Civil Service Compensation Scheme · CAS-14918-Y8J9

CAS-14918-Y8J9

Ombudsman’s Determination Applicant Mr L

Scheme Civil Service Compensation Scheme (CSCS)

Respondents The Cabinet Office

MyCSP

The Department for Work and Pensions (DWP)

Outcome

Complaint summary Mr L has complained that MyCSP calculated the award available to him from the CSCS incorrectly following his dismissal by the DWP in February 2018. In his view, MyCSP should have used a start date of 29 May 2007 and not 1 December 2014 for the purpose of its calculation.

He also contends that the tapering of his CSCS award by MyCSP constitutes age discrimination.

Background information, including submissions from the parties In September 1972, Mr L commenced working for the Ministry of Defence (MoD) and joined the classic section of the Principal Civil Service Pension Scheme (PCSPS).

Mr L transferred from the MoD to the DWP on 28 February 1973.

He left the DWP on 31 July 2005 and became a deferred member of the PCSPS.

On 29 May 2007, Mr L started work with Hewlett Packard (HP).

1 PO-29563 On 1 December 2014, Mr L’s employment with HP transferred under the Transfer of Undertakings (Protection of Employment) (TUPE1) Regulations 2006 to the DWP. At the same time, Mr L joined the 2007 section of the PCSPS known as “nuvos”. Mr L’s Normal Pension Age (NPA) in nuvos was 65 in October 2018.

On 8 February 2018, the DWP dismissed Mr L for efficiency reasons due to ill-health and awarded him “100% compensation” under the CSCS.

On 13 February 2018, the DWP notified MyCSP that Mr L had joined the Civil Service on 29 May 2007. This start date conflicted with the one shown in MyCSP’s records of 1 December 2014.

When MyCSP contacted the DWP to check this date, the DWP’s payroll provider, Shared Services Connected Ltd (SSCL), confirmed that it was 29 May 2007.

There was further correspondence between MyCSP and SSCL during the period February to April 2018 concerning Mr L’s reckonable service2, earnings and contribution history in the PCSPS.

On 2 March 2018, MyCSP asked SSCL for details of Mr L’s TUPE terms and, in particular, whether his HP service should count for compensation purposes.

On 6 April 2018, SSCL replied that the DWP TUPE team had said:

“This transfer took place before our team was formed and so we don’t have any records relating to the individual. However we have subsequently done a lot of work with HP and so have a good insight into their terms and conditions of service…We do know that for all of the transfers from them that we have handled subsequently, none had any form of entitlement to compensation on dismissal but because we have no knowledge of this person, we cannot categorically say whether he had anything or not.

Further to recent similar enquiries we know that policy advice is that, in the absence of a previous contractual entitlement, compensation should only be considered from the CS (Civil Service) start date.”

On 9 April 2018, MyCSP notified SSCL: (a) its records showed that Mr L took a “non- reckonable break” from 30 March 2016 to 8 February 2018; and (b) it held earnings and contributions beyond 30 March 2016 for him. MyCSP asked SSCL to confirm the correct service history from 30 March 2016 for Mr L, including any periods of non- reckonable absences.

1 The TUPE rules protect employees' rights when the organisation or service they work for transfers to a new employer. When TUPE applies, the employees of the outgoing employer automatically become employees of the incoming employer at the point of transfer. They carry with them their continuous service from the outgoing employer, and should continue to enjoy the same terms and conditions of employment with the incoming employer. Under regulation 4(1) of TUPE, the employment contract has effect after the transfer as if originally made between the employee and the incoming employer. 2 Reckonable service is the service that counts towards benefits for the purposes of the Civil Service Compensation Scheme; different definitions apply for different provisions. 2 PO-29563 SSCL replied that Mr L had non-reckonable absences from: (a) 21 March 2016 to 20 April 2016; and (b) 21 April 2016 to 8 February 2018. It also said that Mr L went on long term sick leave with no pay from 30 March 2016 to 8 February 2018.

On 9 May 2018, MyCSP sent Mr L details of his CSCS award of £855.09 which had been calculated using: (a) a start date of 1 December 2014; and (b) an end date of 29 March 2016.

Mr L’s CSCS award had been reduced by 28/36ths because at the time of his dismissal in February 2018 for efficiency reasons due to ill health, he was eight months away from his NPA of 65 in October 2018. As Mr L was within three years of his NPA, the award was reduced by one thirty-sixth for each month of service within that period (counting any part of a month as a full month) in accordance with rule 5.1 of the CSCS rules3.

On 15 May 2018, Mr L asked MyCSP to provide details of its calculations and a copy of the CSCS rules.

