Public and Commercial Services Union and Others v The Minister for the Civil Service

JurisdictionEngland & Wales
CourtQueen's Bench Division (Administrative Court)
JudgeThe Honourable Mr. Justice McCombe
Judgment Date10 August 2011
Neutral Citation[2011] EWHC 2041 (Admin)
Docket NumberCase No: CO/2014/2011

[2011] EWHC 2041 (Admin)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

The Honourable Mr. Justice McCombe

Case No: CO/2014/2011

Between:
Public and Commercial Services Union and others
Claimants
and
The Minister for the Civil Service
Defendant

Mr Nigel Giffin QC & Mr Nick Randall (instructed by Thompsons Solicitors) for the Claimant

Miss Ingrid Simler QC & Mr Clive Sheldon QC (instructed by The Treasury Solicitor) for the Defendant

Hearing dates: 20 th–22 nd July 2011

The Honourable Mr. Justice McCombe

(A) Introduction

1

This is an application for judicial review of a decision by the Defendant of 22 December 2010 whereby he introduced a scheme under section 1 of the Superannuation Act 1972 amending the Civil Service Compensation Scheme ("CSCS"), and thereby reducing the benefits paid to scheme members on redundancy and early retirement. The Claimants also apply for a declaration of incompatibility under the Human Rights Act 1998 and/or a quashing order in respect of certain provisions of the Superannuation Act 2010. The relevant provisions of the 2010 Act which are under attack are those applying a statutory cap to the benefits payable under the CSCS.

2

The CSCS is a statutory scheme made under the 1972 Act, applying to more than 600,000 public servants. The principal features of the scheme, as it existed up to December 2010, date from 1987. The First Claimant is the largest of the Civil Service trade unions. The Second Claimant is the largest trade union representing uniformed grades of prison staff and staff working in the field of secure psychiatric care. The First Claimant has about 270,000 members; the Second Claimant's membership is about 35,000, some of whom are employed in the private sector. The individual claimants were at the start of the proceedings representative members of the public service, although (as I was told) the Fourth Claimant has left the service since that time.

3

The Claimants allege that the changes to the CSCS effected by the Defendant through the new scheme and by the 2010 Act constitute unlawful interferences by the Defendant and/or by the Act, contrary to the rights of civil servants under Article 1 of Protocol 1 (" A1P1") to the European Convention for the Protection of Human Rights and Fundamental Freedoms ("ECHR"). That Article provides:

"Article 1. Protection of property. Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

Further, it is argued that the new arrangements unlawfully breached the legitimate expectations of civil servants under domestic law. In addition, it is said that the steps taken constitute a breach of Article 11 of the ECHR ("Freedom of Assembly and Association") by the annulment of arrangements made under a collective bargaining agreement with trade unions. Finally, it is said the new arrangements are ultra vires the statutory powers in the 2010 Act because they make non-consensual changes to benefits which are not "compensation benefits" within the meaning of that expression as defined by the Act.

(B) The Old Scheme and the New Scheme Compared

4

For this purpose it is necessary to understand that the Principal Civil Service Pension Scheme ("PCSPS"), from which CSCS was hived off in 1994, had three separate sections called respectively the "classic", "premium" and "nuvos" sections making provision in differing ways for different classes of civil servants depending upon an individual's entry date into the service. With this in mind the Old Scheme can be summarised as follows, as set out in the Defendant's skeleton argument:

(i) The Old Scheme terms provided power for government employers to make payments on:

a. Early termination of contract of permanent staff (sections 2, 2A, 3, 3A, 4 and 7)

b. Early termination of contract of fixed-term workers (section 8)

c. Compensation in lieu of notice (section 9)

d. Personal injury (section 10)

e. Dismissal for inefficiency — poor performance or poor attendance (section 11)

(ii) Under rule 1.4 of the scheme, benefits under all these sections were expressly described as discretionary save for compensation in lieu of notice and payments made under rule 1.14. Rule 1.14 provided an underpin for compensation benefits so that redundancy payments could not be less than the statutory scheme would require. These payments were not covered by the discretion of rule 1.4.

