|
Update
Tuesday
7 December 2004 PAY AND PENSION CRISIS IN FURTHER EDUCATION DEEPENS Just when you thought it couldn’t get any worse… The pay settlement agreed between the unions and the Association of Colleges on behalf of the college employers appears to be unravelling before our eyes. The Times Educational Supplement has reported (3 December 2004) that further strike action has been threatened due to the failure of the employers to meet the settlement in full, part, or at all. LEAF’s claim that the settlement, even if delivered, would not bring Lecturers near to parity with schoolteachers has now been acknowledged by all sides to have been true. Even if the claim were to be paid in full, a ‘best case’ comparison would leave Lecturers 6% behind teachers. The true figure , adjusted for responsibilities of the staff in the two sectors (basic rule: in a school ––if you do it ––you get paid for it; in Further Education you just do it) is that Lecturers are paid up to 30% less than schoolteachers when pay and conditions of service and prospects are factored in, as they must be to achieve a true comparison.
What pay demand? The pay ‘deal’, which has not been delivered as usual by the employers’ side, runs out next August. If the Lecturers’ unions do not want to spend the rest of time playing ‘catch up’, then it is necessary for a radical break with past practice. Unless the Association of Colleges agrees to achieve a binding agreement on pay negotiations, then the teacher and staff unions should not pretend to be negotiating with them. The colleges pay the salaries; the colleges must be the place where negotiation takes place. We do not favour plant by plant bargaining, but the only realistic alternative to this is a National bargaining network which has binding agreements. Under the present system, no effective pressure is being put on recalcitrant employers who will not pay an agreed rise. The AOC even colludes in this diffusion of pressure by emphasising constantly that the pay settlement is merely a recommendation on colleges, which must be free to take account of their individual circumstances. This is all quite true in the arrangements that exist, but it means that the AOC plays no essential role in the process. The pay claim must reiterate the need for a 30% pay increase, which recognises the specific job commitments given to Lecturers and the poorer conditions of service. A pay increase must be free of additional responsibilities and be part of a return to a National framework of pay and conditions.
How much longer will the employers honour Lecturers’ pensions? We have warned for some time that the pension entitlements of Lecturers could be undermined by the fact that the college employers are free, in the absence of collectively agreed terms, and the ‘independence’ of colleges, to leave the teachers’ superannuation scheme. We believe that in their never-ending search for savings, the employers will seek to end their commitment to the final-salary scheme as it is presently constituted.
Will Lecturers be in the Teachers’ Pension Scheme in five years’ time? They might be, or they might not. Much of this depends on us. The best way to save your pension is to support LEAF’s campaign to re-establish Lecturers’ National Conditions of Service and pay determination. Without these safeguards, it will become increasingly likely that employers will seek to change the status (and, ipso facto the pension benefit entitlements) of their Lecturers. It has already been mooted in the Civil Service that a move from a final salary pension to an ‘average salary’ calculation, which will be less favourable to civil servants, will be sought. Our message to you is clear: be vigilant on your pension, and redouble your efforts to regain your lost Silver Book collective agreements. Without these safeguards, your pay and pension prospects will not improve.
Update
Friday
7 May 2004 IS YOUR FINAL SALARY TEACHER’S PENSION SAFE? Eleven years ago, colleges left local authority control to gain the dubious status of ‘independent corporations’. The staffing policy of all three hundred plus colleges since that time has had one connecting thread running through: that has been to emphasize the discontinuity with the past, and the non-compatibility of Lecturers’ status with that of schoolteachers and others who work for local authorities. In practical terms this has meant a ceaseless war of attrition against Lecturers’ terms and conditions of employment and pay rates. Today, nearly all Lecturers work to individual contracts of employment. The so-called ’local contracts’ have no status as collective agreements as we properly understand them in the trade union movement, and many Lecturers reading this will have endured several changes of contract in the last few years, with each change bringing slightly worse conditions that the last. LEAF has repeatedly warned that the de-coupling of Lecturers’ bargaining rights from the national collective agreement brings great dangers for your standard of living, prospects and pension. Up until now, the corporations have not sought to leave the teachers’ pension scheme, which Lecturers were enjoined with as part of the hostoric national framework, but can you be sure that this situation will not change?
LECTURERS’ PENSION RIGHTS HANGING BY A THREAD Let’s look at the arguments? In the run-up to incorporation, serving Lecturers were written to by the new corporations. The letter which all serving Lecturers received, although purportedly composed by each corporation, was actually prepared by the CEF (now AOC), the employers’ organisation. The thousands of identically-worded letters essentially sought to reassure staff that no changes would take place in their terms and conditions which were not agreed by the corporation. In a misleading way which became characteristic of the CEF at that time, the letter omitted to say that the employers actually intended to bring about wholesale changes to conditions of service, pay and tenure. This duly followed and today Lecturers are much worse off that they would have been if they had stayed in local authority employment. Agency Staff have no access to Lecturers’ pension rights.
HOW MUCH LONGER WILL LECTURERS KEEP THIS BENEFIT? The thousands of agency staff who joined the sector in the following years were explicitly excluded from access to the Lecturers’ final salary scheme. However, full-time Lecturers who were designeated Lecturers were left alone for the time being. But, it should be made clear that there is nothing to stop any or all the corporations leaving the teachers’ pension scheme at any time. The post-incorporation settlement allowed corporations the freedom to choose whether or not to be bound by the terms of collective agreements, and this includes participation in the pension scheme. This is not the case for schoolteachers employers, who are still bound by the scheme.
THE EMPLOYERS WILL CONSIDER OPTING OUT OF THE SCHEME The scheme which Lecturers are part of is a final salary scheme, which involves contributions from employer and employee. In the private sector, following years of poor returns on the stock markets, employers have been closing down final salary schemes to new and existing staff. You may be aware of a number of high-profile cases of private companies going out of business and leaving ex-staff with no final salary pensions. some after thirty-five years of contributions.