On 2 June 2018, Mr L complained to MyCSP because it had not yet replied.

In June 2018, MyCSP obtained Mr L’s pensionable earnings between 1 December 2014 and 8 February 2018 from SSCL as shown in the table below:

From To Pensionable Earnings

01/12/14 31/03/15 £12,636.48

01/04/15 31/03/16 £37,909.44

01/04/16 31/03/17 £24,068.80

01/04/17 08/02/18 Nil

On 2 July 2018, MyCSP replied to Mr L’s complaint. It provided him with details of: (a) how his CSCS award of £855.09 had been calculated; and (b) his non-reckonable absence dates. It told Mr L to contact the DWP if he disagreed with this information.

On 9 July 2018, MyCSP notified SSCL that the pensionable earnings which it had supplied was inconsistent with Mr L having a break in service from 30 March 2016 until 8 February 2018 with no pay. It consequently asked SSCL to confirm the start date of Mr L’s break in service.

On 19 July 2018, SSCL confirmed that Mr L did not receive any pay from 30 March 2016 to 8 February 2018 and provided revised pensionable earnings for Mr L as follows:

3 Relevant sections of the CSCS rules have been set out in Appendix One below.

3 PO-29563 From To Pensionable Earnings

01/12/14 31/03/15 £12,636.48

01/04/15 29/03/16 £37,705.63

30/03/16 31/03/17 Nil

01/04/17 08/02/18 Nil

On 20 July 2018, SSCL informed MyCSP that:

“The member’s civil service has been backdated to 29/05/2007, and as agreed with the terms of the TUPE transfer 01/12/2014, the member has been put into the nuvos scheme and will have been protected4 within that scheme as a result.”

In July 2018, Mr L contacted the DWP because he disputed the information which SSCL had provided MyCSP in order to calculate his CSCS award.

SSCL replied to Mr L in its letter dated 12 September 2018 as follows:

“SSCL provide MyCSP with details held on RM/SOP, the information required to update your RM/SOP record is provided by Line Managers, additionally your account would have been built up with information provided by our Policy team based on the terms and conditions you agreed to on taking your role within the DWP…

With reference to your start date I can confirm the correct date of 29 May 2007 was used for the purpose of your compensation calculation.”

On 2 October 2018, Mr L sent MyCSP a copy of SSCL’s letter and asked it to recalculate his CSCS award using a start date of 29 May 2007.

On 23 October 2018, MyCSP asked SSCL about the conflicting start date for Mr L and to investigate it urgently.

In November 2018, Mr L made a formal complaint under stage one of the CSCS’ Internal Dispute Resolution Procedure (IDRP). He essentially said that:-

• MyCSP should have used his contractual start date of 29 May 2007 and not the date on which his HP employment TUPE transferred to the DWP, which was 1 December 2014, in the calculation of his CSCS award.

4 Mr L was protected from having to join the alpha section of the PCSPS in April 2015.

4 PO-29563 • He went on sick leave from 21 March 2016 and was entitled to full sick pay under the terms of his contract. So the end date of 29 March 2016 used by MyCSP in its calculation of his CSCS award could not be correct.

• He received sick pay until 20 March 2017. Because of “overpayments and subsequent recoveries”, this date was not recorded correctly by the DWP for him.

• It was inappropriate for the DWP to incorporate rules that “discriminated on the amount of compensation solely in relation to his age” into his contract. Tapering of his CSCS award by MyCSP was in breach of age equality legislation.

• During the dismissal process, his line manager: (a) informed him that his compensation terms would be the same as those available on voluntary redundancy5; and (b) provided him with guidance6 showing that “compensation tariffs aligned with voluntary redundancy terms”.

• As his HP redundancy terms transferred under TUPE, the compensation available to him should, in his view, be calculated using either the DWP or HP voluntary redundancy terms, whichever was more favourable.

• It might be necessary to consider his periods of full time and part time working for the duration of his contract when calculating his compensation.

• While dealing with this complaint, he had used his savings to supplement his income which resulted in a loss of interest.

In its e-mail dated 2 January 2019 to MyCSP, SSCL said that:

“I think the issue is our complaints team has stated in their reply that 2007 date had been used but this isn’t the date we provided you…His service between 2005 and 2014 looks to be out of Civil Service which is why he’s not returned to Classic…

He (Mr L) did TUPE in but as you already know this was from non-Civil Service and looks like pension purposes was considered a new starter. We will investigate further but at present it looks like the 2007 date was error by our complaints department…”

On 4 January 2019, SSCL informed MyCSP that: (a) the correct start date for Mr L’s CSCS award was 1 December 2014; (b) the date shown in its letter dated 12

5 Full details of the changes made to “Efficiency Compensation” may be found in My CSP notes: (a) EPN

471 “Changes to Efficiency Compensation and revised guidance”; (b) EPN 513 “CSCS judicial review: action for employers”; and (c) EPN 584 “Efficiency Compensation”. Relevant sections from these three EPNs have been set out in Appendix Two below. 6 This was the DWP’s attendance management guidance.

