526 INDEX
09 March 1999
LOCAL GOVERNMENT PENSION APPEAL
SUPERANNUATION ACT 1972
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1995 ("the 1995 regulations")
LOCAL GOVERNMENT PENSION SCHEME REGULATIONS 1997 (“the 1997 regulations”)
1. I refer to your letter of 16 December 1998 in which you appeal (under regulation 102 of the 1997 regulations) to the Secretary of State for the Environment, Transport and the Regions against the decision of Mr XXX, the Appointed Person.
2. The Appointed Person upheld the decision of XXX Council (the council). They decided that payments for “additional hours” worked were not remuneration for the purposes of the 1995 regulations and therefore could not be included in the calculation of your retirement benefits.
3. The Secretary of State’s powers under regulations 102 and 103 are limited to reconsidering the original disagreement referred to the Appointed Person under regulation 100. This regulation refers to matters relating to the local government pension scheme (LGPS), which effectively means whether or not the LGPS regulations have been correctly applied in the circumstances.
4. The question for decision: The question for decision by the Secretary of State is whether “additional hours” payments constitute remuneration under the 1995 regulations.
5. The Secretary of State has considered all the representations and evidence. A copy of the list of documents and evidence considered by the Appointed Person was sent to you undercover of the department’s letter of 13 January 1999.
6. Secretary of State’s decision: The Secretary of State having taken into account the appropriate regulations, finds that for the “additional hours” payments received do not constitute “remuneration”. His decision confirms that made by the Appointed Person. The Secretary of State’s reasons and the legislative provisions which he considers apply in your case are set out in the annex to this letter, which forms an integral part of this decision. He is acting judicially and has no power to modify the way the legislative provisions apply to the facts of the case. Having made his decision he has no powers to alter it but you may refer the matter to the Pensions Ombudsman or to the High Court. Because of this the Secretary of State’s officials cannot discuss the case further.
7. The Occupational Pensions Advisory Service (OPAS) is available to assist members and beneficiaries in connection with difficulties which they have failed to resolve. His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 233 8080).
8. The Pensions Ombudsman may investigate and determine any complaint or dispute of fact or law in relation to the local government pension scheme. His address is 11 Belgrave Road, London, SW1V 1RB (telephone number 0171 834 9144).
EVIDENCE RECEIVED
1. The following evidence has been received and taken into account:
a) from you: letters dated 16 December 1998 (with enclosures) and 16 January 1999; and
b) from the Appointed Person: letters dated 5 January (with enclosures) and 28 January 1999.
REGULATIONS CONSIDERED AND REASONS FOR DECISION
2. From the evidence submitted the following relevant points have been noted:
a) when you ceased employment with the council you were employed as a Team Leader with the Emergency Duty Team;
b) Team Leaders and/or Liaison Officer provided cover when a Liaison Officer was absent;
c) when you provided such cover you were paid for “additional hours”;
d) you paid superannuable (now pensionable) contributions on additional hours payments until 1994;
e) on 10 February 1998 you ceased employment on the grounds of ill-health and your LGPS benefits were paid immediately; and
f) your pensionable remuneration excluded the additional hours payments as the council decided that such payments were for non-contractual overtime.
3. In reaching his decision the Secretary of State has had regard to the regulations which, in his view, apply. When you ceased employment the 1995 regulations applied. Your pensionable remuneration would have been calculated by reference to regulation D1. This in turn referred to regulation C2 which defined “remuneration”. It is not disputed that you worked and were paid for additional hours. Remuneration excludes payments for non-contractual overtime. The issue to be resolved is therefore whether these payments were for contractual or non contractual overtime for the purposes of the 1995 regulations.
4. The Secretary of State takes the view that for the purposes of the 1995 regulations, contractual overtime is work which is required under the terms of or to fulfil the person’s contract of employment and which is performed outside normal hours of employment, that is where failure or refusal to carry out the work would result in a breach of contract which could result in disciplinary action being taken.
5. The Secretary of State has carefully considered all the representations and evidence. The council state that the additional hours payments were not payments for contractual overtime. For such payments to count towards pension benefits it would have to have been for work which was required by your contract of employment, and therefore part of basic pay. As such work was not part of your contract the additional hours payments did not form part of your basic pay and therefore was not remuneration. They note that your contract of employment did provide 6 days additional annual leave in recognition of irregular working hours. They acknowledge that you paid contributions on these payments until 1994 but consider this may have been an error.
