| 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!
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