THE PUBLIC SECTOR IS NOT IMMUNE FROM THESE DEVELOPMENTS More recently, it has been proposed by public sector employers in the rail industry to prevent new employees joining a final salary scheme, and instead compelling them to take out a savings plan, or ‘defined contribution’ pension. This has been rightly described as a ‘glorified savings plan’ by our rail union colleagues. Such a move would probably be the form an attack on Lecturers’ pensions would take. First, it would be likely that new joiners would be refused access to the teachers final salary scheme. After that was properly embedded, it would be a logical next step to close the scheme to existing members by the method of offering a curtailment on benefits and a calculation up to the point the employers cease theitr contribution.
HOW CAN WE RESIST SUCH A MOVE? We in LEAF have stressed many times that the fight against the injustices brought about by incorporation are not merely about the situation of a small and declining number of ‘refuseniks’. It is about the long term pay, prospects, and pensions of all staff in the sector, and the vitality of the sector itself. The endless search for savings will compel corporations to consider leaving Lecturers without a final salary pension scheme. Many will have looked already at the cost benefits of alternative arrangements, just like the rail employers. Only LEAF’s principled stance can offer a long-term security for Lecturing and other staff in the sector. We would like to have your views on any matter connected with the sector.
NEW ATTACKS ON LECTURERS’ PENSION RIGHTS MUST BE FOUGHT Colleagues will be aware generally of a pensions crisis in Britain and the Western world generally. Here it had been claimed that employees on a final salary scheme were safe from the vagaries of the stock markets, and could look forward to receiving their pensions at the appropriate age. LEAF has consistently warned against complacency in this matter over the past few years. Quite apart from the fact that a final salary pension can be diminished by constant downward pressure on pay, it is clear that Government has been looking for ways to make the pension harder to obtain, or to reduce its real value to the employee. In June, the Government announced that Teachers’ pension arrangements were being reviewed, with a proposal to make 65 the ‘normal’ retirement age. Bearing in mind that Teachers are entitled to pick up their pensions at 60 as accrued, such a move would clearly force many thousands to work an extra five years to pick up their pensions without suffering a swingeing reduction (or ‘actuarially reduced pension’–ARD). There is no doubt that the DfES is proceeding with the changes, designed to cut costs and compel Teachers to work for longer, or suffer a cut in their pension entitlements. It is absolutely imperative that every Lecturer and Teacher is aware of these proposals and what they mean for pension entitlements. We in LEAF are clear about our view on these matters. The changes are retrogressive, punitive and completely unwarranted. They will mean, if implemented, that some staff will die ‘in harness’ because they will have been compelled to work beyond a time when they should have been able to retire. The changes will also mean that senior staff will leave the profession, to preserve their pension rights intact, and plan to see out their remaining work years outside education. Their skills will be thus lost to teaching. Bad on both counts. In an article in the Times Educational Supplement (18 July 2003), David Miliband, the New Labour School Standards Minister (what’s his business pronouncing on these proposals, anyway?) gave what he describes as ‘five clear guarantees’ to serving Teachers. They are: 1) If you are aged 50 or over, your pension benefits will not be affected by the proposed changes 2) Pension benefits relating to past and present service (up to the time the changes take effect) will not be affected by the higher pension age 3) You will still be able to retire at, before, or after the age of 60 4) Your union will be fully consulted before any changes are made 5) The DfES will examine the scope for introducing improved benefits and flexibilities
READ THE SMALL PRINT BETWEEN THE SPIN It is clear from even the most cursory reading of David Miliband’s article, that what is being proposed offers no comforts to the majority of serving Teachers. Miliband operates in the world of New Labour spin and obfuscation, where nothing is ever said plainly and honestly. We need a translation. Let us consider what each of these five ‘guarantees’ really means: 1) If you are under 50, you will have to work for five more years than at present to collect your pension as accrued. If you are now under 50, and try to access a pension when you are 60, you will find an actuarial reduction taking place if you haven’t put in 40 years by that time. 2) Any pension benefits that begin to be accrued after the date of the changes will not be as good as those before 3) If you retire at 60, without putting in the full complement of years, your pension will be reduced. If you retire before 60, you will suffer a sliding scale of reductions, depending on your age at retirement. You can slog it out for as many more years as you want, though (health permitting). However, don’t forget the ability of your employer to dismiss you on grounds of capability. 4) Your union will be consulted, but we have no intention of listening to any objections seriously 5) Don’t hold out any hopes of any concessions on this proposal. The other clear message from the Government to Teachers and Lecturers is this: We will not value your years of work with a decent pension.
MPs HAVE ENSURED THAT THEY WILL NOT SUFFER ANY DIMINUITION OF THEIR PENSION RIGHTS. David Miliband and his fellow MPs, who enjoy the most cosseted and privileged working conditions and benefits of any major legislature, took action last year to improve their own pension benefits. Changes were made by the MPs, and then voted on by MPs, which ensures than an MP can retire on a full pension after just 27 Years of service. A full pension is then paid using a 1/40 divisor (it was previously) 1/60, of a salary which MPs have hiked up massively in the past ten years. It is certain that no productivity increases were secured from the MPs in return for this largesse.
IF IT’S GOOD ENOUGH FOR THEM, ITS GOOD ENOUGH FOR US If a good pension is right for MPs, then it is right for Teachers and Lecturers. Miliband claims that Teacher salaries are ‘rising rapidly’ and that a workload agreement will cut hours worked. He clearly doesn’t mean us. Further Education Lecturers’ pay has stood still for ten years, and their workloads have increased steadily, to the point where college managers have been unable to achieve more because staff have reached absolute physical limits. LEAF will write to Charles Clarke to arrange our consultation rights, but we will also begin a campaign to defeat the Government’s plans. Like our campaign on contracts, which is now proceeding through Europe, we will work tirelessly to defeat these anti-Teacher measures. We would like to hear your views and opinions. In order to make the Government think again, it will be necessary for all Teachers and Lecturers, in schools, colleges, sixth forms and universities, to work together.
