Firefighters case demonstrates need for clarity over pensionable pay

Firefighters in Wales are regularly paid an additional allowance for accepting shift systems up to 42 hours longer than the standard contracted hours, or for working extra hours in the fire authority’s training school.

It is in everybody’s interests – members and employers alike – to have clarity over what is and isn’t pensionable

Kirsty Bartlett, Squire Patton Boggs

The Mid and West Wales Fire and Rescue Authority had argued that certain aspects of additional payments were not pensionable because the arrangements could be ceased at any time and were not permanent.

But on March 29 the High Court ruled that the payments were regular, even if they could be revoked in the future, meaning that they were pensionable. The fire authority has been ordered to pay pension contributions retrospectively.

Complaints were originally made to the Pensions Ombudsman by four firefighters. Mr Bradshaw, a pensioner member of the Firefighters’ Pension (Wales) Scheme 1992, argued that a training allowance had not been treated as pensionable pay.

The three other firefighters are deferred members of the New Firefighters’ Pension Scheme (Wales) 2007 and active members of the Firefighters’ Pension Scheme (Wales) 2015.

One of these firefighters, Mr Booth, complained the fire authority was obliged to treat his daily crew allowance as pensionable pay – which it was only doing in part on a discretionary basis.

Another, Mr Jones, protested that the authority was obliged to treat the whole rather than just part of his self-rostered crewing allowance as pensionable pay.

The fourth firefighter, Mr Skhane, complained his urban search and rescue allowance was not being treated as pensionable pay.

Last year the ombudsman upheld the complaints of Mr Skhane and Mr Bradshaw, but dismissed the complaints of Mr Booth and Mr Jones.

The latter two firefighters appealed against the determination, and the fire authority appealed against the determination in the cases of Mr Skhane and Mr Bradshaw.

In the recent High Court judgment, Mr Justice Fancourt upheld the fire authority’s appeal in the case of Mr Skhane, noting that “the allowance is not pay in relation to the performance of the duties of a regular firefighter’s role”.

However, regarding the other firefighters, the judge found “that the whole-of-the-day crewing allowance and the self-rostered crewing allowance are pensionable pay”.

A spokeswoman for Mid and West Wales Fire and Rescue Service said: “The court’s ruling on this point, in part, supports Mid and West Wales Fire and Rescue Service’s position on these allowances.”

This refers to the fact that the self-rostered crewing allowance was already partly pensionable. The daily crewing allowance was already pensionable – though Mr Booth’s complaint was that the authority was obliged to treat it as pensionable pay, which it was only doing in part on a discretionary basis.

Fire authority considering position

The NFPS regulations define pensionable pay as the aggregate of “the firefighter member’s pay in relation to the performance of the duties of the firefighter member’s role, except any allowance or emoluments paid to the firefighter member on a temporary basis”. The 2015 scheme regulations are very similar.

Mr Justice Fancourt highlighted that employment as a firefighter is typically employment for the whole or majority of a member’s working life and is not employment for a fixed term.

“To suggest that only allowances and emoluments that will endure for the whole of the member’s employment are pensionable seems to me to be unrealistic and a class devoid of content. On the other hand, it is entirely sensible and realistic to exclude from pensionable pay any emoluments that are occasional, one-off, irregular or limited in time,” he said.

The judge decided the allowance paid to Mr Bradshaw before July 2012 “was not pensionable pay, because it was not a permanent emolument of his role”. However, he agreed that the allowance paid with effect from July 2012 was pensionable pay.

The fire authority said it is currently considering its position in relation to any future appeal.

Clarity is crucial

If the authority decides not to appeal, employees will also have to pay their contributions retrospectively, according to Sean Starbuck, national officer at the Fire Brigades Union – which has nonetheless described the ruling as a “major victory”.

“They will have the option of paying by instalments or by lump sum,” he said, adding that this will be done on a case-by-case basis.

“We have experience of this in the legal victory for part-time workers which involved both parties paying retrospective pension contributions. This also involves tax relief issues and interest payments on the retrospective contributions,” Mr Starbuck said.

He said deferred members will be offered the same options as active members.

Kirsty Bartlett, partner at law firm Squire Patton Boggs, said: “What it has brought home to me, looking at this, is just how complicated it is, and how it is in everybody’s interests – members and employers alike – to have clarity over what is and isn’t pensionable”.  

Stephen Scholefield, partner at law firm Pinsent Masons, agreed, noting that the more complex the pay structure, the more crucial it is that everything is recorded correctly.

He said that, for all pension schemes, “as new types of pay are introduced, it is important that there is clarity as to their pensionable status, and that everyone (schemes, employers, unions) reaches the same conclusion and documents it correctly”.