Pre-April 2000 sittings
On 8 October 2015 the Court of Appeal ruled that the EU Part Time Working Directive does not have retrospective effect and consequently service before 7 April 2000 does not count for pension purposes. Although not part of the judgment, the same rule must surely apply to money claims. Mr O’Brien has now lodged an application for permission to appeal to the Supreme Court. A decision on that application is not expected before March/April 2016.
Those who have been following this litigation closely will recall that in September 2014 the Ministry of Justice (MoJ) filed with the Employment Tribunal a list of all those who had made claims either to the Tribunal or the Judicial Pay Claims Team (JPCT) up to 22 September 2014 showing those claims which it conceded and those which it opposed.
It soon became apparent that the list contained a number of errors. A number of Tribunal claimants were missing altogether. In addition, there were significant errors in including in the conceded claims schedule claims which were out of time and in the disputed schedule some which had been conceded. The MoJ finally acknowledged its mistake in January 2015 and in July 2015 that Tribunal permitted the MoJ to withdraw any concession which had mistakenly been made. It seems that those lucky individuals who have been already paid out on out-of-time claims will not face a claim for repayment.
Sorting out the underpayments and pensionable service
The JPCT has now virtually completed the marathon task of working out and paying the amount underpaid up to 31 December 2013 to part-time fee-paid judges whose claims have been accepted. As at 15 December 2015, just under 4,000 offers have been made together with a payments on account equal to the sum which is due to each claimant, according to the MoJ’s admittedly less than perfect records. Only about ten claims now remain unresolved.
It is a credit to the industry and flexibility of the JPC team that not a single case has yet had to be decided by the Tribunal. Approximately 700 claims have been rejected most on the grounds that they are out of time. An appeal on the issue of generic time extensions is listed for hearing by the Employment Appeals Tribunal (EAT) in February 2016. An appeal on the issue of when time starts to run currently remains stayed by the EAT, pending the current application for permission to appeal to the Supreme Court.
One worrying feature of the claims process is that at the moment approximately 1,650 of those who have received offers and payments on account have failed to respond to the JPCT offer letter – either to accept or to dispute the offer made. One reason may be that claimants have not wished to prejudice their position which may be affected by appeal court decisions which are still awaited. This would apply, for example, to those with part-time fee-paid service prior to April 2000. It is, however, perfectly possible to accept any offer made without prejudice to claims which have not yet finally been resolved. Mr O’Brien himself has adopted this course to obtain a ruling from the Tribunal of the amount of pension and compensation due to him in respect of his service after 7 April 2000 without prejudice to his claim in relation to earlier service.
Of course it is trite law to say that silence alone does not amount to acceptance of an offer to compromise or settle a claim but there are sound practical reasons for not leaving matters up in the air. First, the moratorium which currently remains in place will ultimately end, at which point money claims will very shortly become out of time and pension claims may suffer the same fate. The status of pension claims is not so straightforward as there are conflicting decisions at first instance as to when time starts to run, but this should be resolved some time in 2016. Secondly, and quite reasonably, the MoJ has made it clear that in the absence of any challenge it will work on the basis that its figures are correct. Those figures cover the amount of money due which must in turn be derived from the recorded number of sitting and training day.
In the long term those same sitting and training days will form the basis upon which the retirement pension, lump sum and service award will be based as well as any surviving spouse/partner and dependents pensions which may follow on. The JPCT has now moved on to writing to claimants asking them to confirm that their sitting records are agreed for pension purposes. To avoid future arguments it is important that you confirm your acceptance of the number of days in settlement of your pension claim, if necessary without prejudice to any outstanding issues, if the total days are not disputed.
Ultimately the Judicial Pensions branch is not going to duplicate the work done by the JPCT. The JPCT totals will simply be passed on to the Judicial Pensions branch as the record of pensionable days’ service upon which your pension will be based and from which your historic contributions liability will be determined. All those who have received offers are strongly urged to respond either by accepting or disputing the offer. This is not a chore to be left on one side in the too difficult basket.
