A decade-old dispute sparked by the scrapping of the States’ final salary pension scheme is coming to a head in front of an Industrial Disputes Tribunal.
The power of the States to change the final salary pension scheme so long enjoyed by those in the public sector is at the heart of a case being brought on behalf of a select group of those impacted by changes but who did not agree to them.
The Guernsey Police Association; representing some 53 people, and a group known as the G50; which has included some of the island’s most senior public sector workers and is made up of 209 people, are making a case against the States at the tribunal being held at the Peninsula Hotel this week.
“It was a promise that the States of Guernsey broke” – Advocate Simon Geall.
In 2016 the States voted to end the final salary pension scheme.
Most staff and new joiners were then moved on to another career average scheme to help make pension provision more affordable to the public purse.
GPA representative Advocate Simon Geall said: “This is a case about a promise. A pension promise. A pension promise given by the States of Guernsey as a key part of the remuneration package for public sector employees, namely, an entitlement to a final salary pension scheme. It was a promise that the States of Guernsey broke.”
They broke this despite having “clear legal” advice over decades that they could not, he said in opening.
“This hearing is finally an opportunity for the employees to call the States of Guernsey to account some nine years later and after numerous obstacles thrown in their way by the States of Guernsey.”
There were four key areas of the GPA’s case, he said.
One relied on exploring the terms of contracts of employment for the police officers and the pension documentation that accompanied them, the incorporation of pension rules and the question of whether they were apt for incorporation into the contract and the advice of the States over the years.
The second area concentrated on whether the States had the power to vary the benefits and States arguments around whether the pension rules were quasi legislative.
Advocate Geall also addressed whether the tribunal was the correct way to decide the case or whether it should have gone to court.
Arguments also concerned what award the employees were seeking if the tribunal ruled in their favour.
Advocate Geall spent a large portion of yesterday morning exploring wording in contracts and booklets over the decades, which included references to “mandatory entitlement” with no caveats or references to a power to vary the scheme, the tribunal heard.
“When you look at all those documents, conditions of service, booklets given to employees, it’s crystal clear those employees were promised the pension benefits calculated on the basis of the 1972 rules and if we contrast those documents with the contracts you will find now arise for employees who joined after the dispute, these contracts really shine a light on the terms that the States would have had to contract on to make the benefits non-contractual or to have the express terms on which to vary them.”
The contracts for the new pension scheme include terminology “as amended from time to time”.
As they were working on changing the pension scheme, the States received legal advice that they would either need the agreement of the employees or a declaration from the court that the States had the implied right or power to do so.
“…do they have the contractual right or any other right to vary terms that have been expressly incorporated into a contract, my point is no, they do not” – Advocate Richard Sheldon.
When the States voted in 2016 to make the changes, there was no analysis in the Billet about the legal position, Advocate Geall said, and the GPA members had not consented.
On behalf of the G50, Advocate Richard Sheldon, argued that the pension benefits set out in the 1972 rules formed part of the terms and conditions of employment.
Members who joined prior to 2017 were entitled to benefits based on final salary, he said, as well as other conditions in terms of retirement and how the pension was calculated.
It was important to draw the distinction between the States as a public body and its capacity as an employer, he said.
There was no express or implied right to vary the contract of employment or the conditions of service which related to the G50, the tribunal was told.
“There’s no argument there was a collective agreement between members of the G50. The G50s position is the action of the respondent in passing the resolution as regarding contracts of employment is ineffective, it doesn’t change the contract because it can’t, it doesn’t have the right to do so,” said Advocate Sheldon.
The States will argue that the only way to logically interpret the 1972 rules was that they could be varied from “time to time”.
But Advocate Sheldon disagreed, and added that the financial needs of one party is not the proper basis for implying a term into a contract.
The 1985 conditions of service did have a right to vary, it was clear and unambiguous in the wording, but later versions had lost this and the respondent could not rely on the earlier one.
Advocate Sheldon also spent considerable time on whether the pension rules were legislative, arguing that they were not and even if they were it did not matter, they had been incorporated by reference into the contracts of employment.
“No-one is contesting that the States can’t change the rules, it’s whether they can change the contract of employment, do they have the contractual right or any other right to vary terms that have been expressly incorporated into a contract, my point is no, they do not.”
The tribunal continues. Follow Express for updates…