Contact LEAF now to offer your views and observations.
BIG PENSIONS IMPROVEMENTS FOR PUBLIC SECTOR WORKERS ANNOUNCED (Please note: once again, this is restricted to Members of Parliament) At a time when the pensions prospects of millions of employees are being seriously compromised by falling stock market values, MPs have moved decisively to improve matters. For themselves. Just before the Summer Recess, MPs in Committee voted by 14 to 1 (with a lone Liberal Democrat dissenting), to change their pension calculation rules to be based in a 1/40 calculator, rather than the 1/50 basis now in use. The new arrangements will mean that to gain a full pension, which is a staggering 2/3 of salary, MPs will have to put in only a total of 27 years’ service. The transitional funding will be met by the taxpayer. Robin Cook, the Leader of the House, explained that MPs would contribute more themselves! This justification is wholly beside the point, because in fact all of the pension contributions are met by the taxpayer, since MPs remuneration packages are entirely funded from the public purse. These changes, voted by MPs for themselves in defiance of recommendations from their own review body, should be seen in the context of increases in the last few years in MPs’ salaries, again voted through –by MPs. Because theirs is a final salary pension scheme, the eventual pension is calculated on a best salary basis. MPs have therefore voted huge increases for themselves consistently in the past few years. The latest change is merely a final piece in the jigsaw. LEAF does not have a political axe to grind. We highlight this situation merely to draw attention to the gross inequity between their arrangements and ours. Lecturers must work for 40 years (not 27) to get a ‘full’ pension, which is then half (not 2/3) of salary. The final salary calculation is based upon the lowest salary settlements in the entire public sector. This year, more Lecturers retired on 1993 pension rates, due to a Government-inspired freeze. Almost none will achieve 40 years, since this is virtually impossible for a teacher, particularly in FE. Twenty-seven years would yield a pension of less than £7,000 per annum. If it was taken at 55 rather than at 60, recent changes voted by MPs would reduce the pension to less than £5,000. The best that can be said of MPs’ behaviour is that it is insensitive and thoughtless. A more critical assessment would say that MPs have behaved in a manner that is selfish and venal, and bordering on corrupt. Angry? You should be. LEAF is currently challenging the UK Government’s attempts to restrict pension entitlements, pay increases (which affect pensions, as we have explained), and prospects of hard-working teachers. Can you afford not to support LEAF? Three Months FREE membership for new applicants
BECKMANN BENDS IT FOR LECTURERS’ PENSION ENTITLEMENTS On the 13th December 2001, the Advocate General concluded in the case of Beckmann v. Dynamco, Whicheloe, MacFarlane Ltd., that the contractual entitlements of National Health Service staff to their pension and lump sum as accrued in the event of their redundancy, transfers to a new employer by virtue of Article 3 of the Acquired Rights Directive. The Beckmann case however, is important not only to NHS staff, it is also important to Lecturers. That is because the pension entitlements in question, in regard of the National Health Service contracts, are virtually identical to those enshrined in the Silver Book. Indeed the pension entitlements of both groups of workers are made under the same enabling legislation; the Superannuation Act 1972. On the 4th June 2002, the European Court of Justice confirmed the Advocate General’s Opinion in a formal ruling on the matter. For those who may be interested in the detail, the full judgment can be found at www.curia.eu.int As a consequence of the Beckmann case, LEAF registered a further formal complaint against the United Kingdom, with the European Commission. We say in our complaint that the UK deliberately and intentionally circumvented Lecturers’ entitlements to their pension and lump sum, as accrued, by introducing new regulations in 1997. The new regulations allowed Further Education corporations to “choose” whether or not to meet the cost of a Lecturer’s early retirement in the event of his/her redundancy. The ECJ has now made clear it clear that, although occupational pension rights per. se. do not transfer to the new employer by virtue of the Acquired Rights Directive, a contractual term governing entitlement to one’s pension and lump sum that is triggered by a dismissal for the reason of redundancy or efficiency does. The Silver Book contains such a term and, in our view therefore, the United Kingdom has breached a protected Community law right by introducing legislation aimed at cancelling that right. It is possible that a substantial number of Lecturers will have claims to pursue if they were: a] Made redundant after the 1997 regulations came into force, b] Were employed on the terms of the Silver Book, c] Met the criteria of having reached the age of 50, d] Were not awarded early retirement. LEAF officers will be attending a meeting with the Commission in September 2002 in regard of both of the formal complaints LEAF has submitted on behalf of its members.
LEAF - Working Hard for Lecturers’ Rights
NEWS FROM THE SECRETARIAT-GENERAL We have now received official confirmation that the Commission intends to examine our second complaint concerning Lecturers’ pension entitlements. The complaint centers on what we regard as a protected contractual entitlement to a pension as accrued, if dismissed for the reason of redundancy or in the efficient discharge of the service. Changes to the regulations affecting teachers’ pensions were introduced in 1997. The new arrangements made the payment of a Lecturers’ pension, in the event of his/her redundancy, conditional upon whether the employer was prepared to meet the cost involved. We believe that the contractual entitlement protected by Community law is mandatory. The leading case on this aspect of pension entitlements is Beckmann v. Dynamco, Whicheloe, MacFarlane Limited. It was interesting to note that when the case was referred to the European Court of Justice, lawyers for the United Kingdom supported Mrs. Beckmann’s position. However, in the Beckmann case it was the private contractor and not the UK Government who would be responsible for picking up the tab. We will have to see what the Government’s response will be if they find they are directly or indirectly responsible for meeting the costs of early retirements. Over the past four to five year, a substantial number of Lecturers will have been made redundant and refused access to an early retirement pension. It may well transpire that they will have a claim to their pension and lump sum and that this will have to be backdated. We will keep members in touch with events as they progress.
