I must add that Mr Ford concedes that if I
prefer Mr Paines and Mr Coppel’s submissions on the effect of the 1987 and 1990 rule
changes on the pre-existing breach of the equality clause, the claims must fail. In my
judgment that concession is plainly right and although I did not invite Mr Ford to
explain why he felt constrained to make the concession it might be helpful if I was to
add a few words of explanation of my own. Mr Paines is of course right when he
13
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
submits that the issue here is whether the Scheme post 1987 continued to discriminate
against those part-time workers who fall into the Beswick categories (the Scheme did
of course continue to discriminate against other part-timers, those working fewer than
15 hours a week). That question can only be resolved by looking at the rules of the
Scheme, not at how those rules happened to operate in practice in respect of a
particular individual. The Scheme rules, he submits, as a result of the 1987 and 1990
Regulations no longer so discriminated. Following the judgment of the EAT in Preston
(No. 3) on test issues 5.2(b) and (c) it cannot avail a claimant who had by virtue of
those rule changes become eligible to join the Scheme that she was not informed of
her right to do so unless the reason for the ignorance of her right to join was as a result
of a policy of misinformation or disinformation by the employer. None of these
claimants fall into that category.
The Statutory Provisions
41.
The Local Government Superannuation Regulations 1986 (SI 1986/24)
repealed and replaced without relevant amendment Regulations which had been in
force since 1974. Pensionable employment was defined under Part B and regulation
B1(2) and (3) defined pensionable employees as (inter alia) “a whole time officer” and
“a whole time manual worker” of local government employers. The terms “whole time”,
“officer” and “manual worker” and the employers to whom the Regulations applied
were each defined. Each of these claimants was an “officer” within the Regulations but
not working “whole time”. There will no doubt be Beswick Category 2 claimants who
were manual workers rather than officers but what I say below applies equally to them.
These claimants were therefore not pensionable employees under the 1986
Regulations.
42.
Part D of the 1986 Regulations dealt with the issue of service. Regulation D1
defined reckonable service thus “(1) Reckonable service is time that counts both for the purpose of
ascertaining entitlement to benefits under these Regulations and for the
purpose of calculating them.”
Regulation D2 defined qualifying service “(1) Qualifying service is time that counts for the purpose of ascertaining
entitlements to benefits under these Regulations but not for the purpose of
calculating them.”
43.
The benefits are to be found in Part E. Regulation E2 deals with the entitlement
to a retirement pension and provides “(1). Subject to paragraphs (3) to (10) where a person ceases to hold a local
government employment he becomes entitled in relation to that employment to
an annual retirement pension and a lump sum retiring allowance if –
a) he has attained the age of 60 years and the total of his reckonable
service and any qualifying service is not less than 25 years. The amount
of that pension is determined by Regulation E3”.
14
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
Regulation E3 (1) provides:
“Subject to paragraphs (2) and (12) to (16), and to regulation E29, the annual
rate of a person’s retirement pension is 1/80th of his pensionable remuneration
multiplied by the length in years of his reckonable service.”
44.
The difference between reckonable service and qualifying service is
immediately apparent. Even though it is not pensionable service, qualifying service
has an intrinsic value of its own in that it can, when added to reckonable service,
qualify a local government employee for a benefit under the scheme to which he would
otherwise not be entitled.
45.
Before the 1986 Regulations came into effect, a statement made in the House
of Commons and subsequently appended to a Local Government circular showed that
the Government was then actively considering both extending the ambit of the Local
Government Superannuation Scheme to at least some part-time employees and
permitting those part-time employees to buy back the lost years, that is to convert them
into reckonable or pensionable service. Although this was ultimately achieved by two
sets of Regulations, in 1987 and 1990, there is no doubt that they were intended to be
seen as part of a package of reforms of the Scheme and this was clearly spelled out in
the material which at least three of the respondent local authorities to these test cases
distributed to their employees.
46.
The first step in the process was the Local Government Superannuation
(Miscellaneous Provisions) Regulations 1987 (SI 1987/293) which came into force on 1
April 1987. Regulation 4 inserted a new paragraph (15A) into regulation B1 of the
1986 Regulations, and regulation 20 a new Part IV of Schedule 2 to those Regulations.
These had the combined effect of making officers who worked 35 weeks or more a
year with contractual hours of 15 or more but fewer than 30, pensionable employees
for the purposes of the Regulations. Regulation 4(b) amended regulation B1(3) of the
1986 Regulations to extend them to manual workers with contractual hours of more
than 15 per week.
47.
The amendments achieved by the 1987 Regulations are made retrospective in
two separate ways. By virtue of regulation 25 which has the cross-heading
‘Retrospective Effect’, at paragraph (3) an employee who elected to become a member
of the scheme within the six months immediately after 1 April 1987 (that is before the 1
October 1987) could elect to have their membership (that is their reckonable service)
backdated to 1 April 1986 or, if they had entered the employment of their employing
authority between 1 April 1986 and 1 April 1987, to the date on which their
employment began.
