Two hundred and ten full-time judges, across a variety of courts and tribunals, have successfully sued the Lord Chancellor and the Ministry of Justice in the Employment Tribunal following changes to their pensions. A copy of the decision in McCloud & ors v (1) Lord Chancellor and (2) MOD is available here. This blog analyses the implications of that decision.
In April 2015 the claimant judges were compulsorily transferred from the existing judicial pension scheme to a new scheme. The new scheme has less valuable retirement benefits. It also contains transitional provisions, which protect some judges from the adverse effects of the new scheme. This protection took the form of either total protection or tapered protection; the latter meaning that a judge would be transferred to the new scheme after a period of time. The decision as to whether a sitting judge would receive either form of protection was determined solely on a judge’s date of birth.
Claims were presented on behalf of unprotected judges as well as those with tapered protection on the basis that the claimants had suffered unjustified age discrimination. It was also contended that female and BAME judges had experienced indirect discrimination.
The respondents conceded that the transitional provisions amounted to less favourable treatment of the claimants because of age and conceded that the transitional provisions had a disproportionate impact on female and BAME judges. The claims therefore turned on whether the respondents could show that the transitional provisions are a proportionate means of achieving a legitimate aim in accordance with ss. 13(2), 19(2)(d) and 69(1)(b) of the Equality Act 2010. The respondents relied on the aim of protecting those judges closest to retirement from the financial effects of pension reform.
Employment Judge Williams rejected the respondents’ arguments on both legitimate aim and proportionate means. He held that the aim of protecting judges closest to retirement age was just another way of stating that the treatment was on the basis of age. He further held that the transitional provisions were not a reasonably necessary means of achieving the purported legitimate aim.
The tribunal, though considering the protected characteristic of age, in agreement with the parties, held that the result was the same for the claims of indirect sex and race discrimination and the infringement of the principle of equal pay.
The judgment is a stark reminder of an employer’s need to present a cogent, evidenced case on objective justification.
In relation to the legitimate aim, despite the latitude given to employers in selecting the aim, the aim must be a rational one. The judge found that “to set out to treat more favourably a group, who as was well known at the time, were the least adversely affected by the reforms appears to be counter-intuitive”. In other words, the aim relied on by the government was circular and therefore could not be legitimate: “an aim which amounts to an intention to treat one group more favourable and another less favourably, solely by reference to the age of those in the groups cannot, without further rational explanation of the reasons for it, be legitimate.”
What is surprising is that the respondents’ witnesses accepted that there was “no analysis or research, whether general or specific, underlying the government’s decision to incorporate the transitional provisions” in the new scheme. This was despite the fact that correspondence from 2012 recognised the need for “cogent arguments” to justify the change.
Further, the judge found that there were only general assertions in support of the respondents’ contention that the changes would adversely affect older judges. For example, the tribunal heard no direct evidence to support the suggestion that older judges would have less time prepare for the financial effects of pension change. In contrast, he concluded “that those with the shortest time to retirement have the least adversity to prepare for”. In order to persuade a tribunal that discrimination can be objectively justified, there must be more than supposition. Practitioners should give careful consideration to the witness and documentary evidence that is required to persuade a tribunal that an aim is legitimate.
The judge also appears to have been unimpressed by the respondents’ reliance on an objective of ensuring overall consistency of public sector pensions. This was not relied on expressly in the grounds of resistance and the judge noted that such an argument “might have been more persuasive had it been cogently reasoned and supported by specific evidence; rather, it emerged in evidence and submission.” Whilst a lack of precision formulating an aim does not prevent it from being justified, an employer has greater prospects of persuading a tribunal its aim is legitimate if it is able to show that the aim has been thoroughly thought through – preferably in advance of the hearing itself.
In assessing proportionality, a tribunal will consider whether the chosen means are appropriate and reasonably necessary to achieve the aim. This is in essence a balancing exercise.
The judge concluded that the respondents failed to provide evidence that a shorter period for the transitional provisions would have enabled the respondents to achieve their aim. Similarly, the respondents had failed to explain why they had chosen to implement the transitional provisions over non-discriminatory alternatives.
Whilst the judge noted that the changes to the pension scheme took place against a backdrop of broader public sector pension changes, he found that the changes for the claimants were more detrimental than other public service workers. This is because judicial pensions as a proportion of overall remuneration tend to be significantly higher than for other public service employees. There are a range of other factors that set judicial pensions apart from other public sector pensions. It is well known that many senior practitioners accept a pay cut upon appointment to the bench and that such an appointment is intended to be for the remainder of an individual’s professional life, in part due to the restrictions on judges returning to private practice upon retirement. The judge also emphasised that assurances had been provided to judges by the Lord Chancellor in 2004 that there would be no change to serving judges’ pension.
By the consent of the parties, the judge only considered the protected characteristic of age. It was agreed that the judge’s conclusion on one protected characteristic would be the same for the other protected characteristics relied on, namely sex and race. It should be emphasised that, as a matter of law, the test of justification under s. 19 is wider than the justification of direct age discrimination: see Chief Constable of West Yorkshire v Homer  ICR 704 at §19. However, on these facts the difference in the applications of these tests would not have altered the outcome.
A key theme in this litigation, as in the O’Brien and Miller pension claims brought by part-time judges, is the dual role of the government as employer and law maker. The judge expressly referred to the efforts made to increase the diversity of the judiciary in recent years. This sits uneasily alongside the respondents’ concession that it has placed female and BAME judges at particular disadvantage in comparison to their older, white colleagues.
It is likely that this judgment will have significant ramifications across the public sector. Groups such as the police, teachers and prison officers have faced similar changes to their pensions. It is understood that litigation on a similar point is currently being brought by the Fire Brigades Union and that the same arguments regarding legitimate aim are being advanced. This judgment is unlikely to be the last word on the impact of transitional provisions on judicial and non-judicial pensions.
By Tamar Burton, Cloisters