5 PO-29563 September 2018 for his start date of 29 May 2007 was wrong; and (c) it had notified Mr L accordingly of its mistake.

On 18 January 2019, MyCSP asked the DWP to provide further information including the terms of the TUPE transfer so that it could respond to Mr L’s complaint.

On 18 February 2019, the DWP replied that it had referred the request to its TUPE Team.

On the same day, the Employee Transfer Team informed the DWP that: (a) Mr L’s TUPE transfer had been managed by the Digital HRBP Team; and (b) it had previously received legal advice7 which said that, for the purpose of calculating CSCS awards, the start date should be when the employee transferred to the DWP and any service transferred in should be disregarded. It also provided the DWP with contact details for two employees, Ms J and Ms F, who had been involved in the TUPE transfer.

On 16 August 2019, MyCSP informed the DWP that it did not want to assume legal advice provided for another case applied to Mr L whose circumstances were different. It asked the DWP to contact Ms J and Ms F to find out if they had any pertinent details. It also said that it would seek advice from the Cabinet Office on this matter.

In its e-mail dated 28 August 2019, the DWP informed MyCSP that:

“I have contacted Ms J who was able to provide some documents for this member but nothing that provides the information you requested.

Ms F advised the following:

Unfortunately I no longer have access to the SIAM TUPE information…

I can provide some background information regarding the TUPE transfer which hopefully may help…

The SIAM TUPE transfer from HP included employees on various terms and conditions, some of whom were legacy civil servants (i.e. TUPE transferred out of the CS into HP and then TUPE transferred back into the CS).

The legacy civil servants retained their contractual Civil Service T & Cs when they re-joined the DWP which may have included a contractual entitlement to compensation payments.

I can’t confirm if Mr L was a legacy CS but MyCSP may be able to assist, as legacy civil servants were eligible for New Fair Deal and this would show on Mr L’s record.”

7 The legal advice was for a DWP employee who had joined Cornwall Council in March 2006 and TUPE transferred to the DWP on 1 July 2014. This DWP employee was subsequently dismissed with no contractual rights to compensation under the severance terms with Cornwall Council. 6 PO-29563 In September 2019, the Cabinet Office informed MyCSP that, under the CSCS rules, Mr L was a “new starter” when he was TUPE transferred on 1 December 2014 to the DWP. It also said that the CSCS award available to Mr L on the grounds of dismissal should be calculated using current reckonable and qualifying service since that date.

In its stage one IDRP decision letter dated 12 September 2019, MyCSP: (a) apologised for the delay to its response; and (b) informed Mr L that it did not uphold his complaint.

MyCSP concluded that:

“The start date of the compensation

MyCSP have used 1 December 2014 as your start date for the purpose of your CSCS award. This is the date you began working for the DWP following a TUPE from HP.

In your application you have stated that the terms of this transfer stated access to compensation under the CSCS. You state that your contract start date of 29 May 2007 should be the start date for the purpose of the CSCS calculation date.

Compensation for loss of office is awarded under the CSCS arrangements at an employer’s discretion. When an employer awards compensation to an employee leaving service, they notify the scheme administrator, MyCSP who are responsible for calculating the amount payable in line with the terms laid out under the CSCS rules.

MyCSP queried the terms of your TUPE with DWP during the calculation of your CSCS award. DWP were unable to supply any evidence of the terms and conditions of your TUPE, and based their advice on the understanding of similar cases. DWP could not categorically confirm whether your previous service prior to your TUPE should have been included in your CSCS award.

CSCS rule 11.1(iii) provides that a person dismissed on efficiency grounds on or after 1 April 1998 may be paid compensation up to the amount calculated in accordance with rule 3.3.

Rule 3.3 provides benefits for people dismissed under the old ‘flexible early severance’ terms. The calculation is determined by the member's reckonable service and pensionable earnings.

Rule 3.3 is qualified by a number of other rules - including rule 3.4a, which provides that awards made under rule 3.3 in respect of a new entrant shall be calculated by reference to their current reckonable service and current qualifying service only.

