Universities Superannuation Scheme · CAS-40688-H9G9

CAS-40688-H9G9

Ombudsman’s Determination Applicant Ms E

Scheme Universities Superannuation Scheme (USS)

Respondents The Society of College, National and Universities Libraries (SCONUL)

Universities Superannuation Scheme Limited (USS Ltd)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

Ms E to seek a settlement and her role was expected to diminish, the termination of her employment was “wholly or mainly attributable to” her poor working relationship with Mrs R, the effect this was having on her health and that with legal support she felt comfortable to seek a Compromise Agreement.

1 CAS-40688-H9G9 Detailed Determination

“(a) that the Ombudsman took too narrow an interpretation of ‘redundancy’ for the purposes of rules 1.1 and 11.2.1 of the Scheme Rules by addressing whether or not a formal redundancy process had started or whether the termination of the Appellant’s employment was at SCONUL’s instigation or the Appellant was coerced into the Compromise Agreement;

(b) the wording of the Compromise Agreement should have led the Ombudsman to conclude that the Appellant’s eligible employment was terminated by reason of redundancy within the meaning of rule 11.2.1.”

“My conclusion is that the Ombudsman’s analysis had a misplaced emphasis on the question whether the termination of [Ms E’s] employment arose at the instance of SCONUL (including the question whether she was coerced), and that in consequence the Ombudsman did not properly or sufficiently address the relevant elements of the test for redundancy in USS Rule 1.1, namely:

a) Had SCONUL’s requirements for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish?

And -

b) Was the termination of [Ms E’s] employment wholly or mainly attributable to any such actual or expected cessation or diminution?”

“… I do not think that the meaning and effect of either document can be stretched that far, although I agree that they are consistent with the idea that the test for redundancy might have been met at that time. I say that because, as noted above, both the email and the attachment indicate an intention to put in place a new structure, and for the “main differences”[ 2] to be “in the focus of

1 Gail Downe v Universities Superannuation Scheme and The Society of College, National and University

Libraries [2019] 2403 EWHC (ChD). 2 Taken from SCONUL’s 19.10.12 email.

2 CAS-40688-H9G9 the new roles within the structure and a change in the balance between work carried out internally as opposed to being outsourced”[ 3]. Such statements certainly support an argument that a redundancy situation had arisen, but in and of themselves they do not determine that question, because they do not enable any conclusions to be drawn as to what the new roles were in fact expected to be, or as to what the expected change in the balance between work carried out internally and outsourced work was intended to be, or indeed whether SCONUL’s planning had progressed far enough for there to be an expectation (within the language of the Rule) that SCONUL’s requirements would cease or diminish. It seems to me that such matters should be addressed in light of the relevant evidence as a whole, which in turn may involve any contested issues of fact being resolved (which might include, for example, determining whether Mrs R did in fact present a confidential paper in September 2012[ 4] which reinforced SCONUL’s commitment to outsource accounts, and the weight (if any) to be attributed to [Ms E’s] statement that she was told by HR in August 2012 that “accounts work may be something that could change quite radically quite quickly”[ 5]).

3 Taken from SCONUL’s 19 October 2012 email. 4 ‘EB Paper September 2012: Making the most of our resources’. 5 Taken from ‘Notes of a meeting held at 11.00 a.m. on 1 August 2012’.

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Material facts

Extracts from the USS Rules are provided in the Appendix.

Ms E was the Assistant Secretary in the SCONUL team. Her November 2008 contract of employment states:

“You are employed as SCONUL’s Assistant Secretary.

An outline of the role is contained in your job description. SCONUL reserves the right to require you to perform other duties from time to time for which you are considered capable and which could reasonably be expected of this role. Additional training would be provided as appropriate as necessary.”

Ms E had a poor working relationship with her manager, Mrs R.

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“the EB is asked to consider these proposals and to agree to proceed to the next stage – the development of an implementation plan”.

On 10 September 2012, Ms E returned to work on a phased basis. The week before her return the HR Consultant emailed Ms E. The email explained the temp would continue to work on accounts during the first few weeks so that Ms E could concentrate on events and her own emails/paperwork. After two weeks Ms E could start to pick up on Board associated work (the next Board meeting was scheduled for 18 October), and then accounts work a few weeks later. This would also allow time

8 CAS-40688-H9G9 for Ms E to arrange and take part in some training activities. Mrs R would discuss with her training needs and the types of courses that could be booked in the first week.

