Landmark SPPA ruling sets gender equality precedent
The Scottish Public Pensions Agency has ordered North Lanarkshire Council to treat back pay settlements issued to female employees following years of salary discrimination as pensionable.
The council had claimed the settlement was “compensation” and therefore not pensionable under Local Government Pension Scheme regulations.
In an earlier equal pay case brought before Scottish ministers, the council had been ordered to pay 681 female employees £7.1m after years of paying them lower salaries than their male counterparts.
This is the first time the issue of pension settlements has been determined in a quasi-judicial forum
Changes to Scottish LGPS regulations in 2014 stated that equal pay settlements must be treated as pensionable rather than exempted one-off damages.
A second legal case ensued when the council claimed the new regulations were unclear about when back-payments are pensionable.
The SPPA has now ordered the council to pay the income tax and national insurance on the arrears, which may amount to a further £1m.
Disputed terms
Chad Dawtry, director of policy at the SPPA, said: “The determination in this case reflects the Scottish government’s view of the meaning of The Local Government Pension Scheme (Scotland) Regulations 2014.”
Stefan Cross QC, director of Action 4 Equality, which has been representing the female employees, said: “This is the first time the issue of pension settlements has been determined in a quasi-judicial forum,” adding that it would set a precedent.
He commented that the ruling “raises the profile of the issue that women in the public sector suffer throughout their whole lives” – first under salary discrimination, then under lower pensions.
“At a wider level the ruling highlights a larger problem… the Equality Act doesn’t touch on pensions, and only provides guidance for back pay, not future entitlements”
Sarah Gilzean, associate at law firm HBJ Gateley, which brought the women’s second case to court, said the issue was created by how the council evaluated jobs.
She said under the status quo, “female-dominated public-sector jobs are undervalued compared to those dominated by men; this is why our equal-pay argument proved successful”.
No consensus
When contacted for comment, Stephen Penman, head of corporate communications at North Lanarkshire Council said: “At the time of settlement, there was no consensus about the pensions position”.
He added that the council was comfortable with the idea that clarity would be sought from the SPPA by the claimants’ lawyers, and that it had never obstructed their efforts to do so.
A spokesperson for the council explained in a statement that its reluctance to agree the settlements were pensionable was on the basis that the law in question is ambiguous.
“The original offers of settlement recognised that a clarification of the pension contributions position was required given there was no consensus at the time of the settlements”.
He added: “The council remains committed to equality and has settled more than £100m of claims.”