NUJ to appeal ombudsman ruling over BBC pensionable pay cap

The ombudsman ruled in December that the BBC’s cap had not breached its implied duties of trust, confidence or good faith by putting in place a 1 per cent ceiling on future pensionable pay increases.

The decision of the court in the first place was not unsurprising

Catherine McKenna

The NUJ said it plans to appeal the ombudsman’s decision, arguing the BBC behaved in a way that would damage the relationship between employer and employee. “We say the way they have gone about this is in breach of that,” said the spokesperson. 

In his determination the ombudsman said: "It is therefore clear that to satisfy the 'severe' test, the BBC’s conduct needed to be of a very serious nature indeed, ie conduct which objectively had 'a pretty good chance' of being destructive of the relationship."

He added the offer of a pay rise on terms the appellant did not like did not amount to this. If the High Court rubber-stamps what the ombudsman has said, the NUJ will lodge a further appeal at the Court of Appeal, the spokesperson added.

The NUJ also intends to challenge a High Court ruling in 2012 over the same dispute, arguing that the statement in section 91 of the 1995 Pensions Act that a person cannot agree to surrender their pension benefits voids the BBC’s agreement with employees.  

The High Court had held the employee had no existing right to a pension based on a salary higher than he or she currently received, therefore a higher pension based on this could not be a contravention of section 91.    

“We want people to be given back the pension that we think was unfairly stolen from them,” the union spokesperson said.

The BBC said: “Both the High Court and the ombudsman recognised that changes were needed in order to address the significant and increasing deficit in the pension scheme. We welcome the ombudsman's finding that we acted in good faith when making these important changes.

"Certain rights of appeal still exist and the BBC reserves its right to defend any such action.”

Legal grounds

Legal experts doubted the NUJ would succeed in its appeal against the ombudsman’s decision. The success of an appeal on these grounds will depend on the interpretation of the wording of section 91, according to the facts of the case, said Anne-Marie Winton, partner at law firm Nabarro.

She added if the NUJ was successful in its appeal, there will not be a wholesale unravelling on caps on future pensionable pay increases that have already been put in place.

“People don’t have a crystal ball when they make decisions, you make a decision on the law as it stands,” Winton said.

However, employers putting in such caps in future would most likely have to look for “wiggle room” by differentiating the individual facts of the case, she added, which could include members agreeing that the retirement age be increased.

A High Court case brought by the Prudential staff pension scheme against its sponsoring employer determined that an employer is entitled to take its financial position into account when deciding how to set pension increases.

It also defined the employer’s duty of good faith in a narrow way, said Lesley Browning, partner at Norton Rose Fulbright. “That is quite a high hurdle on the basis of the decision made in that particular case,” said Browning.

The NUJ’s argument on the basis of section 91 is unlikely to be successful, said Catherine McKenna, partner at Squire Sanders. “The decision of the court in the first place was not unsurprising,” she said.

This is because the legislation was developed to stop people giving up an entitlement when they already have it, rather than future entitlements, she added.