Not so civil compensation

The rules governing accrued redundancy benefits of civil servants in the Superannuation Act 1972 required the agreement of the relevant unions to change them. In Public and Commercial Services Union and anor v Minister for Civil Service, the High Court said that the government was justified in reducing redundancy and early retirement benefits to reduce the budget deficit.

The members’ union, PCS, instructed Thompsons to act on their behalf.

Basic facts

Under section 2(3) of the Superannuation Act 1972, the government needed the agreement of all six trade union members of the Council of Civil Service Unions (CCSU) before making any changes to the Civil Service Compensation Scheme (CSCS).

In May 2010, the union won a case of judicial review against the Labour government’s plans to drastically cut civil service redundancy and early retirement benefits. This meant that the coalition government could not introduce a new scheme reducing the rights that staff had accrued during their service.

However, following this ruling, the coalition government introduced the Superannuation Act 2010 which removed the requirement for union agreement before any changes to reduce compensation payments could be introduced. The Act also capped voluntary and compulsory severance payable under the old CSCS.

Union arguments

The PCS union, along with the Prison Officers Association, applied for judicial review of the new scheme, arguing that it was contrary to the rights of civil servants under Article 1, Protocol 1 (A1P1), of the European Convention for the Protection of Human and Fundamental Freedoms.

That article states, in short, that: “No-one shall be deprived of their possessions except in the public interest and subject to conditions provided by law ....”

The unions also argued that the scheme was a breach of article 11 (freedom of assembly and association) of the European Convention on Human Rights (ECHR), and that the new arrangements were ultra vires (outside the scope of) the government’s powers contained in the 2010 Act.

High Court decision

The High Court, said that although the benefits under the CSCS constituted “possessions” for the purposes of A1P1 and that although they had been unlawfully interfered with, the interference (by reducing the benefits payable under the Superannuation Act 2010) was justified.

This was because it was in pursuit of a legitimate aim that was in the public interest – reducing the national budget deficit. The unions did not dispute the legitimate aim. However they argued that the loss of accrued rights was unjustified. In particular, that the government had failed to consider the substantial loss of accrued rights on a large number of employees, had justified cost on unreliable assumptions and had failed to consider alternative options to preserve accrued rights.

In rejecting these arguments the Court said its role was not to scrutinise the quality of the decision making process nor second guess what was affordable. The question was whether the interference with scheme members’ rights was a proportionate one and in the court’s judgement, it did not go beyond what was “reasonably necessary”.

As the Court considered the new scheme was valid it did not consider the unions’ arguments on the statutory cap.

The Court also rejected the unions argument that the new scheme breached article 11 of the ECHR. In particular, the Court took account of the fact that there were negotiations with the unions and therefore the right of freedom of assembly and association were not infringed.