Premature
Retirement
Compensation Commissioner
Diamantopoulou 14th March 2002 Dear
Commissioner, This
complaint
is
made
on
behalf
of
Further
Education
Lecturers
in
the
United
Kingdom
by
the
Lecturers’
Employment
Advice
&
Action
Fellowship
[LEAF],
which
is
a
listed
trade
union
under
the
Trade
Union
and
Labour
Relations
[Consolidation]
Act
1992.
It
concerns
the
removal
of
the
contractual
entitlement
to
a
Pension
and
Lump
sum
as
accrued,
if
having
completed
the
minimum
reckonable
service
for
pension
purposes,
the
Lecturer
is
made
redundant
or
is
dismissed
for
reasons
of
efficiency.
The
removal
of
this
entitlement
was
effected
by
way
of
a
regulation
made
by
the
Secretary
of
State
under
Section
24
of
the
Superannuation
Act
1972. The
contractual
entitlements
to
which
we
refer
are
contained
in
a
collective
agreement
protected
by
Article
3[2]
of
Directive
77/187/EEC. In
1997
the
United
Kingdom
Government
introduced
a
new
regulation
[SI
Number:
1997/311],
which
removed
the
earlier
contractual
and
statutory
entitlements.
The
regulation
removed
the
mandatory
contractual
and
regulatory
requirement
upon
the
employer
to
fund
the
additional
cost
of
the
dismissed
employee’s
premature
retirement,
and
made
this
a
discretionary
feature
of
the
employer’s
obligations
and
responsibilities. At
the
time
it
was
not
clear
whether
the
entitlement
to
a
Pension
and
Lump
sum
as
accrued
was
covered
by
the
ARD
because
of
difficulties
interpreting
the
wording
of
Article
3[3]. On
The
21st
January
2000
the
Queen’s
Bench
Division
of
the
High
Court
made
a
Reference
to
the
European
Court
of
Justice
concerning
the
interpretation
of
“old-age
benefits”
within
the
meaning
of
Article
3[3]
of
Directive
77/187/EEC.
The
case
that
gave
rise
to
the
reference,
Beckmann
v.
Dynamco,
Whicheloe,
Macfarlane
Ltd.,
raised
fundamental
issues
as
to
the
construction
of
the
Directive
and
sections
5
and
7
of
the
TUPE
regulations.
The
points
raised
by
the
Reference
would
determine
the
entitlements
of
many
older
NHS
workers
made
redundant
after
a
transfer. On
the
13th
December
2001,
the
Advocate
General
gave
a
preliminary
ruling
which
favoured
the
claimant
Mrs.
Beckmann The
contractual
and
regulatory
entitlement
to
a
Pension
and
Lump
sum
as
accrued,
as
defined
in
the
Beckmann
proceedings,
is
strikingly
similar
to
the
position
of
Further
Education
Lecturers’.
The
key
difference
between
the
Beckmann
case
and
this
complaint
is
marked
out
by
the
fact
that
the
United
Kingdom
Government
removed
the
regulatory
entitlements
enjoyed
by
Lecturers
whose
terms
and
conditions
were,
or,
continue
to
be
governed
by
the
pre-transfer
collective
agreement. The Member State did so by making a new regulation that allowed employers’ the option of meeting the additional cost of the premature retirement. THE
KEY
AREAS
OF
SIMILARITY
BETWEEN
THE
POSITION
IN
BECKMANN
AND
THAT
OF
FURTHER
EDUCATION
LECTURERS
IN
THE
UNITED
KINGDOM
ARE
SET
OUT
BELOW: 1.
In
keeping
with
the
position
in
Beckmann
–
Further
Education
Lecturers’
were
subject
to
a
transfer
of
employer. 2.
In
keeping
with
the
position
in
Beckmann
–
Further
Education
Lecturers’
contracts
of
employment
were
governed
by
a
collective
agreement. 3.
In
keeping
with
the
position
in
Beckmann
–
the
collective
agreement
was
incorporated
by
express
reference
into
their
individual
contracts
of
employment. 4.
In
keeping
with
the
position
in
Beckmann
–
a
term
of
the
collective
agreement
[Appendix
3]
made
provision
for
premature
retirement
compensation.
The
agreement
was
reached
in
1976
and
appears
to
predate
the
embodiment
of
those
terms
in
a
statutory
instrument. 5.
In
keeping
with
the
position
in
Beckmann
–-
this
contractual
entitlement
was
triggered
in
the
event
that,
having
attained
the
age
of
50
and
having
completed
at
least
5
years
service
for
pension
purposes,
the
Lecturer
was
dismissed
by
reason
of
redundancy
or
on
the
grounds
of
efficiency. 6.
In keeping with the
position in Beckmann
- in regard of Lecturers’
entitlements to pension
under the Teachers’
Pension Scheme, the
enabling legislation
is the Superannuation
Act 1972. 7.
In keeping with the
position in Beckmann
- the provision for
early retirement compensation
as described in [5],
was also embodied
in regulations made
by the Secretary of
State under Section
24 of the Superannuation
Act 1972. The regulation
was made retrospective
to the 1st April 1976.
BACKGROUND On
the 1st April 1993,
pursuant to the Further
& Higher Education
Act [1992], Colleges
of Further and Higher
Education in England
and Wales were removed
from local authority
control. As a consequence,
every Lecturer’s
employment was transferred
to his or her respective
newly formed Further
Education Corporation
[FEC]. The
change of employer
constituted a relevant
transfer for the purposes
of Directive 77/187/EEC.
