QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
MRS JUSTICE WHIPPLE
| (1) Public And Commercial Services Union
(2) Lawrence Dunne
(3) James Donald Roy Cox
|- and -
|Minister for the Cabinet Office
Clive Sheldon QC and Joseph Barrett (instructed by the Government Legal Department) for the Defendant
Hearing dates: 04 & 05 July 2017
Crown Copyright ©
Lord Justice Sales:
"1.— Superannuation schemes as respects civil servants, etc.
(1) The Minister for the Civil Service (in this Act referred to as "the Minister")—
(a) may make, maintain, and administer schemes (whether contributory or not) whereby provision is made with respect to the pensions, allowances or gratuities which, subject to the fulfilment of such requirements and conditions as may be prescribed by the scheme, are to be paid, or may be paid, by the Minister to or in respect of such of the persons to whom this section applies as he may determine; …
(3) Before making any scheme under this section the Minister … shall consult with persons appearing to the Minister … to represent persons likely to be affected by the proposed scheme …."
"2.— Further provisions relating to schemes under s. 1.
(2) Any scheme under the said section 1 may make provision for the payment by the Minister of pensions, allowances or gratuities by way of compensation to or in respect of persons—
(a) to whom that section applies; and
(b) who suffer loss of office or employment, or loss or diminution of emoluments, in such circumstances, or by reason of the happening of such an event, as may be prescribed by the scheme.
(3) Subject to subsection (3A) below, no scheme under the said section 1 shall make any provision which would have the effect of reducing the amount of any pension, allowance or gratuity, in so far as that amount is directly or indirectly referable to rights which have accrued (whether by virtue of service rendered, contributions paid or any other thing done) before the coming into operation of the scheme, unless the persons consulted in accordance with section 1(3) of this Act have agreed to the inclusion of that provision.
(3A) Subsection (3) above does not apply to a provision which would have the effect of reducing the amount of a compensation benefit except in so far as the compensation benefit is one provided in respect of a loss of office or employment which is the consequence of—
(a) a notice of dismissal given before the coming into operation of the scheme which would have that effect, or
(b) an agreement made before the coming into operation of that scheme.
(3B) In this section—
"compensation benefit" means so much of any pension, allowance or gratuity as is provided under the civil service compensation scheme by way of compensation to or in respect of a person by reason only of the person's having suffered loss of office or employment;"the civil service compensation scheme" means so much of any scheme under the said section 1 (whenever made) as provides by virtue of subsection (2) above for benefits to be provided by way of compensation to or in respect of persons who suffer loss of office or employment.
(3C) In subsection (3B) above a reference to suffering loss of office or employment includes a reference to suffering loss or diminution of emoluments as a consequence of suffering loss of office or employment.
(3D) So far as it relates to a provision of a scheme under the said section 1 which would have the effect of reducing the amount of a compensation benefit, the duty to consult in section 1(3) of this Act is a duty to consult with a view to reaching agreement with the persons consulted.
(11) Before a scheme made under the said section 1, being the principal civil service pension scheme or a scheme amending or revoking that scheme, comes into operation the Minister shall lay a copy of the scheme before Parliament.
(11A) Subsection (11B) below applies if a scheme made under the said section 1 makes any provision which would have the effect of reducing the amount of a compensation benefit.
(11B) Before the scheme comes into operation, the Minister must have laid before Parliament a report providing information about—
(a) the consultation that took place for the purposes of section 1(3) of this Act, so far as relating to the provision,
(b) the steps taken in connection with that consultation with a view to reaching agreement in relation to the provision with the persons consulted, and
(c) whether such agreement has been reached.
"Everyone has the right to freedom of peaceful assembly and to freedom of association with others, including the right to form and join trade unions for the protection of his interests."
"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 of to secure the payment of taxes or other contributions or penalties."
"149 Public sector equality duty
(1) A public authority must, in the exercise of its functions, have due regard to the need to—
(a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act;
(b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;
(c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it.
(3) Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to—
(a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;
(b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;
(c) encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low.
(4) The steps involved in meeting the needs of disabled persons that are different from the needs of persons who are not disabled include, in particular, steps to take account of disabled persons' disabilities.
(5) Having due regard to the need to foster good relations between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to—
(a) tackle prejudice, and
(b) promote understanding.
(6) Compliance with the duties in this section may involve treating some persons more favourably than others; but that is not to be taken as permitting conduct that would otherwise be prohibited by or under this Act.
(7) The relevant protected characteristics are—
"The High Court-
(a) Must refuse to grant relief on an application for judicial review …
If it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred."
"This reformed scheme has been in place for over four years now and the experience of its use has led the Government to believe that it is not fully delivering against its aims. In particular the Government is concerned that:
- The Voluntary Redundancy (VR) terms are limiting the flexible use of the Voluntary Exit (VE) terms. The scheme is therefore not functioning as intended but is still encouraging staff to hold on in the expectation of better terms later;
- Early access to pension was included to allow staff to retire and draw all of their Civil Service pension without reduction for early payment. Given the significant costs, the limited eligibility and that Government's aim in encouraging longer working lives (for example the recent pension reforms) it is questionable as to whether it is still appropriate for the employer to be funding this as an option;
- Overall the scheme remains too expensive in light of the national debt and budget deficit leaving less money available to support those where necessary. This is especially acute because of the requirement to reduce current staff numbers due to both the spending review and the need to create space to allow for the recruitment of apprentices; and
- More broadly the scheme is out of line with the terms that the Government considers should be generally available in the public sector. In particular the Government does not believe that six figure compensation payments are likely to be fair or to offer value for money."