48.
Regulation 13 paved the way for the 1990 Regulations and was also
retrospective in its effect. It achieved its purpose by inserting into the 1986
Regulations a new regulation D12 which had the cross-heading ‘Previous Service of
Part-time Employees’. It provides “(1).
A person who –
15
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
(a) has become a pensionable employee by virtue of an election under
paragraph 1(1) of Part IV of Schedule 2 made before 1 April 1988 …or
(b)…
is entitled to reckon as qualifying service in relation to the employment in which
he is a pensionable employee any previous period of employment under a
scheduled body after the material date …
(2).
The material date is the earliest date from which, if Part IV of Schedule 2
had come into force on 1 April 1974, an election or as the case may be a
deemed election by him could have had effect.”
49.
Thus an election made to opt into the pension scheme before 1 April 1988
entitled the employee to claim as qualifying but not reckonable service the whole of
their previous employment, backdated either to 1 April 1974 or if their employment had
commenced after that date, the date on which, but for the qualifying hourly threshold,
they would have been eligible to join the pension scheme which, at least in the case of
manual workers, was not necessarily the start of their employment.
50.
The final piece in the jigsaw was the Local Government Superannuation
(Amendment) Regulations 1990 (SI 1990/1709) which came into force on 17
September 1990. Regulation 3 inserts a new regulation C7A into the 1986
Regulations. Regulation C7A has the cross-heading ‘Additional Payments in respect
of previous Part-time Service’ and provides so far as material “(1)
In this regulation –
‘eligible person’ shall be construed in accordance with paragraph (2)…
(2)
Subject to paragraph (3), an eligible person is a person who became
entitled by virtue of Regulation D12 to reckon a period of service as qualifying
service…
(4)
An eligible person may … by notice given in accordance with paragraph
(6) elect to make payment to the appropriate superannuation fund in order to
become entitled under regulation D13 to reckon an additional period as whole
time reckonable service.
(5)
As soon as is reasonably practicable after 17th September 1990, and in
any event within twelve months after that date, an eligible person’s employing
authority shall notify him … in writing of the right of election under paragraph (4)
and of the requirements of paragraph (6) as to notice.”
(14) Where the eligible person is a pensionable employee, the amount
payable by him …shall…be paid by instalments of equal amounts at such
interval s as the appropriate administering authority may agree …
51.
Pausing there, new Regulation C7A(5) therefore created a positive statutory
duty on employers to notify eligible persons of their newly created right to translate
16
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
qualifying service into reckonable service. There are no test cases in which a claimant
opted into the scheme in 1987 and thus became an eligible person but who claims not
to have received the notification required by regulation C7A(5).
52.
Regulation 4 of the 1990 Regulations introduced a new regulation D13 into the
1986 Regulations. It had the cross-heading ‘Increase of Reckonable Service of Parttime Employees’ and so far as material provided as follows “(1) A person who has made … one or more payments under regulation
C7A(14) or (16) is entitled to reckon as whole time reckonable service an
additional period calculated in accordance with Part II of Schedule 4A
(2) …
(3) In respect of a person who is entitled to reckon service after 5th April 1988
as reckonable service under regulation D1, the additional period shall be treated
as reckonable service after that date. In any other case it shall be treated as
reckonable service before 6 April 1988.”
53.
As Mr Paines points out, new regulation D13 does not have the effect of
retrospectively deeming the employee to have been a member of the pension scheme
during the period of previous exclusion. Paragraph (3) of regulation 13, however, has
the advantage of preserving the rights accrued under the State Earnings Related
Pension Scheme (SERPS) and the Second State Pension (S2P) by those employees
previously excluded from the Local Government Pension Scheme who opted to make
the additional contributions under SERPS or S2P. It also probably had, as Mr Paines
intimated darkly, other somewhat recondite tax implications. But, importantly, what
paragraph (1) of regulation D13 does not do is to create a generalised, freestanding,
right to make additional voluntary contributions. The right is only to purchase
additional years equivalent to the “lost years” that is, the years of previous exclusion.
The combined effect of those paragraphs is therefore not merely to put the employee
into the position they would have been in had they been a member throughout the lost
years, but, for those in SERPS and S2P, to do so with an advantage over their full time
comparators.
The effect of the statutory provisions
54.
Mr Paines submits that when applying the effect produced by the combination of
the 1987 and 1990 Regulations to the correct understanding of the nature of pensions,
his proposition is made out. The correct understanding of the nature of pensions, he
submits, is to be found in the judgment of the European Court of Justice in Coloroll
Pension Trustees Limited -v- Russell and Others (Case C-200/91) paragraphs 45
and 46:
“45. The Court has already pointed out in Ten Oever -v- Stichting
Bedrijfspensioenfonds voor het Glazenwassers- en Schoonmaakbedrijf
(Case C-109/91) [1995] ICR 74, 136, para. 16, that the limitation in question
was imposed in the specific context of benefits (in particular, pensions) provided
for by private occupational schemes which were held to be pay within the
meaning of Article [141] of the E.E.C. Treaty.