It was conceded in
the case of Ralton
v. Havering College
of F&HE [1999],
which is the subject
of a separate formal
complaint to the Commission
[2001/5005, SG [2001]
A/11176], that the
College was an emanation
of the State. [Case
C-188/89 Foster v.
British Gas [1990]
ECR I-3313]. The Lecturers
concerned were therefore
entitled to rely directly
upon the ARD. It
is our contention
that Further Education
Lecturers’ throughout
the Further Education
sector, like their
colleagues in the
Ralton proceedings,
are able to rely directly
on Directive 77/187/EEC. Before the transfer, Further Education Lecturers’ employment was governed by a collective agreement known colloquially as the Silver Book. Under UK law collective agreements acquire legal force through being incorporated into individual contracts of employment. The Silver Book collective agreement is expressly incorporated into individual contracts of employment. The contracts of employment that were transferred from the local education authorities [LEAs], to the new {FECs] on 1st April 1993, were therefore contracts that included, as legally binding terms and conditions, the provisions of the Silver Book. The Silver Book collective agreement has not been terminated, nor has it expired or been replaced, and it remains in force today. As
a result there are
still some employees
who despite having
suffered severe duress
for the reason that
they chose to retain
their transferred
rights, have managed
to continue to work
on the Silver Book
terms. [See formal
complaint ref: 2001/5005,
SG[2001] A/11176]. The
Silver Book collective
agreement makes provision
for premature retirement
compensation in the
event that a Lecturer,
having attained the
age of 50 and having
completed at least
5 years service for
pension purposes,
is dismissed for redundancy
or on the grounds
of efficiency. Clause
22.1 of the Silver
Book states: “Where
an LEA proposes to
make use of premature
retirement compensation
they shall consult
the recognised Lecturers’
locally using the
procedures set out
in Appendix 3. Where
the premature retirement
compensation scheme
is used to reduce
FE Lecturers’
employment this amounts
to redundancy for
the purposes of this
Appendix and not efficient
discharge of the employer’s
functions”.
Appendix
3 - entitled - “Agreement
on Premature Retirement
Compensation”. First
Sentence “CLEA*
and the recognised
unions of Further
Education teachers
[and those of school-teachers]
issued the following
agreed text in 1976” Paragraph
[3] of Appendix 3
[first sentence]: “The
main provisions for
the payment of PRC,
shortly to be embodied
in regulations made
under the Superannuation
Act 1972, are set
out in Annexe B”. Paragraph
[4] of Appendix 3: “Parallel to the statutory regulations for the payment of PRC, which are due to be made with retrospective effect to 1 April 1976, are changes in teachers’ entitlements to redundancy pay under the Redundancy Payments Act 1965. These also would have retrospective effect from 1st April 1976. Details
are at Annexe D”. Annexe
B of Appendix 3, paragraph
4 states: The regulations would provide that eligible employees aged 50 or over who have completed the minimum period of reckonable service [normally 5 years] for pension purposes should receive the following compensation payments from the compensating authority where the employing authority has certified that the employee has ceased to hold his employment by reason of redundancy or in the interests of the efficient exercise of their functions. Annexe
B sub-paragraphs [a
-d] state: At
the time of ceasing
to hold employment [a]
payments equal to
the personal pension
accrued at the date
of cessation of employment; [b]
payments equal to
the retirement lump
sum under the superannuation
scheme based on [c]
enhancement at the
discretion of the
compensating authority
of a and b by added
years not [i]
a period of 10 years; [ii]
a period equivalent
in length to the aggregate
of his reckonable
and qualifying service; [iii]
a period which, when
added to his reckonable
service, [as defined
in the superannuation [vi]
a period equivalent
in length to the period
beginning with the
day immediately following
[d] supplementary payment to enhance widows’ and dependants’ pensions in respect of the period between cessation of employment and age 65 or date of death if earlier by means of added years on the principle set out in paragraph 4 [c]. [There would be no special supplement in respect of other payments on death i.e. death gratuity.] The
Notoriety of Custom
& Practice The
contractual arrangements
set out in the Silver
Book collective agreement
and enshrined in the
Teachers [Premature
Retirement Compensation]
Regulations were honoured
before and after the
transfer. Indeed,
until 1996, the Further
Education Funding
Council was providing
colleges of Further
Education with additional
funds to enable the
colleges to enhance
the pensions of staff
by up to 10 added
years. The objective
of the Government
was clearly to encourage
the post-transfer
removal from the FE
sector of as many
Lecturers employed
on Silver Book conditions
as possible. Mr
Bill Michie MP raised
the question of proposed
changes to the Teachers
Pensions Regulations
by the Secretary of
State, by way of a
Written Question,
and received the following
Written Answer on
the 13th January 1997. Mr.
Bill Michie: “To
ask the Secretary
of State for Education
and Employment if
teachers’ who
are members of the
teachers’ pension
scheme have an entitlement
to receive an unenhanced
pension based on years
of service up to the
date of dismissal;
if dismissed as redundant
aged over 50 years;
and what legal advice
has she obtained on
changing that entitlement,
as proposed on 22nd
October, by means
of amending regulations”. Mrs.Gillian
Shepherd: Under the
current regulations,
a teacher over 50
receives an immediate
pension only if their
employer certifies
to the Secretary of
State that the teacher’s
employment has been
terminated by reason
of redundancy or in
the efficient discharge
of the employer’s
functions. [Hansard
(Written Answers)
[pp 64] - 13th January
1997]. From
the 1st September
1997, the Teachers
[Compensation for
Premature Retirement
and Redundancy] Regulations
took effect and Further
Education employers
were allowed to apply
their discretion in
regard of awarding
early retirement compensation
to Lecturers’
who were dismissed
for the reason of
redundancy or on the
grounds of efficiency.
