Schemes should be alert to Supreme Court’s part-time ruling
The UK government is facing a compensation bill of hundreds of millions of pounds following the Supreme Court’s ruling in Miller and others v Ministry of Justice.
The ruling in favour of the four judges, who were denied pensions for part-time work, might affect more than 1,000 justices. Schemes and employers who have fallen into the same trap could face similar consequences.
Prior to Miller, claims for unfavourable treatment towards part-time workers needed to be brought within three months of the end of the part-time employment, otherwise any such claim would be “out of time”. The ruling in Miller has expanded when such claims can be brought.
The court was asked to consider whether the three-month time limit prescribed by regulations covering part-time workers ran from the end of the part-time employment, or from the date of retirement.
The appellants in Miller were four judges, all of whom had held positions as fee-paid, part-time judges, a judicial office position that had previously been excluded from the application of the regulations. Some of the judges had moved between part-time and full-time salaried positions.
All of the appellants lodged a claim with the employment tribunal more than three months after the end of their part-time appointment, but within time if the relevant date was the date of retirement.
The Ministry of Defence argued that the unfavourable treatment occurred during the period of part-time appointment, and that a distinction should be made between when the time at which the unfavourable treatment happened and when the consequences were felt – at retirement.
It also claimed that if the relevant time was retirement, then part-time workers would be unable to make any claim for unfair treatment until they left work. However, the Supreme Court dismissed this argument as absurd.
The judges bringing the case argued that instead, the real question centred on when the less-favourable treatment finally occurred. They said that the detriment in question was the non-payment of a pro-rate pension on retirement, and as the right to a pension is “prospective, contingent and inchoate”, the judges’ “right to equal treatment was similarly prospective, contingent and inchoate”.
In its judgment, the Supreme Court highlighted that the regulations would need to be construed in a highly artificial context for two main reasons. First, they assume that a contract exists, despite the fact that judicial officers are not employed under a contract.
Second, entitlements in the judicial pension scheme are not based on individual appointments, but rather takes an aggregate approach to periods of service – weakening the government’s assertion that the time limit for making a claim ran from the end of each individual appointment.
The Supreme Court ultimately accepted the appellants’ arguments, and ruled that part-time judges can bring a claim for unfavourable treatment both during the course of their part-time appointment and up to three months after retirement. It went so far as to say that this accorded with the common sense of the matter.
The ruling means that claims from part-time workers for unfavourable treatment that would have previously been “out of time” could be brought back to life, provided the individual has not reached retirement age and that their part-time work did not end prior to the introduction of the regulations.
This could have a significant financial impact on schemes and sponsoring employers, particularly where a scheme’s governing documentation has not correctly applied the regulations.
Financial implications could also arise where the scheme has a high percentage of part-time workers who changed their job during their period of service.
Trustees and employers need to be aware that such claims could arise and that provisions may need to be made. If they have any concerns they should consider speaking to their scheme administrator or legal advisers.
The views in this article are intended for general information purposes only and should not be used as a substitute for professional advice. Arc Pensions Law and the author(s) are not responsible for any direct or indirect result arising from any reliance placed on content, including any loss, and exclude liability to the full extent. Always seek appropriate legal advice from a suitably qualified lawyer before taking, or avoiding taking, any action. If you have any questions on the points raised in the above, please do not hesitate to get in touch.