Our Ref: LGR 79/1/1532 426 INDEX
Date September 1998
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 ("the 1995 regulations")
1. I am directed by the Secretary of State for the Environment, Transport and the Regions to refer to your notice of appeal submitted under regulation J5 of the 1995 regulations against the decision of XXX Borough Council ("XXX"), whose responsibilities as employing authority following local government reorganisation now fall to XXX Council ("XXX") supported by XXX Council ("XXX") as administrative authority under regulation C1 of the 1995 regulations.
2. The appeal has been conducted by correspondence. Consideration has been given to your letters of 3 April and 12 September 1996; XXX's letter of 21 May; N. XXX letters 4 September 1996 and 13 October 1997, and to all copy documents enclosed with those letters.
3. The question for determination is whether XXX is obliged to treat fees received for electoral duties as remuneration for the purposes of determining your pensionable remuneration.
4. From the evidence submitted the following facts have been established:
(a) you worked for XXX with effect from 1 November 1993 as Senior Administrative Officer (elections, electoral registration and land charges);
(b) your duties included responsibility to the Chief Executive for all duties associated with elections to the extent that XXX accepted responsibility for those elections and to the extent that the Chief Executive Officer did not personally carry out those duties;
(c) your duties also included responsibility to the Electoral Registration Officer (through the Borough Solicitor) for all aspects of electoral registration including recruitment of canvassers, the canvass itself and publication of the electoral register;
(d) on 31 March 1996 you took early retirement from local government service; and
(e) on 3 April 1996 you appealed to the Secretary of State against XXX's decision not to include election fees in your pensionable remuneration.
5. You contend that it was custom and practice for many years for election fees to be paid for extra responsibility and that these responsibilities in your case were more than clerical duties. You argue that the overtime you worked at the time of the elections was necessary to carry out your contractual obligations.
6. You provided three pieces of evidence where payments for electoral duties were considered pensionable remuneration and where there were many similarities to your duties. In general you felt they pointed to additional fees for the full range of electoral duties being pensionable where they were contractual and paid for the employee's own use. The first involved pensionable contractual fees that you contend were treated as pensionable bonus payments. The second again pointed to contractual obligations and provided the fees were paid for someone's own use the fees would be pensionable. The last contained an informal government view that a whole-time officer with additional contractual election duties is not prevented from paying contributions on fees for those duties by the Local Government Superannuation Regulations 1986. Also, referenced in this evidence is an appeal precedent under the Local Government Superannuation Regulations 1974. Here a fee which was paid to an employee in pursuance of his contract was pensionable provided that it was paid for his own use and there was not a contractual condition requiring payment of the fee to the Council. In this case the officer was assigned to work for the Clerk to the County Council in his electoral work.
7. XXX's decision was on the basis that the election fees were extra payments for duties which they considered should be regarded as non-contractual overtime.
8. XXX raised a number of points based on their understanding of the background of XXX's decision and their own views on the question to be determined. They consider the duties irregular and should have been treated under provisions in the 1995 regulations treating the duties as variable-time. The National Joint Council for Local Authorities Administrative, Professional, Technical and Clerical Services Scheme of Conditions of Service ("the Purple Book") covering your appointment require fees to be paid by the officer into the general rate or County Fund as the officer's salary is deemed to be inclusive for all work undertaken. Through custom and practice they were paid in addition to contractual pay. They point out that your appointment letter made no mention of fees for irregular work.
9. XXX supported the above arguments of XXX and submitted evidence on the views taken on the pensionability of election fees. Reference is made to the Purple Book requirement for fees to be paid to the general rate fund. It is agreed that, although this did not happen, it would be a further breach of these conditions to make them pensionable. They point to the view that election fees, cannot be regarded as remuneration on which contributions are payable when passed to subordinates as pension contributions were deducted on payment to the returning officer ("RO") or acting returning officer ("ARO"). They further draw attention to Home Office guidance which states that a deputy acting returning officer's fees are not superannuable.
10. All the representations and evidence submitted have been considered. The Secretary of State is required to determine the same question as to your rights under the regulations which fell to be decided in the first instance by XXX. He is acting judicially and has no power to modify the application of the regulations to the facts of the case.
11. As far as is relevant regulation C2 of the 1995 regulations defines remuneration as follows:
"C2.-(1) Subject to paragraphs (2) ... "remuneration", in relation to an employee, means the total of-
(a) all the salary, wages, fees and other payments paid to him for his own use in respect of his employment ...
and any other payment or benefit specified in his contract of employment as being a pensionable emolument.
(2) "Remuneration" does not include-
(a) payments for non-contractual overtime;
(b) to (h) ...