[SI Number: 1997/311] By
virtue of the above
regulation, the award
of unreduced premature
retirement benefits
became dependent on
the employer’s
willingness to meet
the cost of the early
retirement. Under
the new regulations
the employer was required
to: [a]
Certify that the person
has been made redundant
or their employment
terminated prematurely
in the efficient discharge
of the employer’s
functions; as per
the previous contractual
and statutory position,
and. [b]
Certify that he agreed
to meet the statutory
compensation costs;
a new feature of the
regulations. 1.
It is our view that
this change in the
regulations is in
conflict with the
contractual entitlements
as identified in Appendix
3 of the Silver Book
collective agreement. 2.
That the Member State
has breached the protection
of Community law afforded
by Directive 77/187/EEC
following the transfer
of employer, by way
of making secondary
legislation aimed
at altering a pre-transfer
contractual entitlement. In
the absence of a ruling
by the European Court
of Justice as to the
interpretation of
Article 3[3] ARD,
we raised the question
as to whether the
1997 regulation constituted
a worsening of entitlements
under Section 24 of
the enabling Act.
That section is recorded
verbatim below. 24[1]
Subject to subsection
[2] below, the Secretary
of State may, with
the consent of the
Minister, by regulations
provide for the payment
by such person as
may be prescribed
by or determined under
the regulations of
pensions, allowances
or gratuities by way
of compensation to
or in respect of the
following persons,
that is to say, persons
- a]
in relation to whom
regulations may be
made under section
7, section 9 or section
10 of this Act or
section 1 of the Police
Pensions Act 1948
or in relation to
whom a Scheme may
be made in accordance
with section 26 of
the Fire Services
Act 1947 [Fireman’s
Pension Scheme]; and b]
who suffer loss of
office or employment,
or loss or diminution
of emoluments, in
such circumstances,
or by reasons of happening
of such an event,
as may be prescribed
by regulations. [2]
Regulations under
this section relating
to persons in relation
to whom regulations
may be made under
section 7 of this
Act may be prescribed
without the consent
of the Minister. [3]
Regulations under
this section may- [a]
include provision
as to the manner in
which and the person
to whom any claim
for compensation is
to be made, and for
the determination
of all questions arising
under the regulations; [b]
make different provision
as respects different
classes of persons
and different circumstances
and make or authorise
the Secretary of State
to make exceptions
and conditions; and [c]
be framed so as to
have effect from a
date earlier than
the making of the
regulations, [4]
Regulations under
this section may include
all or any of the
provisions referred
to in paragraphs 8,9,
and 13 of Schedule
3 to this Act. [5]
Regulations under
this section shall
be made by statutory
instrument, which
shall be subject to
annulment in pursuance
of a resolution of
either House of Parliament. Section
24 of the Superannuation
Act 1972 therefore
prohibits the retrospective
effect of regulations
that place a person
in a worse position
than he would have
been in if the regulations
had been so framed
as to have effect
only from the date
of their making. It
therefore appeared
to follow that, in
any event, rights
that had accrued up
until this change
in the regulations
occurred must be protected. The
Department for Education
and Employment was
contacted on this
matter and the following
response was received. “Finally,
you seek clarification
about Section 24[3][c]
of the Superannuation
Act 1972. Both the
teachers’ pension
regulations and the
regulations supporting
the premature retirement
compensation framework
are made under the
Superannuation Act
1972. The section
you quote is a ‘no
worsening’ provision,
which protects scheme
members accrued rights.
Entitlement to premature
retirement benefit
is not an accrued
right. As explained
above, premature retirement
benefits are discretionary,
and are paid only
as a consequence of
action by the employer
to prematurely terminate
a person’s employment”. The
DFEE letter continues
as follows: “The
teacher’s scheme
is a statutory scheme
and the regulations
are not overridden
by any documentation
governing terms and
conditions of employment.
Whether the terms
and conditions of
your employment, including
your contract placed
any obligation on
your employer to award
unreduced retirement
benefits to you in
the event of your
redundancy is not
a matter for the Department.
This is something
you must resolve with
your employer”. The
employer of course
simply relied upon
the 1997 Regulations
for his defence. The
position in which
Lecturers’ found
themselves was impossible. Scope
and Effect of Directive
77/187 Article
1 ‘1.
This Directive shall
apply to the transfer
of an undertaking,
business or part of
a business to another
employer as a result
of a legal transfer
or merger. Article
3 ‘1. The transferor’s rights and obligations arising from a contract of employment or from an employment relationship existing on the date of a transfer within the meaning of Article 1(1) shall, by reason of such transfer, be transferred to the transferee. Member States may provide that, after the date of transfer within the meaning of Article 1(1) and in addition to the transferee, the transferor shall continue to be liable in respect of obligations which arose from a contract of employment or an employment relationship. 2.
Following the transfer
within the meaning
of Article 1(1), the
transferee shall continue
to observe the terms
and conditions agreed
in any collective
agreement on the same
terms applicable to
the transferor under
that agreement, until
the date of termination
or expiry of the collective
agreement or the entry
into force or application
of another collective
agreement. Member
States may limit the
period for observing
such terms and conditions,
with the provision
that it shall not
be less than one year.
3. Paragraphs 1 and
2 shall not cover
employees’ rights
to old-age, invalidity
or survivors’
benefits under supplementary
company or inter-company
pension schemes outside
the statutory social
security schemes in
Member States. Scope
and Effect of National
Law Regulations
5, 6 and 7 of the
TUPE provide on the
relevant points: 5.
Effect of Relevant
Transfer on Contracts
of Employment etc.