A ‘new entrant’ is defined in rule 1.10 as any person who takes up employment or is re-employed in the Civil Service on or after 1 April 1997.

7 PO-29563 Rule 1.8 defines ‘current reckonable service’ as being the same as ‘reckonable service’ except that it shall not include service prior to the current period of continuous service in the Civil Service, nor any service credited as a result of a transfer in from another pension scheme, nor any service credited as a result of a purchase of added years.

You re-joined the Civil Service after 1 April 1997; meeting the definition of a ‘new entrant’, so any compensation calculated by reference to rule 3.3 can only be based on your current reckonable service - i.e. your reckonable service since re-joining the Civil Service on 1 December 2014.

However, rule 1.7 provides that where, as a consequence of any transfer of employment (e.g. a TUPE transfer) any person becomes entitled to benefits under the CSCS, the Minister may apply the rules of the scheme to that person with any modifications which may be necessary to reflect:

• the terms and conditions of employment relating to compensation for early retirement or severance transferred with such a person; or

• any undertaking by a Minister of the Crown given about compensation payments for early retirement or severance.

As you did not leave DWP on early retirement or severance, but rather were dismissed on efficiency grounds, the discretion provided for under rule 1.7 cannot apply.

Therefore, the maximum compensation payable on dismissal on efficiency grounds is the lump sum calculated under rule 3.3 based on your service from 1 December 2014 only…

The end date of the compensation

For the purpose of your CSCS award MyCSP have based the calculation on…an end date of 29 March 2016. The data supplied by your employer states that 29 March 2016 was the last date you were a member of the scheme, and therefore was your last date which reckoned for the purpose of your CSCS award.

You have stated that you believe the end date should be 20 March 2017. Your employer has confirmed you were on sick leave with nil pay from 30 March 2016 to your date of dismissal. As you were not contributing to the pension scheme for this period, MyCSP have correctly not included in for the purpose of your award.

The tapering of compensation

In your application you state that the tapering of your CSCS award is a breach of age equality legislation.

8 PO-29563 When a member is within three years of their normal pension age at the date they leave under the CSCS, in accordance with Rule 3A.7.38 the compensation lump sum is reduced by 1/36 for each month of service within that three year period.

It is important to state that My CSP are the administrators of the Civil Service Pension arrangements, and have no authority to deviate from the scheme rules as they are written. The Scheme Manager, the Cabinet Office state that they consider the difference in treatment of individuals under pension age to those over pension age as justifiable. This guidance is as follows:

“The aim of compensation under the CSCS is to provide a proportionate financial cushion until alternative employment is found or as a bridge into (earlier-than-planned) retirement.

The compensation therefore provides financial protection that reflects the individual’s presumed personal circumstances (it is not possible to look at each individual case to determine benefits for each individual).

In determining the level of that financial protection, it is reasonable to take into account the extent to which the individual has access to other employer- funded income after leaving service.”

In light of the above, while you feel the decision to cap your compensation payment may be discriminatory; your compensation payment has been calculated in accordance with the CSCS rules…

As stated above, this is a presumption of a financial position as it is not possible to consider all cases on an individual basis. However as you are now in receipt of your Civil Service pension, you are deemed to be in a more stable financial position than colleagues much younger than you. This is because you are able to withdraw your pension whilst simultaneously seeking employment, should you wish to pursue this.

Part time working

The underlying principle in this matter is that the CSCS compensates staff for the loss of employment. When a full-time worker loses their job they lose full- time employment, a part-time worker loses part-time employment.

The compensation calculation is based on pay and service. Pay for part-time staff is the full-time equivalent rate. Reckonable service for part-time staff is their actual reckonable service, that is, service that “counts towards” the calculation of benefits under the scheme. This produces an initial

8 This rule has been set out in Appendix One. It is in similar terms to rule 5.1. In my view, rule 5.1 and not 3A.7.3 is the correct rule here as rule 5.1 applies to benefit under rule 11, whereas rule 3A.7.3 applies to flexible severance benefit under rule 3A for which Mr L does not qualify. 9 PO-29563 compensation figure which, per year of service actually worked is the same for part-time staff as it is for full-time staff.

From 1 December 2014 to your last day of service, your working pattern was 22.50 hours per week. Your reckonable service is therefore effectively prorated to represent the actual hours you worked…”

Mr L disagreed with the decision and, in February 2020, appealed it at stage two of the IDRP. In particular, Mr L said that:-

• He did not accept that 29 May 2007 was the wrong start date for his CSCS award.

• The DWP initially exercised discretion under CSCS rule 1.7 to include his previous HP service in the calculation of his CSCS award. However, it subsequently changed that decision without giving any reasons or justification (via SSCL).