(iii) Sections 2 and 2A set out benefits payable under the Compulsory and Redundancy category. Section 2A applied to members of the premium category and, while the shape of the benefits were slightly different from those provided for in section 2, the intention was that they should be of essentially the same value as follows: people aged under 50 (or aged between 50 and pension age (60) and with less than 5 years' service) could be eligible for a Compulsory Early Severance (CES) lump sum payment. The CES terms applied on redundancy and could be used by employers for certain categories of voluntary exit. CES compensation payments were calculated as:

•One month's pay per year of service; plus

•One month's pay per year of service given after the later of (a) age 30 and (b) attaining 5 years' service; plus

•One month's pay per year of service given after the age of 35.

(iv) CES payments could not generally exceed three years' pay other than where an individual was covered by "reserved rights". In these cases the terms were set out in section 7. Where staff left on CES terms, their pension benefits were treated as if they had resigned – that is, provided the individual had at least 2 years' service, preserved in the scheme for payment at pension age (typically 60). People aged between 50 and 60 (with a minimum of 5 years' service) could be eligible for Compulsory Early Retirement (CER) terms. These comprised:

•Immediate payment of pension (and pension lump sum) without actuarial reduction for early payment; plus

•Pensionable service enhanced by up to 62/3 years (subject to the resulting pension not exceeding that which would have been earned if the person had carried on working until pension age); plus

•A lump sum compensation payment of up to 6 months' pay.

(v) Sections 3 and 3A set out the benefits that could be payable under the Flexible category. Section 3A applied to members of the premium category and were of essentially the same value as those provided for in section 3: People aged under 50 (or aged between 50 and pension age (60) and with less than 5 years' service) could be eligible for a Flexible Early Severance (FES) lump sum payment. The FES scheme was to be used in circumstances where the individual was not under any compulsion to leave. FES compensation payments are calculated as:

•Two weeks' pay per year of service; plus

•One week's pay per year of service given after the first 5; plus

•One week's pay per year of service given after the first 10; plus.

•Two weeks' pay per year of service given after age 40.

FES benefits could not exceed 2 years' pay.

(vi) People aged between 50 and 60 (and with a minimum of 5 years' service) could be eligible for Flexible Early Retirement (FER) terms. These were calculated in the same way as CER terms but without the lump sum compensation payment.

(vii) A further option open to employers, in respect of employees aged over 50, was Approved Early Retirement (AER). As with the Flexible terms, this could only be used where the individual was under no compulsion to leave. This provided immediate payment of pension (plus associated pension commencement lump sum) without the normal reduction for early payment.

(viii) While sections 2A and 3A applied to premium members, there were no equivalent provisions for nuvos members prior to the introduction of the February 2010 scheme, which was quashed. The practice under the Old Scheme rules was that, where departments wished to provide CSCS-equivalent benefits to people who were pensioned under nuvos, they applied to the Cabinet Office. Cabinet Office then calculated the benefits and, having secured Treasury agreement to these benefits being paid ex-gratia, advised the employer department accordingly. The New Scheme, which took effect from 22 December 2010 applies to nuvos members in the same way as to others.

5

In contrast, the principal features of the New Scheme are these:

1. A standard "tariff" of 1 month's salary per year of service;

2. The ability to vary that tariff between the statutory minimum and twice the standard tariff for voluntary departures with no crystallised risk of redundancies;

3. By way of instructions issued by the Minister, a commitment that staff would always have at least one opportunity to apply for a voluntary scheme offering the standard tariff and all other optional items before being made compulsorily redundant, but after being told that they are at risk of compulsory redundancy;

4. A cap of 12 months for compulsory redundancies and 21 months for voluntary departures;

5. The ability to treat all staff below a certain salary level (initially £23,000 but set as 90% of the Private Sector Median Earnings) as being at that salary level for purposes of the calculation;

6. Setting a cap (currently £149,820 and linked to 6 times the Private Sector Median Earnings) on the amount of salary that will count for compensation purposes;

7. The ability for staff who have reached their minimum pension age to draw an...

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