(1) ... a relevant
transfer shall not
operate so as to terminate
the contract of employment
of any person employed
by the transferor
in the undertaking
or part transferred
but any such contract
which would otherwise
have been terminated
by the transfer shall
have effect after
the transfer as if
originally made between
the person so employed
and the transferee.
(2) Without prejudice
to paragraph (1) above,
... on completion
of a relevant transfer –all
the transferor’s
rights, powers, duties
and liabilities under
or in connection with
such a contract shall
be transferred by
virtue of this regulation
to the transferee;
and –anything done before the transfer is completed by or in relation to the transferor in respect of that contract or a person employed in that undertaking or part shall be deemed to have been done by or in relation to the transferee ... 6. Effect of Relevant Transfer on Collective Agreements Where at the time of a relevant transfer there exists a collective agreement made by or on behalf of the transferor with a trade union recognised by the transferor in respect of any employee whose contract of employment is preserved by Regulation 5(1) above, then: (a)
... that agreement,
in its application
in relation to the
employee, shall, after
the transfer, have
effect as if made
by or on behalf of
the transferee with
that trade union,
and accordingly anything
done under or in connection
with it, in its application
as aforesaid, by or
in relation to the
transferor before
the transfer, shall,
after the transfer,
be deemed to have
been done by or in
relation to the transferee
... 7. Exclusion of
Occupational Pension
Schemes (1) Regulation
5 and 6 above shall
not apply: (a) to
so much of a contract
of employment or collective
agreement as relates
to an occupational
pension scheme within
the meaning of the
Social Security Pensions
Act 1975 or the Social
Security Pensions
(Northern Ireland)
Order 1975; or (b)
to any rights, powers,
duties or liabilities
under or in connection
with any such contract
or subsisting by virtue
of any such agreement
and relating to such
a scheme or otherwise
arising in connection
with that person’s
employment and relating
to such a scheme.
(2) For the purposes
of paragraph (1) above
any provisions of
an occupational pension
scheme which do not
relate to benefits
for old age, invalidity
or survivors shall
be treated as not
being part of the
scheme. [Case
C-164/00] Katina Beckmann
v. Dynamco, Whicheloe,
Macfarlane As
referred to earlier,
the above case was
sent on Reference
to the European Court
of Justice from the
Court of Appeal in
the United Kingdom. The
Court was faced with
the following questions: 1.
Is the employee’s
entitlement to early
payment of pension
and retirement lump
sum and/or to the
annual allowance and
lump sum compensation,
a right to an old-age,
invalidity or survivors’
benefit within the
meaning of Article
3(3) of Council Directive
77/187/EEC? 2. If
and to the extent
that the answer to
Question 1 is no,
is there an obligation
of the transferor
arising from the contract
of employment, the
employment relationship
or the collective
agreement within the
meaning of Article
3(1) and/or 3(2) which
transfers by reason
of the transfer of
the undertaking and
renders the transferee
liable to pay the
benefits to the employee
upon dismissal? The
Advocate General proposed
that the questions
referred for a ruling
should be answered
as follows: (1) The entitlement of an employee to payment of the Early Retirement Pension and Lump sum on retirement and/or the Annual Allowance and Lump sum compensation is not a right to an old-age, invalidity or survivor’s benefit within the meaning of Article 3(3) of Directive 77/187/EEC. (2) There is an obligation of the transferor of an undertaking arising from the contract of employment, the employment relationship and the collectiveagreement within the meaning of Article 3(1) and (2) to pay benefits to an employee in the event of dismissal which transfers by reason of the transfer of the undertaking and renders the transferee liable to pay the benefits to the employee upon dismissal. The
Commission’s
attention is drawn
to the very strong
positive correlation
between the contractual
and regulatory position
of Katina Beckmann
and the contractual
position and circumstances
that appertain to
Lecturers’ whose
terms and conditions
are or were governed
by the Silver Book
collective agreement.
Indeed, the similarity
between the two positions
is striking. Hundreds,
if not thousands of
Lecturers’ will
have lost their entitlement
to a premature retirement
Pension and Lump sum,
as accrued at the
date of the cessation
of their employment,
as a consequence of
the Member State’s
contravention of what
now appear to be entitlements
protected by Community
law, following the
introduction of the
1997 Regulations. In
the light of the Advocate
General’s Opinion
in Beckmann, we now
ask the Commission
to consider whether
the changes made by
the United Kingdom
in respect of the
Teachers’ [Compensation
for Redundancy and
Early Retirement]
Regulations 1997 contravene
the protections afforded
under Directive 77/187/EEC,
and if so whether
the Commission will
bring infringement
proceedings against
the Member State. CLEA* Council for Local Education Authorities
KATINA
BECKMANN v. DYNAMCO
WHICHELOE, MACFARLANE
LTD.
