First published by The Herald on Sunday on 20 September 2018
COUNCIL workers across Scotland are being subjected to postcode-based discrimination that will last a lifetime because a 2014 law designed to protect their interests has been implemented in a haphazard way and no public body will take responsibility for enforcing it.
In a change to the rules governing the Scottish Local Government Pension Scheme, government body the Scottish Public Pensions Agency (SPPA) stipulated in 2014 that all women with a valid claim for pay discrimination had to have their pensions rerated as part of any settlement.
However, a Freedom of Information request made by this paper has revealed that only a handful of councils immediately complied with the legislation while a number are still not complying and have no intention of doing so.
Argyll & Bute Council, which has so far paid out a total of £4.8m to settle claims, has not included pensions in any of its pay outs and does not plan to factor them in when dealing with the 120 outstanding claims against it. Similarly, East Ayrshire, which has paid out £862,000 in settlements since April 2015, and East Renfrewshire, which has paid out £511,000 in that time, have also failed to rerate the pensions of the affected women.
Fife Council, on the other hand, which paid out £11.3m in non-pensionable settlements immediately after the legislation was updated, has included pensions in the £36.2m it has paid out since. Fife will also factor in pensions as part of settling the 1,100 outstanding claims against it.
East Dunbartonshire, Falkirk, Highland, West Dunbartonshire and West Lothian have also included pensions in recent settlements and will do so for future ones.
The overall result of the different approaches is that some women face being discriminated against for the rest of their lives because of the part of the country they lived and worked in, yet no public body will claim responsibility for ensuring the law is enforced.
The Convention of Scottish Local Authorities, for example, said that while individual councils are aware of the pension regulations, “it is for each employer to consider the appropriate method of settlement and agree the same with the claimants and their representatives”.
Audit Scotland, meanwhile, which audits the SPPA, all 32 local authorities and the 11 pension funds that make up the Local Government Pension Scheme, admitted that it did not consider pensions as part of its 2017 report Equal Pay in Scottish Councils. It has also not included the pensions issue in any of the reports it has issued following the annual audit of each individual authority.
Noting that there are “highly complex issues around the implementation of equal pay”, a spokesman for the body said it is up to local authorities to “agree the pensionable elements with claimants as part of any settlement”.
Even the SPPA, which forced North Lanarkshire Council to include pensions in its settlements after being asked to intervene in 2016, said it has “no powers under pensions legislation to ensure compliance”.
“Councils are independent bodies of the Scottish Government so negotiations entered into to settle equal-pay claims are a matter for them,” an SPPA spokeswoman said. “If different agreements have been reached it’s for the councils to have ensured they are appropriate and compliant.”
Stefan Cross QC of Action4Equality Scotland, who led the case against North Lanarkshire, said this shows that public bodies are “passing the buck” on the issue and failing to uphold the rights of the women the pensions legislation is designed to protect.
“The women are left dangling because none of the authorities will take responsibility for upholding the law,” he said.
Peter Hunter of the trade union Unison agreed and said that as some women have been receiving the incorrect pension for over a decade, while others have died without ever receiving what they were entitled to, the Scottish Government should intervene.
“Pay is pensionable and therefore equal-pay settlements are pensionable. All this is crystal clear in the law, rulings and guidance on pensions so non-payment of pension contributions for low-paid women is yet another example, if one were needed, of the fact that public bodies need to wake up,” he said.
“Many councils still don’t pay equally, pension fund administrators are inactive in the face of missing millions and auditors still can’t grasp the cost and risk of systemic inequality.
“This is a complete system failure. Government has the power to act and the time for action is long overdue.”
Despite this, a Scottish Government spokesman, who did not answer questions relating specifically to pensions, reiterated the SPPA’s viewpoint that local as opposed to central government should deal with anything related to equal pay.
“We have made clear we believe pay discrimination is unacceptable and that equal pay claims should be settled as quickly as possible,” he said.
“As such as we would urge councils, in line with their legal obligations as employers, to resolve any outstanding claims.”
EQUAL PAY AND PENSIONS – THE HISTORY
THE Equal Pay Act 1970 made it illegal for employers to offer men and women different employment terms, but it wasn’t until 1997 that a UK-wide agreement was put in place to ensure all local authorities complied with the legislation.
It then took until 2010 for all Scottish councils to implement the so-called single status agreement, with most paying compensation to female workers who had been discriminated against up to that point.
Despite this, all councils went on to receive further equal-pay claims in relation to single status itself. The issues raised included the fact that bonuses that only male staff had been entitled to were protected under the new scheme while the job evaluation element of single status deemed some roles done mainly by women to be less valuable than those done mostly by men.
In both rounds of claims most councils treated their settlements as compensation, meaning they were neither taxable nor pensionable. In 2014 HMRC ordered that practice to stop, stressing that all equal-pay settlements must be treated as arrears of pay, with tax and pension contributions becoming due as a result. The rules of the Scottish Local Government Pension Scheme were updated to clarify the point in the same year.
Not all councils complied, however. In North Lanarkshire, affected women took legal action against their local authority in a bid to have their pensions – which are calculated based on salary – increased to the level they would have been at had they not been underpaid.
In 2016 the Scottish Government’s Scottish Public Pensions Agency ordered the council to abide by the law. The effect was to increase the amount the affected women had been paid in the years they were making claims for and, as a result, their pension entitlement too.
The SPPA wrote to all public bodies in the wake of the North Lanarkshire case to “clarify the policy intent that a payment of arrears of pay, made in respect of an equal-pay claim, should be treated as pensionable”.
EQUAL PAY AND PENSIONS – THE IMPACT
LIZ Melrose, who is enjoying a late summer holiday in Tenerife, is looking forward to retiring at the end of this year after putting in a 25-year shift at North Lanarkshire Council.
Yet while the thought of entering the next phase of her life is an enticing one, Mrs Melrose admits that money will be tight to begin with because she is taking early retirement and so won’t receive the state pension for another two years.
Despite this, thanks to a fight put up by her and fellow North Lanarkshire staff, the home support worker will be almost £1,500 a year better off than she expected to be because the equal-pay settlement she received from the council in 2015 has finally been reflected in her pension.
As a result, Mrs Melrose’s retirement income will rise from £5,695 to £7,133 a year when she clocks off for the final time in December. While the numbers are not huge, when her state entitlement is factored in in two years’ time it will make the difference, Mrs Melrose says, between being able to continue to take holidays in retirement and not.
“That £1,500 a year is a substantial increase,” she says.
A retired care home warden is in a similar position. Having stopped work 11 years ago after 30 years of service, also with North Lanarkshire Council, the 71-year old had been receiving the incorrect pension every month in the intervening period until, three months ago, it was bumped up by 30 per cent.
It has, she says, “made quite a big difference” to her and her husband’s lives. Her husband agrees, noting that the couple no longer has to be quite so “guarded about what we’re spending and what we’re not spending”.
Yet the outcome is bittersweet, with the woman’s husband noting that due to ill health his wife is no longer able to fully enjoy the extra money.
“This would have made a big difference to us, a substantial difference, but my wife’s heath has deteriorated and deteriorated and she can’t go abroad now because she can’t get insurance,” he says.
“We both worked all our days and were in the habit of going on a Continental holiday every year until her ill health prevented that. [If the correct pension had been paid from the start] we might have been able to have a winter holiday and a summer holiday.
“When you get to our age you are on the downward slope as regards time.”