(3) ... "
12. So far as is relevant pensionable remuneration is defined in regulation D1 of the 1995 regulations as:
"D1.-(1) A person's pensionable remuneration, in relation to a local government employment, is his remuneration for so much of the relevant period as he is entitled to count as a period of membership in relation to that employment.
(2) For the purposes of this regulation, the relevant period is-
(a) the year ending with the day on which the person ceases to be a member; or
(b) such other period as in accordance with Schedule D1 is to be regarded as the relevant period.
(3) ... "
Schedule D1 provides for fees as follows:
"9. Where the whole or a part of the member's remuneration consists of fees, his pensionable remuneration in respect of them is the annual average of the fees earned by him-
(a) during the period of 3 years ending with the last day of the period which is the relevant period for the purposes of regulation D1,
(b) during such more favourable period, of more than 3 but not more than 5 years, as his last employing authority may allow, or
(c) if he was entitled to receive fees during part only of the period mentioned in paragraph (a), during that part of the period."
13. It is not disputed between the parties that the payments in question are properly described as fees. The Secretary of State accepts that they should be so regarded. In deciding whether the fees constitute remuneration, the Secretary of State has to consider under regulation C2(1) whether the fees can be said to be paid to you, for your own use and in respect of your employment. If so, he then has to consider whether they fall within the exceptions listed in regulation C2(2). It is noted that the 1995 regulations provide for duties of returning officers and acting returning officers to be considered under the scheme. They are silent on the role of supporting officers and their duties. It is also noted that the 1995 regulations do not state that they have to be paid by the employer. The terms of regulation C26 show that the remuneration may come from another source.
14. It is not disputed that fees were paid to you. The Secretary of State has considered whether they were for your own use. He notes XXX's contention that you were remunerated in respect of your employment in relation to electoral duties and payment was subsumed into your contractual pay. He accepts the evidence that you were an officer to whom section 3, paragraph 26 of the Purple Book applies. He takes the view that, properly applied, this condition would mean that fees could not be considered to be for an employee's own use. However, in your case, paragraph 26(e) of the Purple Book terms does not appear to have been applied in practice. The Secretary of State notes that you have been allowed to keep the fees, despite what the condition in paragraph 26(e) purports to require. He takes the view that, to the extent that the term relating to the repayment of fees could be said to be within your contract of employment, since it has never been implemented it cannot in practice be held to apply. He therefore considers that the fees must be regarded as for your own use.
15. The Secretary of State has next considered whether the fees were, for the purposes of regulation C2(1), paid in respect of your employment. It is clear that electoral duties were included on the schedule to your letter of appointment. The Secretary of State takes the view that you were therefore contractually required to undertake them. To the extent that the duties for which you received the fees were duties you were contractually expected to perform, he takes the view that the monies were fees in respect of your employment. Payments at the returning officer's discretion in return for tasks which you were not contractually required to undertake would not form part of your employment, even if it were the practice for you to undertake them. It is noted that your duties associated with elections did not extend to elections for which XXX did not accept responsibility. XXX have stated that XXX was not allocated overall responsibility for County, Parliamentary and European elections; it would be for the RO in each case to decide on the limit of XXX's involvement. The Secretary of State takes the view that this does not mean they had no responsibility in such elections. The Secretary of State is not able in the context of this appeal to determine whether any individual elections or duties for which you were paid fees were not part of your contracted duties; however, he considers that it has not been shown that you performed election duties for which fees were received for which XXX did not accept responsibility. Neither has it been shown that any payments were discretionary to the extent that they could be considered a gift.
16. The Secretary of State does not consider that the fees fall within the exceptions listed in regulation C2(2). XXX's decision that the duties amount to non-contractual overtime has been noted. However, with regard to electoral duties which were clearly among your contracted duties, the Secretary of State takes the view that you should have been held to be in breach of your contract if you had refused to perform them. He concludes that overtime required in the performance of those contracted duties was not therefore voluntary and cannot be regarded as non-contractual overtime. To the extent that the fees were paid for those duties they are not therefore excluded on payment for non-contractual overtime.
17. The Secretary of State therefore concludes that the fees constituted remuneration within the meaning of regulation C2. This conclusion is based solely on the facts of the case in accordance with the 1995 regulations. Comparison with other appeals is not in itself a deciding factor. The appeal can only be determined on the relevant facts.
18. The Secretary of State therefore determines as set out above and allows your appeal that XXX is obliged to treat fees received for electoral duties as pensionable remuneration for the purposes of determining your pensionable remuneration.
19. A copy of this letter has been sent to the XXX.
20. The above constitutes the Secretary of State's determination of this case. It is final and cannot be changed except by a judgement in the High Court. As the Secretary of State's jurisdiction is now at an end; officers may not discuss or comment on the case further.