The
Advocate General
has now given his
Opinion in the case
of Katina Beckmann
v. Dynamco, Whicheloe,
Macfarlane Limited,
which was referred
to the European
Court of Justice
from the Queen’s
Bench Division of
the High Court. LEAF is of the view that the ruling is of considerable significance to those Lecturers, who while employed on the terms of the Silver Book, and had attained the age of 50 years, were made redundant. We believe that their entitlement to a pension “as accrued” transferred at the point of incorporation of colleges, and is binding on the employer. Currently, the only prospect is an actuarially reduced pension that the member can elect to take once s/he has attained 55 years of age. We are discussing the implications of the ruling with our lawyers. The
Advocate General’s
Opinion is given
below. Members are
advised to revisit
our discussion of
the ramifications
of a ruling by the
European Court of
Justice in the Beckmann
case, which can
be found at the
address below:
Case C-164/00: Katia Beckman v Dynamco Whicheloe, Macfarlane Limited Preliminary ruling: · High Court of Justice (Queen’s Bench Division) · Interpretation of Article 3 of Council Directive 77/187/EEC on the approximation of the laws of the Member States relating to the safeguarding of employees’ right in the event of transfers of undertakings, businesses or parts of businesses · Concepts of old-age, invalidity and survivors’ benefits · Employee’s right to payment of early retirement pension and payment of lump sum on retirement · Right to annual payment and lump sum compensation payment on redundancy. Advocate General S. Alber delivered his Opinion at the sitting of the Full Court on 13 December 2001. He proposed that the Court should rule as follows: ‘(1) The entitlement of an employee to payment of an early retirement pension and lump sum on retirement is not a right to an old-age, invalidity or survivor’s benefit within the meaning of Article 3(3) of Directive 77/187/EEC.* (2) There is an obligation on the transferor of an undertaking arising from the contract of employment, the employment relationship and the collective agreement within the meaning of Article 3(1) and (2) to pay benefits to an employee in the event of dismissal, which transfers by reason of the transfer of the undertaking and renders the transferee liable to pay the benefits to the employee upon dismissal.Œ···· *The Acquired Right Directive does not cover the transfer of rights and obligations arising from employees’ rights to old-age, invalidity or survivor’s benefits under supplementary company or inter-company pension schemes, outside the statutory social security schemes in Member States. However, the entitlement to a pension and lump sum “as accrued” in the event of redundancy at age 50+ is a contractual obligation that does transfer. This is the Opinion of the Advocate General in point [2] of his ruling in the Beckmann v. Dynamco, Whicheloe, Macfarlane case. Further, in order to avoid the adverse consequences for employees that could result from the exclusion in regard of the transfer of obligations connected to occupational pension rights, Member States must adopt the measures necessary to protect the interests of employees and persons no longer employed in the transferor’s business at the time of transfer.
Update
Saturday
26 May 2001 PENSION ENTITLEMENTS – PART TIME WORKERS Members who intend to claim their pension entitlement following the recent court ruling on the rights of part-time workers should contact LEAF.
Update
Sunday
6 May 2001 PENSIONS Further discussions have taken place with LEAF's lawyers in regard of bringing an action in relation to Lecturers' pension entitlements. A conference with leading counsel specialising in pension matters is in the process of being arranged. In particular, we will be examining the legal force of the contractual entitlement to a pension, as accrued, if having attained the age of 50 the Lecturer is made redundant or dismissed on the grounds of efficiency. At the moment, the employers consider that they have the right to "decide" whether to agree to meet the additional cost of early retirements. We are of the view that the employer has a Mandatory Obligation to pay for the additional pension costs in the circumstances described above. Members will be informed of any progress following our meeting with counsel on this matter.
Update Monday 9 April 2001
EUROPEAN
COURT OF JUSTICE TO HEAR PENSIONS
CASE BY SUMMER
A Lecturer's right to receive his/her pension in a situation of dismissal for the reason of redundancy, if aged 50 or over, is a contractual term of the Silver Book. Yet, since 1998 the Government has placed a further hurdle between an employee's redundancy and his/her entitlement to their pension. In addition to notifying the Secretary of State that the employee had been dismissed for the reason of redundancy, the employer must now also certify that the college is prepared to meet the additional cost of the early retirement. LEAF has long since held the view that our contractual right cannot be simply cancelled by a government regulation. We believe that the employer remains contractually bound to meet the additional cost of early retirement in the circumstances described. We are also of the view that this contractual commitment under the Silver Book transfers with the employee, along with all other rights and obligations, to the new employer. These matters will be tested by the following case. In February 2000 the Queen's Bench Division of the High Court referred a case known as [Katina Beckmann v. Dynamco Whicheloe MacFarlane] to the European Court of Justice. The case involves the pension entitlements of National Health Service employees, if made redundant when they had reached the age of 50, and following a transfer of employer. Upon making the Reference to the ECJ, Mr Justice Penry-Davey commented that the points involved in the case are clearly important, and will determine the entitlements of many older NHS workers made redundant after transfer to a contractor. We believe that this case will also determine the entitlements of Lecturers' faced with similar circumstances. As we all know, there are plenty of our colleagues faced with that prospect. LEAF has been following the Beckmann case for some considerable period of time, because there are very important parallels with the situation facing Lecturers. As we have already stated above, under the Silver Book an employee was entitled to his/her pension, as accrued, if they were 50 years of age or over and had been dismissed for reasons of redundancy or in the interests of the efficiency of the service. Members will readily see the parallel in contractual terms with the case before the ECJ. Further, the pension scheme applicable to National Heath Service workers was established under the same enabling Act, as the Teachers' Pension Scheme, the Superannuation Act 1972. Moreover, a transfer of employer interrupted Beckman's contractual entitlement, as it has done with Lecturers. The key facts of the Beckmann case are therefore strongly related to the position of Lecturers. LEAF strongly believes that the Beckmann case is likely to provide important answers to questions of law in relation to pension entitlements in the event of a transfer of employer and subsequent redundancy when an employee has reached the age of 50. The current situation can only be described as dire. The redundant Lecturer will only have a right to his pension if his employer says he can. We do not know of any colleges that have been prepared to pick up the tab for the "the common or garden Lecturer", Ð although we have little doubt that some colleges provide this benefit for their flabby chums. The only way out at present for the poor old Lecturer is to be at least 55 years of age and to be prepared to accept a massive actuarial reduction in their pension and lump sum entitlement. All of that could change with the Judgement of the ECJ in Beckmann. As always, LEAF is at the forefront of research on legal matters in order to ensure that its members do not lose out. If you are concerned about your pension entitlement and have not yet joined LEAF, it is advisable to do so. We are committed to recovering our member's rights, not giving them away!
|