6. The Appointed Person found that the additional payments made were for cover when a Liaison Officer was absent. Cover could be provided by one of the other Liaison Officers or the Team Leader. He reviewed your contract of employment and job description but found no reference to “additional hours working” as being a contractual requirement in either document. The Appointed Person also considered a number of other points which are set out in the annex to his letter of 13 August 1998.
7. You contend that in 1983 when you commenced employment you were informed that “additional hours” payments were pensionable and that this was confirmed by the deduction of 6% from all additional hours you worked. You further contend that in 1986 when you were appointed Team Leader you received clear verbal assurance that additional hours worked would continue to be pensionable. You maintain that this was also known to the other Team members and that a previous Emergency Duty Team manager receives a pension entitlement which includes “additional hours” payments.
8. You point out that many aspects of the role of an emergency duty worker have not been made clear on contract but custom and practice has established clear expectations of the Team by its managers. You consider this is essentially due to the Team being in the unique position of having many of its working conditions and arrangements different from the “mainstream” service. You further consider it grossly unreasonable of the department (that is the section you worked for as a Team Leader) to renege on your conditions of service which it had applied for many years and consistently deducted pensionable contributions from your additional hours payments. You consider it unacceptable for the council to suggest there may have been an “error which was not identified until 1994”. You point out that you were not told that the additional hours payments were not pensionable.
9. You believe that the department had always considered the hours to be contractual until a contrary decision was made by the personnel department at the time you retired. You have provided a copy of your pay statement for 1987-88 which shows additional hours coded 002 which is the department’s code for basic pay. You consider that you had to carry out the work and that for the council to suggest that no disciplinary action would have been taken ignores the intensive pressure you felt under to work the additional hours and your loyalty to the council.
10. The Secretary of State has first considered the question whether a colleague’s pensionable benefits have been calculated with the inclusion of the additional hours payments. Comparison with how other members of the LGPS have had their pensionable benefits calculated is not in itself a deciding factor as facts in individual cases may not be identical in key respects. Furthermore the Secretary of State’s powers under regulations 102 and 103 of the 1997 regulations are limited to reconsidering the appeal before him and whether the council have correctly applied the appropriate regulations in that case.
11. The Secretary of State has considered the question of contributions. He considers that the payment of contributions does not of itself prove that the payments on which the contributions are assessed are required to be treated as (pensionable) remuneration. “Remuneration” and “pensionable remuneration” must be determined by reference to regulations C2 and D1. It is not for the Secretary of State to consider in this context whether the deduction of contributions in error constitutes maladministration.
12. The Secretary of State has next considered whether the additional hours payments were for contractual overtime. There is no disagreement that the department was required to provide cover if a Liaison Officer was absent. Nor is it disputed that this cover was outside normal hours of attendance and that additional hours payment were made. The Secretary of State is satisfied that the additional hours are properly classed as overtime; they were time worked in excess of and outside normal hours of employment for which no specific counter balancing time off was granted. He therefore has to consider whether this overtime was contractual or non-contractual. He has not been helped in this matter as he notes that it appears there maybe a disagreement within the council in that the department considers the additional hours payments are contractual but that the personnel department does not. The Secretary of State notes that the personnel department were aware of the view of the department that they considered the hours were contractual, but concluded that this was not the case and in 1994 you ceased to pay contributions on the additional hours payments. From the evidence available it is not clear when you became aware of this but it is noted that in November 1996 you wrote to the personnel section about this matter and stated that you had not been informed. However the Secretary of State notes that your contract of employment does not refer to the need to carry out the additional hours work, nor is there a reference to such work in your job description. Furthermore, from the evidence available it is clear that you were not the only member able to provide such cover and the Secretary of State considers that had you refused to carry out this work there were other members of the department who could have carried out the duties. He does not accept that custom and practice was sufficient in itself to establish that the overtime was contractual. He takes the view that you could not have been disciplined as in breach of contract had you refused to carry out these duties. In all the circumstances he considers that the additional hours worked were not contractual for the purposes of the 1995 regulations.
13. The Secretary of State concludes that the additional hours payments were for non-contractual overtime for the purposes of the 1995 regulations and therefore do not constitute remuneration within the meaning of regulation C2.
14. It appears to the Secretary of State that the council were confusing and confused about whether the additional payments would form part of your remuneration. Furthermore it appears that you may have been misled into believing that these payments would be included in your remuneration. However these are not matters the Secretary of State can reasonably consider as he has no appropriate powers of redress.