17
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
46.
That ruling took account of the fact that it was a characteristic of that form
of pay that there was a time-lag between the accrual of entitlement to the
pension, which occurred gradually throughout the employee’s working life, and
its actual payment, which was deferred until a particular age …”
55.
The true nature of pensions therefore is that although they are pay for the
purposes of both Article 141 and the Equal Pay Act 1970, they are deferred pay, the
right to which accrues only upon retirement. If, by the time of retirement, there is no
difference in the deferred pay which the claimant and her comparator receive,
notwithstanding that the comparator may always have been a member of the Scheme
while the claimant may have been at times excluded from the Scheme but prior to the
date on which she became entitled to receive the deferred pay had been able to rectify
that position, then she can have suffered no detriment.
Conclusions
56.
I accept Mr Paines’ and Mr Coppel’s combined submissions but would add my
own gloss to them. This is not, in my judgment, strictly speaking, a case of a past
breach of the equality clause being cured, or history being rewritten. Until such time as
there is a detriment there is no breach of the equality clause. All the part-time worker
pension claims were commenced at least 4 years after the 1990 Regulations had
completed the reform of the Local Government Superannuation Scheme by
retrospectively removing what in my judgment was, in the case of all local government
employees who had not by then retired, merely a putative or contingent breach of the
equality clause rather than an actual breach. The rewriting of the scheme rules meant
that, whether one takes Mr Paines’ or Mr Coppel’s starting point, the Beswick
claimants who bought back (or could have bought back) would no longer suffer a
detriment and there was therefore never a breach of the equality clause in their case.
Pensions are deferred pay. Therefore the time to determine whether a detriment has
been suffered in respect of that deferred pay is not when some are contributing to it
and some are not, but either, as Mr Paines submits, when it becomes payable, which
may be many years after proceedings such as these have been commenced, or, as Mr
Coppel submits, when the proceedings are commenced.
57.
Although it is of little importance to the outcome of these cases, I think Mr
Coppel must be right and Mr Paines wrong. If it were otherwise all claims commenced
before the rules of a Scheme had been rendered compliant with the equality clause
would have to be stayed until the claimant’s retirement to see whether by that time
compliance had been achieved. That would plainly not be right. The time to determine
whether there has been a breach of the equality clause is when proceedings alleging a
breach are commenced. By the time these proceedings were commenced the
amendments to the Scheme rules had not so much cured as prevented a breach of the
equality clause. That can only mean that UNISON’s original concession that those
exercising (or declining to exercise) the right to buy back had suffered no detriment
and in consequence there was no breach of the equality clause in their case, was
rightly made, if perhaps for slightly the wrong reasons.
58.
Having accepted the correctness of the submissions for the respondents albeit
in a slightly modified way, it must follow, as Mr Ford has conceded, that none of these
claims can succeed. No purpose would therefore be served in my granting Mr Ford’s
18
Case numbers:
(1) 2901496/2000
(2) 515657/1995
(3) 2303363/2004
(4) 513798/1995
application for permission to vary the concession made on 24 June 2005: it was clearly
correctly made. The Respondents’ application to strike out these test cases therefore
succeeds.
59.
It must also follow that all of the cases currently stayed under Beswick 2 must
fail with the exception of any claimant who can establish a prima facie case that, as a
result of a policy of their employer, aimed at part-timers, of a campaign of deliberate
misinformation or otherwise amounting in practice to a denial of the right of
membership of the Scheme, they were not informed of their right to opt into the
Scheme in 1987. Such cases will have to be determined on their facts at a hearing
before a full tribunal. If there are any cases of claimants who did opt into the scheme in
1987 but who, contrary to the duty imposed on the employers by regulation C7A(5) of
the 1986 Regulations as inserted by regulation 3 of the 1990 Regulations were not
subsequently informed by the employers of their right to buy back, rather different
considerations would appear to arise about which I propose to say nothing.
Case management orders
60.
I therefore order that, in order to allow time for an appeal to be lodged, after the
expiration of 8 weeks from the date on which this judgment and reasons are sent to the
parties, show cause letters should be sent to all Beswick 2 claimants. It would be
extremely helpful should there be no appeal against this judgment if UNISON would
inform me of that fact and they and other representatives would write to tribunal offices
withdrawing all the stayed Beswick 2 claims. If there is to be no appeal, strike out
letters can be sent out before the 8 weeks has expired.
.................................................................
Chairman
Date:
REASONS SENT TO THE PARTIES ON
…………………………………………………
AND ENTERED IN THE REGISTER
…………………………………………………
FOR SECRETARY OF THE TRIBUNALS
19