ABG Employment Newsletter – February 2013

Pension schemes and spouse’s pensions for civil partners

Since 1st December 2003 it has been unlawful for an employer to discriminate against a member of the workforce on the grounds of sexual orientation. In relation to occupational pension schemes, the relevant legislation (now the Equality Act 2010) implies a non-discrimination rule into the rules of an occupational pension scheme prohibiting discrimination on the grounds of sexual orientation.

The Civil Partnership Act 2004 came into force on 5th December 2005 and allows same sex couples to enter into civil partnerships. Registered civil partners must be treated in the same way as spouses on the death of a pension scheme member, but only in relation to pensionable service from 5th December 2005. Pension benefits based on service prior to that date are exempt from the non-discrimination rule under a provision in the Equality Act 2010.

However, an Employment Tribunal has now ruled that the exemption from providing a spouse’s pension in relation to service accrued before 5th December 2005 is in breach of the European Equal Treatment Framework Directive. This ruling was made in a case brought by a retired member of an occupational pension scheme who entered into a civil partnership in 2006 with his longstanding partner. After entering into the civil partnership the scheme member enquired whether his civil partner would benefit from a full spouse’s pension. The pension scheme administrator replied that any spouse’s pension would be based only on service since 5th December 2005 because of the statutory exemption.

The member’s challenge to this exemption was upheld by the Tribunal which ruled that the member had been discriminated against on the grounds of his sexual orientation and was being treated less favourably than a married person in the same situation.

Some pension schemes do provide spouse’s pensions on all service, both before and after 5th December 2005, but many other schemes still restrict spouse’s pensions for civil partners to service from that date. The Tribunal’s ruling is being appealed to the Employment Appeal Tribunal, but in the meantime pension schemes which do not provide for full spouse’s pensions for civil partners should be reviewed.

Pension cost does not justify discrimination against part-time workers

In an important test case the Supreme Court has ruled that the cost of providing a benefit cannot be used to justify the failure to provide that benefit to part-time workers. The case concerns part-time judges and their exclusion from the judges’ pension scheme, but has wider ramifications in the context of protecting part-time workers against discrimination.

Full-time salaried judges and part-time salaried judges are entitled to pensions on retirement under the judicial pension scheme. However, the category of part-time judges who are fee paid on a daily basis have no such entitlement. They are paid pro-rata to full-time judges and are entitled to other benefits such as sick pay and maternity pay, but not pensions.

This exclusion was challenged by a part-time fee paid judge who did not receive any judicial pension on his retirement. The Government attempted to justify his exclusion on the grounds of the cost of providing pensions to fee paid judges, pointing out that it did not have a bottomless fund of public money available and that many fee paid judges can make alternative pension arrangements in their main employment.

However, the Government’s defence has been rejected by the Supreme Court on the grounds that costs could not justify blanket discrimination between different classes of worker, full-time and part-time. This ruling means that many thousands of fee paid judges will now have to be provided with pension benefits or compensated for the lack of pension. But the case also starkly demonstrates the overarching requirement to provide equal treatment for part-time workers and in particular to provide the same benefits as are provided to full-time workers on a pro-rata basis.

Proposed changes to TUPE

The Government has initiated consultations on a number of proposed changes to the Transfer of Undertaking (Protection of Employment) Regulations 2006. The proposed changes include the following:-

Repeal of the provisions governing “service provision changes” which were introduced in 2006. The Government plans to have a long lead-in period before any repeal takes place. Even if the repeal is implemented, TUPE may still apply to service provision changes under the main definition of when there is a relevant transfer for the purposes of TUPE.
Removal of the transferor’s obligation to provide employee liability information to the transferee. Transferors will still be required to disclose information to the transferee where it is necessary for either party to comply with their information and consultation obligations.
Enabling the transferee to consult with representatives of the transferring employees on potential collective redundancies prior to the transfer. Many transferees already do this in practice.
Enabling the transferor to be able to rely on the transferee’s ETO reasons to justify pre-transfer dismissals.
Amending the meaning of ETO reasons “entailing changes in the workforce” to include changes to the location of the workforce.
Enabling the employer to agree changes to terms of employment with the employees if such changes could have been agreed had there not been a TUPE transfer and to agree changes to terms where the reason for the changes is an economic, technical or organisational reason entailing changes in the workforce.