On 11 October 2012, Ms E contacted the HR Consultant with concerns about her interaction with Mrs R since returning to work. The HR Consultant replied:-

“...I am sorry that you still feel that Mrs R is treating you in an inappropriate manner and that you do not feel supported. It is our intention to make sure that you do feel supported during your phased return and, whilst arrangements have not been put in place very swiftly, I hope that the coaching arrangements will provide you with very specific and direct support.

I do not intend responding to the details of your e-mail, as the issues are very similar to many of those addressed…in the investigation... We could, if you wish, arrange a three-way meeting with you, me, and Mrs R, to see if we can help move forward with these issues. Please let me know and I will then discuss it with Mrs R.

You mention…that you feel you need counselling urgently. That is not something we have discussed before…Is that something that your GP has

9 CAS-40688-H9G9 recommended…It was not something that was highlighted in the occupational health report earlier this year so I am unsure whether that is something you would look to SCONUL to support you with – in which case I will look into it for you.

Also, you did not say whether you agreed with my proposed extension to your phased return – please could you clarify?”

“At yesterday’s Board meeting, [Mrs R] put forward a paper for approval setting out the basis for a new structure. The proposal is to create a structure which will be aligned to the strategy within the current budget and with no overall reduction in staff numbers. The main differences will be in the focus of the new roles within the structure and a change in the balance between the work carried out internally as opposed to being outsourced.

The Board gave its approval to this proposal and over the coming month, [Mrs R] supported by [HR]… will be putting together the details of the new structure in terms of job descriptions…Once that work has been completed, this will be shared with you and [the Secretarial Assistant] and there will be a period of consultation with both before final decisions are made. During the consultation period you will be able to fully engage with the process, and ask any questions and make any suggestions you may have.

I have attached the outline process and indicative timetable.

At this stage, we are not in a position to give you any more detail on what new posts there would be under the new structure and the implications for you personally. That will follow towards the end of November. But I wanted to ensure that you were kept up to date with developments and were aware of the planned timetable.”

“Date Activity

18th October Restructure plans approved by Board.

19th Oct – 23rd November Preparation of job descriptions/person specs and details of the proposed new structure.

10 CAS-40688-H9G9 w/c 26th November Meeting with staff to set out restructure proposal in detail. Written paper to be provided to staff containing the background, rationale, process, implications and timescale. This is the start of the consultation period.

26th November – 11th January A series of individual consultation meetings with affected staff. Due consideration given to issues and questions raised and responses provided in writing.

11th January End of the consultation period.

w/c 14th January Proposal confirmed (with any amendments arising as a result of consultation).

After 14th January New structure implemented”

“I propose that we restructure the SCONUL office to divert effort from what might be considered backroom functions to services to members and out- source some of the functions currently carried [out] in-house…

The restructured SCONUL would have four staff, fulfilling the following roles

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In section three, Ms E’s role is broken down as: Supporting the Board (15%), supporting working groups and other groups (10%), Events organisation (32%), handling post, invoices and making payments (28%), preparing accounts (10%) and premises and office management (5%).

In respect of Ms E’s role, Appendix 1 says:-

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“I should also say that [Ms E] as you know feels aggrieved as to the way she has been treated by [Mrs R] since her appointment. She also would want any settlement package to reflect her last few years experiences in some way as 14 CAS-40688-H9G9 consideration of her not bringing an employment tribunal claim were the process to make her redundant and her to still feel aggrieved.

Her instructions to me is that she would accept a package around the £40,000 mark however.”

On 1 November 2012, the HR Consultant informed Mr Harding that SCONUL had agreed Ms E’s proposal regarding a severance package. The HR Consultant provided a breakdown of the payment, comprising an ‘Enhanced redundancy payment’, a ‘3 months’ PILON’, an ‘Additional payment’ and ‘Outstanding holiday’. Mr Harding forwarded the email to Ms E for consideration.

“You set out a suggested framework for a package which included a sum that you called a redundancy payment and we were happy to progress our discussions with you using that sort of short hand for payments, but that does not mean that [Ms E] was redundant.”

15 CAS-40688-H9G9 • Ms E returned to work from sick leave in September 2012. On return she was following a phased return-to-work plan.

• An accountant had been hired on an interim basis to cover the accountancy basis of Ms E’s work while she was off sick and was retained to cover accounts for the period of Ms E’s phased return, after which Ms E was expected to resume accountancy work.

