2016 amendments to Civil Service Compensation Scheme declared void

The High Court has ruled that amendments made to the Civil Service Compensation Scheme last year were unlawful and accordingly of no legal effect. These changes were introduced to reduce the value of voluntary exit, voluntary redundancy, compulsory redundancy and inefficiency payments. This ruling affects not only central government employees, but significant numbers of third sector and quasi-public sector workers whose employers participate in the Civil Service pension arrangements.

The Government introduced the changes in November 2016 following consultation with various unions and the agreement of eight unions. The reforms were not however agreed with Public and Commercial Services Union or the Prison Officers’ Association. The PCS brought judicial review proceedings to challenge the validity of the changes.

PCS successfully argued that the Government failed in its duty to consult with a view to reaching agreement (an obligation under the Superannuation Act 1972) in that it was excluded from further discussions about the amendments to the scheme that followed an initial consultation. Whilst PCS was included in the initial discussions the Court found that as the Government had held further discussions on the scheme that led to further changes without PCS being present, the Government had not fully met its duty to consult with a view to reaching agreement.

The Government has stated it will be appealing the judicial review decision, including on the basis that further discussion with PCS would not have made a difference to the scheme amendments. The Government has stated it will ask the Court to stay the current JR decision pending the appeal so that the 2016 terms can be used for now.

However pending further clarification it is likely that all voluntary exit, voluntary redundancy, compulsory redundancy and inefficiency exits will need to be calculated on the 2010 terms. The position with regard to payments already made under the 2016 terms is more complicated, as not all types of payment will necessarily be treated the same, through some may need to be recalculated.

Employers affected by this decision should await further guidance from the Cabinet Office. If decisions cannot be deferred, it would be prudent to take legal advice in relation to any redundancy or restructuring arrangements currently being progressed.

Patrick Gass, Principal Associate

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