Successful challenge - Public and Commercial Services Union (PCS) obtains judgment that changes to the Civil Service Compensation Scheme (CSCS) are unlawful

The PCS (a trade union representing large numbers of civil servants) has successfully challenged the legality of certain changes made to the CSCS. The changes to the CSCS will now be set aside and sent back to the decision makers to be remade in light of the court's findings. The changes, which purported to take effect on 1 April 2010, reduced in some cases the benefits to be received by civil servants who are made redundant, who are compelled to take early retirement or are dismissed on grounds of structural reorganisation or in similar circumstances. Our alert, Civil Service Compensation Scheme - changes introduced on 1 April 2010, discussed the purported changes in more detail.

The changes were introduced as part of an overall package which produced increased benefits for some categories of employee but reduced benefits for others. The package was accepted by five of the six main Civil Service unions. However the PCS, which represents the largest number of civil servants, objected on the grounds that a significant number of its members would be detrimentally affected by the changes.

In a judgment published on 10 May, Mr Justice Sales agreed with the PCS that its consent was required before the changes could be brought into effect. He ruled that the changes were changes to accrued redundancy rights. Consequently under section 2(3) of the Superannuation Act 1972 they could not be reduced without obtaining the agreement of the unions representing employees affected by the changes.

So what happens now?

Given the current political climate, there is likely to be a delay before an order is drawn up between the government and the unions. Any areas of dispute may need to be referred back to the court for determination.

Even though five of the six main Civil Service unions had recognised the requirement for reform of the CSCS and believed that the terms reached were the best that might reasonably be negotiated, it could still be some time before new terms are agreed. We will keep you updated as to what these will be.

Pending agreement, it may be necessary to have regard to the former terms of the CSCS when considering any redundancies and to revisit the provisions of any packages or agreements with civil servants entered into since 1 April 2010 where they were agreed on the basis of the changes which are to be set aside.

If you have any queries, please contact a member of Wragge & Co's Pensions team.