• Ms E began her phased return on shortened hours and only carried out events/personal organisation work, with the aim that she would build up to her full workload, including accounts work, towards the end of November and Board work shortly thereafter.

• Ms E’s employment ended on 16 November 2012, prior to when she was due to resume accountancy work.

On the second and third questions

• All of Ms E’s accountabilities/responsibilities remained intact and were kept in- house, including the accounting aspect of her role. Her functions were ultimately distributed amongst other roles.

• There was no overall reduction in headcount. Headcount increased because of the employment of part-time staff.

• PR, conference support and additional accountancy support were brought in- house. Events work was redistributed between the SCONUL Coordinator and the part-time Events Assistant. Accounts work was allocated to the part-time Finance Assistant. Support for the Board became the responsibility of the Head of Policy and Member Engagement.

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“41. By contrast a situation can arise in which due to a recession in trade it is found that the business is much over-staffed. The employer can either continue with his existing labour force sharing out the available work and paying reduced wages or he can halve the size of the labour force by dismissals. If the employees will not agree to work-sharing and some are in consequence dismissed, the case may be said to be one “self-induced redundancy”. But this aspect is irrelevant. The question remains, “Were the applicants dismissed wholly or mainly by reason of the redundancy?” The answer will depend upon an exact analysis of the facts, but if the employees could not reasonably be expected to accept the proposed reduction in wages any tribunal would be almost bound to find that the dismissals were wholly or mainly attributable to redundancy and that the dismissed employees were entitled to redundancy payments.”

7 At Stage Two of the Internal Dispute Resolution Procedure.

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• It does not feel that Ms E has raised any points which SCONUL has not previously responded to.

• Ms E’s original complaint referred to another EB paper dated February 2011. This was never implemented and was obsolete before Ms E left SCONUL. It was a confidential document and not circulated to Ms E.

• The Board agreed to set up the Events Committee at its meeting on 4 October 2011. Two Board members were identified to lead the Events Committee at that time, along with the Executive Director and the Assistant Secretary who were expressly named as proposed core members. Its creation did not 'take over' Ms E's functions in this area. She remained fully involved as part of the Events Committee and that, in relation to events, her role remained the same, that is in relation to administration tasks pertaining to events, which continued. Ms E's administrative responsibilities (or indeed any other events-related responsibilities) were not taken over by the Events Committee (of which in any case she was a member). The function of the Events Committee was to oversee and steer, as opposed to delivering the events themselves, responsibility for which remained with the SCONUL office. The Events Committee did not take on responsibility for any areas of work which had previously been the responsibility of the SCONUL office.

• It does not dispute that there was an agency accountant in place in June 2012. This arrangement was made to cover Ms E’s sickness absence.

• After her letter of 8 August 2012, Ms E made further allegations of inappropriate treatment against Mrs R. Despite SCONUL’s best efforts it was clear that the investigation and the Report’s recommendations had not had the desired effect and the working relationship remained the major issue.

19 CAS-40688-H9G9 • It took significant action to attempt to retain Ms E and facilitate her return to work. This included: offering support, proactively instigating the independent investigation, providing officer support in the review meeting, developing a phased return to work plan, undertaking extensive work to identify coaches for Ms E and Mrs R to resolve their professional issues; and considering ongoing training and upskilling for both.

• Ms E was not provided with the EB paper dated September 2012.

• Any exact analysis of the restructuring email was premature, the proposal had been approved by the Board but there was still consultation to carry out and in fact a different structure to the one proposed in September 2012 was eventually implemented.

• It would have continued to act in good faith to attempt to match Ms E to a new role within the structure, had she chosen not to leave. If this had not been possible, then a redundancy process and appropriately worded agreement may have followed, albeit this is speculation.

• All of Ms E’s accountabilities/responsibilities remained intact and were kept in- house, including the accounting aspect of her role. Ultimately, her functions were distributed amongst other roles. Ms E’s job description was not changed or withdrawn prior to her leaving. The last update was made in April 2011 when Mrs R became Ms E’s manager.

• Mr H’s 31 October 2012 email to the HR Consultant made significant reference to “the way [Ms H] had been treated by [Mrs R] since her appointment” and “her experiences over the past few years”, with only a passing reference to the possibility of redundancy. Quite some time after the Compromise Agreement was signed, Mr H contacted the HR Consultant on 17 January 2013 to raise the question of redundancy, specifically so that Ms E could seek to take advantage of any associated pension benefits.

