Union poised for High Court challenge to £95k cap on civil service exit payments

FDA will today kick off judicial review process against limit on settlements introduced last month
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By Jim Dunton

04 Dec 2020

The FDA is this afternoon starting legal proceedings at the High Court to challenge the government’s introduction of a £95,000 cap on exit payments for public sector workers, which came into force last month.

It said the government had “patently failed” to meet its legal obligations to properly consult on the proposals and reach an agreement on the changes to members’ terms and conditions that could affect workers earning salaries below £30,000 a year as well as top earners.

FDA assistant general secretary Lucille Thirlby said the union – which represents higher grade civil servants – had been left with no alternative but to challenge ministers’ actions through the courts. 

“These significant and complex changes have been rushed through without any meaningful dialogue, with the government imposing arbitrary cuts to exit and redundancy terms that could potentially affect hundreds of thousands of public servants, and not just to those on higher salaries,” she said.

“They have once again targeted the very public sector workers who have performed such extraordinary feats over the last nine months to keep our vital public services functioning.”

The FDA issued a letter before action to the government four weeks ago, indicating its intention to seek a judicial review of the cap – which came into effect via secondary legislation last month. Both PCS and Prospect subsequently fired similar warning shots across the Cabinet Office's bows. But the FDA is the first of the main civil service unions to follow up the move by commencing proceedings.

Unions representing local government workers are also challenging the government’s introduction of the cap, as is doctors' trade union the BMA.

Although limiting public sector exit payments was among the Conservative Party’s manifesto pledges for 2019’s general election, the legislation enacting the move was introduced without consultation – one ground of challenge against the move. A Cabinet Office consultation on the cap went live on 3 November,  the day before the new rules came into force.

The cap, which applies to civil servants, staff at arm’s length bodies, local authorities and a range of other organisations, was provided for in the Small Business, Enterprise and Employment Act 2015. But secondary legislation underpinning its terms was only laid before parliament on 14 October.

One of the main grounds for challenge to the cap's introduction as it affects civil servants is its conflict with the Superannuation Act 1972.

Garry Graham, deputy general secretary of public-sector professionals union Prospect, said the organisation had been working with its lawyers to challenge the cap and the way it had been introduced, but would cooperate with other unions.

“We believe the government has ignored the requirements of the 1972 Superannuation Act and that any changes to the Civil Service Compensation Scheme must be a result of consultation,” he said.

“Prospect’s pre action letter was submitted on 27 November and we await a response from the Government Legal Department.”

PCS, the civil service’s biggest union, has also submitted a letter before action to the government and signalled its willingness to work with other unions to challenge the cap. 

In 2017 the union successfully challenged changes made to the Civil Service Compensation Scheme that were introduced in 2016. PCS said it had not been properly consulted on them. The victory meant the updated terms were set aside and civil servants whose exit payments had been based on them saw their packages boosted.

PCS said this week that it believed the pay-cap regulations fell short of legal obligations in respect not only of the Superannuation Act, but also Article 1 Protocol 1 of the European Convention on Human Rights and the Equality Act 2010.

“PCS believes that the move is contrary to other legislative provisions that provide our members with protections,” a union spokesman said. “We also believe that the government has failed to consult on the changes with a view to reaching agreement, as is their legal obligation.”

Civil Service World understands that unions in some parts of the public sector may need to challenge the cap under different legislation from the Superannuation Act. However, it is possible that the High Court could choose to bring together judicial review requests that relate to the cap into one main case.

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