Enhanced redundancy pay and age discrimination

Discrimination on the grounds of age, whether direct or indirect discrimination, is not unlawful if the employer’s action or conduct can be shown to be objectively justified as a proportionate means of achieving a legitimate aim.

In a recent case the Employment Appeal Tribunal ruled that this allowed an employer to operate a redundancy payment scheme which provided for enhanced redundancy payments to employees over the age of 35. The case involved a voluntary redundancy scheme offered by the DWP. Under the scheme an employee aged 26 volunteered for redundancy and received the payment provided for by the scheme. Had she been over the age of 35 she would have been entitled to a substantially more generous payment than that which she actually received.

She then brought a claim for direct age discrimination but was unsuccessful both in the Employment Tribunal and the EAT. The DWP were able to justify the enhanced payment for workers over the age of 35 because there was a strong social policy objective of providing a financial cushion which reflected the extra problems which older workers experience after losing their jobs. In these circumstances it was ruled that there had been no unlawful discrimination.

This decision confirms that the more generous treatment of older workers can be justified if the employer has a legitimate aim for doing so which is of a public interest nature and which is not disproportionate in its effect or application.

Dismissals for gross misconduct offences

The Court of Appeal has ruled that an Employment Tribunal cannot substitute its own views for those of the employer in relation to the seriousness of a list of gross misconduct offences contained in the employer’s disciplinary procedure.

The employer ran a care home for elderly people. It had a disciplinary procedure contained in an employee handbook which listed types of conduct which it considered to be gross misconduct. This included falsifying the written records of the company.

A nurse was dismissed for falsifying company records after she made a false entry in a patient’s feed record and had also failed to carry out an assessment of a new resident who had suffered a fall. In accordance with its disciplinary procedure the company treated this as gross misconduct.

An employment tribunal decided, by a majority, that the nurse’s dismissal was unfair saying that the falsification of company records was less serious than the other types of gross misconduct listed in the disciplinary procedure.

However, this decision was overturned by both the Employment Appeal Tribunal and the Court of Appeal, which confirmed that a tribunal cannot substitute its own decision as to what was the right course to adopt for that of the employer, but must decide whether the employer’s decision to dismiss fell within the band of reasonable responses which a reasonable employer might have adopted. So the tribunal were wrong to regard the falsification of company records as less serious than the other types of misconduct listed in the handbook.

The case shows the importance of having well worded rules and policies and making it clear to employees through such rules and policies what types of misconduct the employer may regard as gross misconduct and render employees liable to dismissal.

Collective redundancy consultations and information about agency workers

In carrying out collective redundancy consultations an employer must provide the union or employee representatives with certain information in writing. Since October 2011, when the Agency Workers Regulations came into force, the information must include information about the number of agency workers working for the employer, the parts of the business in which they are working and the type of work they carry out. Failure to provide this information can result in a protective award for breach of the consultation obligation.

In a recent case an employer who was proposing to embark on a major redundancy programme started consultations with the union and placed 97 employees at risk. Although it provided some limited information about the agency workers it used, the information was incomplete and did not comply with the statutory requirements. In these circumstances a tribunal ruled that there had been a failure to provide adequate information concerning agency workers during the consultation exercise. On a claim brought by the trade union it made a protective award in favour of the affected employees.

The comments in this note are of a general nature only. Full advice should be sought on any specific problems.

Christopher Gigg
[email protected]
+44 (0)115 934 3310

Kathryn Meir
[email protected]
+44 (0)115 934 3308