"The Government is seeking to make changes to the CSCS so that it remains a suitable and appropriate tool. Specifically it is looking to reform to meet the following principles:
- to align with wider compensation reforms proposed across the public sector, including the Government's manifesto commitment to prevent excessive payouts to the better paid by ending six-figure exit packages;
- to support employers in reshaping and restructuring their workforce to ensure it has the skills required for the future;
- to increase the relative attractiveness of the scheme for staff exiting earlier in the process, and to maintain flexibility in voluntary exits to support this aim;
- to create significant savings on the current cost of exits and ensure appropriate use of taxpayers money; and
- to ensure any early access to pension provisions remains appropriate."
"1. As you will be aware the consultation on changes to the Civil Service Compensation Scheme (CSCS) closed on 4 May. We committed to write to set out next steps.
2. The Government has not yet reached a decision on what changes to make to the Compensation Scheme. However, based on consideration of the responses received through the consultation period including those expressed by trade unions, the Minister for the Cabinet Office is still minded to amend the scheme.
3. The Minister has taken particular note of the comments made from trade unions throughout our discussions, especially on the issue around the relative levels of compensation payable under the VE and VR terms. He has agreed that we should hold a further series of meetings with trade union colleagues who can engage with the intention of reaching an agreement on a revised proposal, as well as on inefficiency compensation terms.
4. If we are able to reach agreement then it is likely that the proposal below would become the basis of a final Government position. The base structure of this proposal is that:
- the CSCS terms will be reformed to produce significant savings;
- the tariff to be three weeks per year of service;
- the compulsory notice period to be reduced to three months;
- the limits for both VE and VR exits to be set at 15 months' salary; and
- for employer funded early access to unreduced pension to be available from age 55 (and then track 10 years behind state pension age).
5. Within these further discussions we note that several unions have expressed a desire to ensure that any reforms to be of an enduring nature; to discuss the interaction between early access to pension and the cap on the value of exits at £95,000; to discuss the transition and a desire for a clear commitment to redeployment where possible. We also want to discuss streamlining the exit process to deliver cost saving and a more efficient process. We are willing to discuss these areas in more detail with the ultimate aim of delivering against the principles outlined in the consultation document. We recognise that equalising the VE and VR position may be seen to run counter to incentivising VE but this is something we could accept as part of an overall agreement. There will be come scope to slightly amend the base structure of the proposal, but it is unlikely that these discussions would lead to comprehensive changes.
6. I want to be clear that attendance at any further discussions will be taken as a clear commitment that those unions engaging in the talks have accepted that the proposal above will form the basis of a reformed, negotiated, set of arrangements that their relevant executives can recommend acceptance to their members in any ballot. The aim of these further discussions is to reach agreement on the precise form that those changes will take.
7. To provide this commitment, we are aware this may require exceptional meetings of Executive Committees, and we will encourage employers to assist in ensuring that appropriate facility time is provided if requested.
8. I will shortly be inviting you, NTUC colleagues and other unions that have engaged with the consultation, to a series of further meetings over the next three weeks. To participate in these discussions, I would expect a commitment in writing to engage on the basis outlined in paragraph 6 by the end of Wednesday 15 June at the latest.
9. Following these further meetings we will consider the views of unions and advise the Minister accordingly, before making a formal offer…"
"We are writing on behalf of our 3 trade Unions in response to your letter of 3 June 2016. You will note that PCS, POA and Unite represent an overwhelming majority of civil servants who are union members and predictably our unions also represent a majority of the civil servants affected by redundancy situations in future years.
Taking each point in turn.
1. We note your views on next steps. We hereby put forward ours.
2. We are at a loss to understand how the Minister can be minded to amend the scheme if the Government has not yet reached a decision on what changes to make to the CS Compensation Scheme, or any changes to other Public Sector schemes. Can you please explain this situation?
You state that the Minister's view is based on consideration of the responses received through the consultation period including those expressed by trade unions. Can you please furnish us with copies of the responses to the consultation, the analysis of those responses and explain what is contained within the Reponses that has drawn the Minister to this view?
Can you also provide us with a full equality impact assessment of the proposed amendments to inform our discussions going forward?
3. We note that the Minister has taken particular note of the comments made from trade unions throughout our discussions, especially on the issue around the relative levels of compensation payable under the VE and the VR terms. We can confirm that we are prepared to engage in a further series of meetings with the intention of reaching an agreement on this issue, as well as on inefficiency compensation terms.
4. It is premature to conclude what the basis of a final Government position will look like, primarily for two reasons: firstly, you state that the Government has yet to reach a decision on what changes to make to the Compensation Scheme; secondly, it is simply illogical to conclude what the outcome of discussions will be before those discussions have taken place.