• A number of Ms E’s arguments rely upon the interpretation of the wording of the Compromise Agreement. But this was dealt with and dismissed by Johnson J. In his judgment he made clear that “…the terms of the Compromise Agreement, when properly construed, do not assist with the inquiry contemplated by the test for redundancy…”

Ms E has requested an oral hearing and has further commented:-

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• Judge Johnson ruled that he could not see why the idea that the Compromise Agreement was either a mutual agreement or instigated by herself should necessarily be incompatible with the idea that there either existed a redundancy situation within the meaning of the USS Rules and/or that such a redundancy

8 Full-time. 9 Full-time equivalent. 10 Employment Rights Act 1996.

21 CAS-40688-H9G9 situation was the sole or main cause of the Compromise Agreement coming about.

• If SCONUL is saying redundancy was not the reason for the Compromise Agreement, then it implies that she has surrendered her unreduced pension under the USS.

• SCONUL should have informed her that she was giving up her unreduced pension and/or that redundancy was not the reason for the termination of her employment. SCONUL should be estopped from denying that redundancy was the reason for the termination of her employment. This triggers the second part of her complaint.

“If you retire before the scheme’s NPA (excluding retirement due to ill health), any pension you receive will be reduced because taking your 22 CAS-40688-H9G9 benefits early means they will be paid for a longer period of time. There is one exemption to this for those members aged 55 or more on 1 October 2011, retiring from age 60 with their employer’s consent.”

Subsequently, in January 2013, USS Ltd sent her pension details with a document ‘Leaving the scheme’, which informed her that:

“Leavers before 1 October 2011 – Redundancy. If you were made redundant but chose not to draw your pension at that time, you still have the right to draw your pension in full before your NPA. The Trustee Company must pay your benefits immediately on request if, after having been in USS for at least five years, you left eligible employment at age 55 (50 in some cases) or over and were made redundant or were dismissed at the request of your employer, in circumstances in which there was no good cause to do so.”

and:

“Up until 1 October 2013, the same rules apply to benefits as for leavers before 1 October 2011. However, if the redundancy occurs after 1 October 2013, any pension payable will be reduced for its earlier payment.”

• As she was compensated for redundancy, she is entitled to draw an unreduced pension.

Conclusions

Oral Hearing

After careful consideration I have decided that an oral hearing is unnecessary as the evidence available to me, including Ms E’s written submissions, is sufficient to determine Ms E’s complaint.

On Ms E’s complaint

Johnson J has remitted this case back to me to determine two questions in order to decide whether Ms E’s employment ended on grounds of redundancy in accord with

23 CAS-40688-H9G9 USS Rule 1.1b. Namely:-

(i) Had SCONUL's requirements for employees to carry out work of a particular kind ceased or diminished, or were they expected to cease or diminish?

(ii) Was the termination of Ms E's employment wholly or mainly attributable to any such actual or expected cessation or diminution?

On the first question

Murray v Foyle Meats [1999] ICR 827

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Noble v House of Fraser (Stores) Ltd EAT/686/84

"If an employer chooses to engage outside contractors instead of employees to do work of a particular kind he no longer requires employees to do it. That in our view clearly falls within the definition of redundancy".

Ms H’s email dated 19 Oct 2012 and the EB Paper

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Considering Rule 1.1(b) and the factors that caused the termination of Ms E’s employment Johnson J commented in paragraph 79(iv):

General details of SCONUL’s proposed reorganisation were set out in the Report and this information was discussed with Ms E at the meeting on 1 August 2012 with the 26 CAS-40688-H9G9 Chair of SCONUL and the HR Consultant. I appreciate that Ms E may have been unsettled by these proposed changes, however, both SCONUL and Ms E in her letter dated 8 August 2012, show a commitment to make the agreed phased return to work a practical solution.

Unbeknown to Ms E at the time the wording of the proposed structure set out in the EB Paper made no reference to potential redundancies, although it was made clear to Ms E in the email dated 19 October 2012 that she would be fully engaged with the consultation exercise that would be commenced and that she could ask questions at any time.

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Legal advice

My understanding is that Ms E received legal advice throughout the Compromise Agreement process; and that until January 2013 the question of whether she had been made redundant had not been raised, other than to ensure that she received a preferential payment.