Compensation for delay in payment
Compensation for the delay in payment has been calculated according to what is known as the “Preston method”. This is a formula provided by the Government Actuary based on the historical returns on five-year National Savings bonds. Other, slightly more generous methods could have been used but so far none of those who have brought Tribunal claims have sought to argue for any alternative. The reason for this may well be simply pragmatic. The cost of obtaining expert evidence and then presenting it to the Tribunal would far exceed the actual cash advantage gained by any individual. In its latest O’Brien judgment dated 13 December 2015 the lead claimants have conceded and the Tribunal has accepted that the use of the Preston method does provide just and equitable compensation for the delay in payment of both pension and money claims. It has also ruled that since compensation has been calculated on the gross amount of the underpayments these payments are liable to tax as miscellaneous income.
Up to August 2015 the MoJ had been relying on HMRC guidance and deducting tax from compensation payments. HMRC was challenged to provide the statutory authority for the MoJ deducting tax at source in this way. In August 2015 HMRC finally accepted that there was no statutory authority for deducting tax at source and payments are now being made gross leaving the individual to pay any tax due in the normal way. The tax implications of this, together with further information on the tax position of money claims payments and payments on account of pension, are by no means straightforward and will be dealt with in the next update early in 2016.
Checking the figures
The task of checking the JPC figures is not as great as it may appear at first sight. To those who are not familiar with Excel, the spreadsheet(s) sent with the offer letter may appear daunting. However, Excel is simply a clever piece of software which in this instance does the necessary addition, subtraction, multiplication, and division to arrive at a figure which is mathematically correct both for the money due and the compensation so long as the number of sitting training and sickness days year by year are correct. In mathematical jargon we have a series of equations which consist of both constants and variables. All the figures for salary, daily rates, shortfall and the appropriate divisor are constants which have been exhaustively checked and are undoubtedly correct. The sitting and training days for each salary period are the only variables. So in order to verify the offer you only need to check these variables in your case.
If you have submitted actual figures for the number of days with your claim and MoJ records indicate a higher figure, the JPCT will use its own figures. The team also has access to HMRC P60 records from the tax years from 2001/2 which can assist in verifying the number of sitting days, bearing in mind that a salary figure for one day’s sitting would have been the same as a figure for two days’ training. After a lapse of time, which in some cases exceeds 15 years, absolute certainty in every case is unlikely to be achievable unless you have kept meticulous records. In practical terms if you can get within two or three days on the figure offered for total pensionable service it may simply not be worth the effort and the sums involved to dispute matters any further.
For those in SSRB salary Group 7 the only other item which is worth careful checking is the issue of London weighting. The JPCT has been working on the premise that anyone who sat at least 40% of the time in the London Group of Courts and Tribunals in any salary year is entitled to London weighting at the appropriate daily rate. That is the rule which applies to salaried judges.
Some claimants have not made clear to the JPCT that their claim includes London weighting and the team do not automatically have access to these records. Consequently mistakes have been made and rectified when the true position has come to light. The simple way to check this is to look at the box on the right hand side of the first page of the spreadsheet and if the words “London weighting” appear in the box the amount offered will include a figure for London weighting.
Following representations made earlier in 2015, the position over payment of London weighting and London allowance has been clarified to some extent. Those who regularly sit for more than 50% of their time at hearing venues in the London Area will be paid London weighting automatically with each month’s payment. Those with irregular sitting patterns will have to wait until the end of each financial year at which point their sittings will be reviewed and if more than 50% (see below) have been made in the London area all sittings will qualify for London weighting.
In terms of pension, London weighting is pensionable so those who have the option to choose their sittings should make sure that in at least one of the final three years of service, preferably the last year, they make sure to sit at a London hearing venue for at least 50% of the time and so qualify for London weighting. This figure of 50% as opposed to the 40% which applies to salaried judges is simply an MoJ diktat made without apparent justification which may well be open to challenge as a breach of the Directive.
Underpayment for sitting and training after 1 January 2014
You will recall that the MoJ undertook to seek out and pay all those who had been underpaid after 1 January 2014, irrespective of whether or not they had lodged a formal claim. For various practical and technical reasons there has been a significant delay first in in setting up the new salary figures to comply with the terms of the Miller judgment of 2 January 2014. The revised sitting and training fees were implemented in July and August 2014 and London weighting for some but not all in September 2014. Underpayments for sitting and training between January and July/August 2014 were made through Liberata on three separate occasions. For most, if not all, the first payment which covered sitting days between 2 January 2014 and 31 March 2014 was made in April 2014. The second, which covered sitting days between 1 April and 31 July 2014 and training days between 1 January and 31 March 2014, was made in February 2015. The third, which covered training days between 1 April and 30 June 2014, was made to some but not all judges sometime before July 2015. Unfortunately the information in the Liberata pay slips does not refer to the relevant periods and a good deal of solid detective work is needed to make sure that correct payments have actually been made.