We are happy to enter discussions with an open mind and with a view to reaching agreement on a final package and a set of arrangements that our relevant executives can recommend to our members in any ballot. …"
"Our unions have genuine concerns regarding the refusal to provide us with important information, the refusal to respond to the questions and points we have previously raised, the attempt to impose a restrictive framework on talks and the unseemly rush to conclude matters. Taken together, these concerns can only lead us to suspect that the process you are embarking on is a sham. Your insistence upon unreasonable restrictions and illogical sequencing also undermines the entire concept of free collective bargaining.
All of this notwithstanding, our unions are prepared to engage in further talks with a view to seeking agreement. We will do so unfettered, in accordance with our status as free Trade Unions operating in a democratic society."
"We have given ample time for consultation and we have made every effort to reach agreement with unions on a revised set of CSCS terms in line with our requirement to consult with a view to reaching agreement. You have given no indication of seeking to reach agreement on the basis set out in Simon [Claydon]'s letters. Simon's letter of 21 June specifically stated that if you were unable or unwilling to reach agreement then it was unclear what utility there would be in entering into further discussions beyond the comprehensive ones that took place during the consultation period."
He confirmed that Cabinet Office representatives were still prepared to meet if the commitment requested in previous letters was provided.
" … The only requirement was that, in order to participate, a trade union should at least be prepared to confirm that the discussions might lead to an agreement i.e. they should indicate that there was at least a possibility of an agreement being reached."
However, the commitment sought by Mr Claydon at paragraph 6 of his 3 June 2016 letter, substantially repeated in his 21 June 2016 letter, was much more demanding than that. It required an acceptance that the current proposals would form the basis of a negotiated package which the unions could recommend to their members in a ballot. It was not surprising that the PCSU, Unite and POA, all of whom were in general opposed to the proposals, were unable to give such a commitment.
"Our intention has always been to agree a negotiated package of reforms that meets the Government's objectives as set out in the consultation document and has the support of the majority of trade unions representing staff covered by the [CSCS]. I am grateful to the FDA, Prospect, GMB, UNISON and the Defence Police Federation who responded positively to my letter of 3 June and have continued constructive discussions on this basis with a view to reaching agreement."
Ground (1): breach of the obligation of consultation in the 1972 Act
i) the wording of section 1(3), since "the proposed scheme" in relation to which the duty of consultation arises is the scheme which is eventually made ("Before making any scheme …"); and
ii) the wording of section 2(3D) and the context in which the particular obligation of consultation defined in that subsection arises, namely in relation to a proposal to make a scheme "which would have the effect of reducing the amount of a compensation benefit". Since the focus is on loss of one or more particular compensation benefits as defined in subsection (3B), the duty of consultation is intended to provide a safeguard before that occurs. The duty is to consult "with a view to reaching agreement", meaning on the particular terms of the scheme being put forward. The natural meaning of the word "agreement" in this context is, actual agreement on any provision in a scheme which would have the effect of reducing the amount of a compensation benefit.
Ground (2): Article 11 of the ECHR
Ground (3): A1P1
"Drawing such assistance as I can from the Strasbourg cases, I bear in mind that the scheme and payments made under it are designed to plug a gap between employments or between leaving the service and full retirement. To this extent, they are "weaker" than pension rights which afford financial protection for many years and into old age and have a transfer value (e.g on divorce). Salary and pension benefits remain unaffected. The rights of scheme members have not been eliminated by the New Scheme; they have been reduced in a manner designed to spread the burden fairly among all civil servants. There is no discrimination argument such as that raised successfully in the Asmundsson case [Asmundsson v Iceland (2004) 41 EHRR 927]. Past service is still recognised in the calculations. The decision was taken by the Defendant having considered the unions' objections and after assessing in detail the alternative proposed by them. While I recognise that each union has a different membership "profile", it is not, I think, without relevance that four unions accepted the New Scheme and five union negotiating teams did so. It is also not seriously contested that the New Scheme is still relatively favourable to departing employees when compared with statutory terms and the terms customarily on offer in the private sector and other public sector employments. Nor is it a case where some alternative is obviously available. Helpful though Counsels' arguments have been in enabling me to see how the Defendant and his ministerial colleagues and officials went about the problem, it is quite impossible in the context of a 2 ½ day hearing to make a full assessment of the quality of the calculations that underlay the Defendant's decision."
"An applicant can allege a violation of Art. 1 of Protocol No. 1 only in so far as the impugned decisions related to his "possessions" within the meaning of this provision. "Possessions" can be either "existing possessions" or assets, including claims, in respect of which the applicant can argue that he or she has at least a "legitimate expectation" of obtaining effective enjoyment of a property right. By way of contrast, the hope of recognition of a property right which it has been impossible to exercise effectively cannot be considered a "possession" within the meaning of Art. 1 of Protocol No. 1, nor can a conditional claim which lapses as a result of the non-fulfilment of the condition."
Ground (4): the public sector equality duty
Relief: section 31(2A) of the Senior Courts Act 1981