Ms E did not accept the HR Consultant’s tentative proposals of a without prejudice conversation in August 2012. Instead, she chose to return to work on a phased basis on the understanding that Mrs R had accepted the findings of the Report and was committed to her return to work.

It was not until 31 October 2012 that Mr Harding contacted SCONUL’s HR department to discuss possible severance terms. In an email to the HR Consultant, Mr Harding commented that Ms E would want any settlement package to reflect her experiences in some way "as consideration of her not bringing an employment tribunal claim were the process to make her redundant and her to still feel aggrieved".

This wording confirms that Ms E considered that she could be made redundant but was prepared to avoid the risk of this or her continued employment in a new role if a settlement agreement could be reached. As part of the negotiations of the Compromise Agreement Mr Harding placed emphasis on Ms E’s past work experiences, how she was allegedly treated by Mrs R 11, and that any settlement should reflect her experiences. This wording does not reflect the fact that it is the role of “Assistant Secretary” that is potentially being made redundant and the possibility that Ms E may have remained employed by SCONUL.

I consider that Mr Harding’s statement separates the Compromise Agreement process and the question of redundancy, as Ms E is looking to agree a financial settlement that would terminate her employment. At the time of Ms E’s departure a consultation exercise had not commenced, no decision had been made on whether her role would or should be made redundant and she voluntarily entered into the Compromise Agreement.

11 See paragraph 27.

28 CAS-40688-H9G9 The terms of the Compromise Agreement were negotiated, and the agreement was completed on the 30 November 2012. I agree with Johnson J’s comments in respect of the wording of the Compromise Agreement, in that I do not consider it confirms one way or another whether Ms E was made redundant. What the Compromise Agreement does do is confirm that Ms E agreed the terms of the termination of her employment contract.

In addition, I note Ms E’s comments that she feels that had she not, in her opinion, been misinformed about her pension rights, the Compromise Agreement and by implication the negotiations would have looked very different. However, based on her understanding of her pension options there was no indication that she was unhappy with the Compromise Agreement.

While, not unusual, I do consider it to be significant that Ms E’s legal adviser instigated the negotiations of the Compromise Agreement with SCONUL on the basis that Ms E wanted to leave her employment. The provision of legal advice and the attraction of a financial settlement provided Ms E with sufficient confidence to go ahead with her decision to seek an agreement with SCONUL.

Employment relationship and employment contract

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On that basis, I conclude that the answer to the second question is ‘No’ and, therefore, the termination of Ms E’s employment does not satisfy the definition of redundancy in USS Rule 1.1(b).

As I have decided that Ms E was not made redundant as defined in the USS Rule, I do not need to consider the second part of her complaint.

Anthony Arter

Pensions Ombudsman 3 September 2021

30 CAS-40688-H9G9 Appendix

“11.1 Members to whom this rule applies

This rule applies to a member:

11.1.1 who has 5 or more years’ pensionable service…;

11.1.2 who has attained minimum pension age [55];

11.1.3 has not in respect of that eligible employment become entitled to a pension under any rules 8 (Benefits at normal retirement age), 10 (Late retirement) and 13 (Early pensions on incapacity); and

11.1.4 to whom rule 11.2…applies.

This rule applies to a member:

11.2.1 whose eligible employment is terminated by reason of redundancy; or

11.2.2 whose employment is terminated in the interests of the efficient exercise of the institutions functions…and the employer gives its consent to payment of the benefits; or …

11.3 Benefits

A member to whom this rule applies may elect to receive from the day after the date of retirement:

…[an unreduced pension].”

““Redundancy” means cessation of eligible employment attributable wholly or mainly to:

(a) the employer ceasing, or intending to cease, to carry on the activity for the purpose of which the member was employed, or ceasing, or intending to cease, to carry on that activity in the place in which the member worked; or

31 CAS-40688-H9G9 (b) the requirements of that activity for employees of the employer to carry out work of a particular kind, or for employees of the employer to carry out work of a particular kind in that place, ceasing or diminishing, or being expected to cease or diminish.

If within one month of such cessation of eligible employment the member is offered a comparable post entitling the member to continued membership, or if any successor to the business or functions of the employer offers the member comparable employment such as to disentitle the member to a redundancy under ERA, there shall be deemed to be no redundancy.”

“ERA” means the Employment Rights Act 1996.

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