Lawyers threaten to sue Strathclyde Pension Fund over equal pay retirement funds

First published by The Ferret on 24 June 2020

Lawyers representing thousands of women who secured the largest equal-pay settlement in Scottish history are planning legal action against Strathclyde Pension Fund over delays to ensuring the payout is reflected in their retirement income.

Glasgow City Council agreed last year to pay £500m to settle prolonged, equal-pay claims from 14,000 women employed mainly in cleaning, caring and catering roles.

As the settlement amounted to backpay for the years in which the women were underpaid, the council was required by law to make the settlement pensionable.

However, while Glasgow City Council confirmed that £25m has been paid into Strathclyde Pension Fund (SPF) – £6m of which represents employee contributions and £19m of which came from the employer – the women are yet to be informed of the impact this will have on their individual pensions.

In some instances the re-rating could be significant. Following a similar settlement made by North Lanarkshire Council some women saw their annual pensions increase by 30 per cent.

Lawyer Stefan Cross QC, who acted for the vast majority of the claimants via his organisation Action4Equality Scotland, said legal action is a possibility as it is now some months since the final payouts were made by the council.

“The pensions issue is bubbling up to be a dispute,” he added. “The money has been paid to the pension fund, but it has not done the calculations – the pension scheme has been paid the money and it has not done its job. There’s a real possibility of us having to sue the pension fund. My view is that we’ll be sending a letter before action in the next few weeks.”

Action4Equality is not currently carrying out claims-management activities in Scotland as it is awaiting retrospective authorisation from regulator the Financial Conduct Authority. Cross said that if litigation is necessary he will, as has been the case with all past litigation brought by the organisation, instruct Scottish lawyers to act on the women’s behalf.

Rhea Wolfson, regional organiser at the GMB trade union, which represents around a fifth of the women affected, said the “unreasonable” delay is having an effect on some women’s retirement plans.

Noting that the council had done “a very good job of getting the money where it needed to be” once the settlement was agreed, Wolfson added: “The only delay now is around pension payments. That’s causing some frustration because people are waiting to retire.”

Despite claims from the women’s representatives that there has been no communication regarding the pension situation, a spokesman for SPF said it is hoped that individual calculations will be finalised by next month.

The process has been complicated by the fact the women’s jobs were passed to arms-length external organisation Cordia in the years during which the council was defending its discriminatory pay system, only to be tranferred back to the local authority in 2018.

As a result, the fund’s actuary is having to work out entitlement based on multiple employers, multiple posts and different versions of the scheme itself.

“This has been a complex exercise, involving huge amounts of data, that could only ever follow the offer and payment process carried out by Glasgow City Council and the claimants’ representatives,” the SPF spokesman said. “Processing is now well advanced and we currently expect adjustments to be made next month.”

In the meantime, the women’s representatives said they will be pushing for lessons learned about the value of women’s work during the coronavirus pandemic to be reflected in the new pay scheme the local authority has promised to implement.

The £500m settlement already paid out covers the years between 2007, when the discriminatory pay system was put in place, and March 2018, which was the cut-off point agreed by all sides in order to get the deal away.

The women, many of whom are on minimum wage, are still being paid according to pay scales that caused initial discrimination and will be until a new system is finalised and a second settlement covering the period from 2018 is negotiated.

Work on the job evaluation required before the new pay scheme can be designed got under way at the end of last year, with the intention being that the new structure would be in place by April next year.

As the job evaluation process involves holding face-to-face interviews with hundreds of employees, all work came to a halt at the beginning of the lockdown.

The delay means the women potentially face being paid discriminatory wages for the next two years. However, Wolfson said the pause means the pay negotiations that come after all jobs have been graded will be able to take account of the vital role the pandemic has shown carers and cleaners to play – and how dangerous their jobs can be.

A spokesman for Glasgow City Council noted that the women’s representatives agreed the council should use the Scottish Joint Council’s Job Evaluation Scheme to determine where its new pay bands should sit.

As such, he said, there is a limit to how far pay scales could be manipulated to reflect the additional responsibilities placed on cleaners and carers as a result of the pandemic.

However, Peter Hunter, head of organising at trade union Unison, which also represents around a fifth of the Glasgow claimants, said the pandemic has shown that the scheme – which is used by all Scottish local authorities – may no longer be fit for purpose.

“Many workers, mostly women, are working beyond their scores at the moment and if a post-Covid review says we need to embed capacity to work like that at the drop of a hat there will be a Covid legacy that is respect, value and therefore pay for women,” he said.

“Can you justify paying road sweepers substantially more than cleaners when cleaners are the first defence? That raises a question for the Scottish job evaluation scheme.

“Nobody is questioning the scheme, but it now needs to be reviewed in light of Covid. Are we still happy to say that cleaners are the least valuable employees?”

Wolfson added that, even if the job evaluation scheme is not updated, pressure will be put on Glasgow City Council to re-evaluate how it chooses to remunerate jobs at each point on the scale.

“There will be an interesting conversation to be had about what Covid means for the job evaluation scheme; does it take into account the changing nature of the workplace,” she said. “Job evaluation is very fixed, it’s a very rigid thing, but this all leads up to a pay negotiation.

“Whatever the scheme says and does there’s nothing stopping Glasgow saying ‘we’re going to be the blueprint for the country’. If you invest in wages you invest in your city; you don’t have to say grade one is minimum wage.”