It is important to bear in mind that these underpayments have not been dealt with by the JPCT but through a different office in the MoJ, which has led to some avoidable confusion. For reasons which were not explained at the time, daily rates for almost all part-time fee-paid judges from 2 January 2014 have been rounded down to the nearest pound. The same rounding down has also applied to daily rates for 2015/6. This action should be seen against a long standing practise of rounding up the salaries of salaried judges when they receive a pay rise.
In September 2015, the MoJ finally admitted that rounding down to a figure which is mathematically below 1/210, 1/215 or 1/220 has taken place for sittings since January 2104. The amounts of the shortfall are justified as being de minimis but the MoJ has stated that from 2016/17 the figures will not be rounded down but will be mathematically correct. Whether this decision to round down accords with a principle of law which has stood since Pinnell’s case in 1610 is highly debateable. In terms of money claims for those who have sat over these two years for, say, 50 days a gross loss of £25 may not be worth making a fuss about. However, some Groups 7 judges will have sat for up to 400 days in London during this period and may take a different view over being short changed by over £200.
In terms of pension this rounding down may possibly affect the pension and lump sum of those who have retired or will retire from part-time fee-paid service between January 2014 and March 2017. At the moment it appears that payments on account of the lump sum and pension due on retirement are being correctly calculated to four decimal places by the JPCT using its spreadsheets and are therefore NOT being rounded down. This is a point to bear in mind as and when the final reconciliation is carried out next year.
Parole Board work
In December 2015 the Tribunal rejected claims by retired Circuit Judges that their part time Parole Board work fell within the O’Brien principle and is therefore pensionable. The Tribunal was not persuaded that the work was broadly similar to the work done by the Circuit Judge comparator and also held that the reason why no pension was included in the terms of service was not because of the part-time status of Parole Board members.
Part-time fee-paid judges who have held more than one office
After a lot of argument the MoJ has finally conceded that the five years of service required for entitlement to any pension may be service in any judicial office for which a claim is in time and such service need not necessarily be continuous. Periods of overlapping service will not be double counted. This brings the new scheme for part-time fee-paid judges into line with the rules for salaried judges.
However, for the purpose of deciding whether a pension claim is time-barred, the Tribunal has held in its judgment of 13 December 2015 that service in each office will be treated separately. So a fee-paid judge who has retired from Office A and not made an in time claim while continuing to serve in Office B for which his claim is in time will only be entitled to a pension for his service in Office B unless he obtains an extension of time to claim for Office A.
Moving from part time fee paid to salaried
For those who move from fee-paid to salaried judicial service with less than five years’ service as a part-time fee-paid judge, the fee paid and salaried service will be combined for the purpose of calculating the five-year period. This would have involved an amendment to the 1993 Act but instead will be dealt with by extra statutory concession.
Up to April 2012 all salaried judges paid no contribution towards their personal pensions and only paid contributions towards their surviving spouse/dependents pension effectively at 1.8% of salary. From April 2012 contributions have been payable towards the personal pension as well at varying rates depending on salary. The MoJ has now agreed that part-time fee-paid judges will pay contributions on the same basis as salaried judges based on earnings in each tax year.
You will be aware that the MoJ has been deducting an arbitrary 3% of earnings from money awards to cover each individual’s liability as and when the new scheme is in force. It follows that this liability will eventually have to be recalculated and refunds will be due.
The latest judgments have brought the litigation to the point where the MoJ can produce draft regulations for which there will be a very short consultation period and the aim remains to obtain parliamentary approval in time for implementation by 1 April 2016. That is a considerable challenge and an announcement giving further details is promised shortly.
His Honour John Platt is a retired Circuit Judge who worked on the drafting of both the Judicial Pensions and Retirement Act 1993 and the various accompanying Regulations and is the author of a handbook Judicial Pensions - A Guide to the 1993 Act.