• He received sick pay throughout 2016 and submitted his payslips as evidence.

• The end date of his CSCS award should be 20 March 2017, and not 29 March 2016, if unpaid sick leave was disregarded.

• It was wrong for the DWP to taper his CSCS award which amounted to age discrimination. At no point had the DWP attempted to justify tapering was a proportionate means of achieving a legitimate aim.

The Cabinet Office sent its stage two IDRP decision letter on 14 January 2021. It partly upheld Mr L s complaint and said that:

“To calculate your benefits, MyCSP must rely on the information the DWP give them. Regrettably the DWP gave them some incorrect information, as well as misinforming you that your start date at HP (29 May 2007) would be used to work out your compensation payment. You do not accept that it was a mistake because you believe that CSCS rules 1.7…was not applied correctly. You argue that the DWP has discretion to include your previous service. However, you are mistaken on that. Rule 1.7 applies to someone leaving on redundancy terms. This does not apply to you because the DWP dismissed you.

You are entitled to benefits under CSCS rule 3.3. As MyCSP explained, CSCS rules 1.8 and 1.10…define what service can count towards any compensation benefits. Under those rules, you fall into the group who take up employment or re-employed in the Civil Service on or after 1 April 1997 – you rejoined after 1 April 1997. That means you meet the definition of a “new entrant”. Then rule 1.8 defines your service as “current reckonable service”. Therefore I confirm that the maximum compensation you are entitled to on dismissal on efficiency grounds is the lump sum based on your service from 1 December 2014 only.

10 PO-29563 Regarding the end date used for the calculation of your award. I agree that the DWP gave MyCSP incorrect details. I understand that MyCSP wrote to you on 27 November 2020 saying that the DWP had now confirmed the following:

• on 18 September 2016, you were on full pay;

• between 19 September 2016 to 19 March 2017 you were on half pay; and

• from 20 March 2017 you received no pay.

The end date for working out your compensation is therefore 20 March 2017. MyCSP have revised your compensation payment, and paid a further £631.09. They also adjusted your pension benefits for the period between 28 October 2018 and 27 November 2020, for which you had been underpaid by £1,883.49.

I agree that you should be compensated for the delays and incorrect end date used to calculate your award. To reflect the distress and inconvenience you have experienced, I direct your employer to pay you £1,000. In addition, I find it appropriate that your employer also pay you simple interest at bank base rate on your pension arrears and the additional CSCS compensation lump sum. I appreciate that there may have been tax implications due to the arrears and additional compensation. If you are able to provide evidence that you paid more tax, it would be appropriate that your employer also compensates you with that amount.

Finally I will address the matter of tapering. The underlying principle of the CSCS is to compensate staff for loss of employment. The purpose of the compensation is to provide proportionate financial support until they find alternative employment, or as a bridge to retirement. It is important to note here that the DWP did not make you redundant. Therefore the CSCS rules for redundancy terms are not relevant to your circumstances. MyCSP have explained the scheme rules for efficiency dismissal and why the tapering of your compensation is not considered age discrimination. I will expand on that below.

Unlike redundancy payments, the amount of compensation an employer awards for efficiency dismissal is entirely discretionary – there is no automatic rights to such payments. Because you were so close to the scheme pension age, your compensation payment was less than you had expected. It is easy to understand why you feel that tapering the compensation lump sum has disadvantaged you. You argue that, had you been [62] years old, you would be entitled to compensation without tapering. You also say you cannot work due to ill-health, and contended that the compensation would have been your only source of income until you received your pension. Therefore, the higher amount of compensation would have to last longer. Your argument is, in fact, setting out the exact principle underpinning tapering. 11 PO-29563 As a scheme, the CSCS must comply with primary equality legislation, which means it should not discriminate. That is, it must not treat one person/group less favourably than another person/group because of their “protected characteristic” – for example; age, religion, sexual orientation, amongst others. But the law does allow exceptions – section 13(2) of the Equality Act 2010. So a scheme provision may treat members differently, as long as the different treatment is a “proportionate means of achieving a legitimate aim”.

The tapering rules for efficiency payments mean that those who are dismissed for ill-health reasons, and who are within three years or less of their normal pension age get less compensation. The amount reduces, the closer they are to pension age. In itself, those rules do, indeed, treat people differently because of their age. But the rules provide a proportionate way of achieving the legitimate aims of:

• providing compensation for employees who are fairly dismissed because of ill health but not medically retired, and who would not otherwise be legally entitled to compensation for loss of employment;

• bridging the gap, so far as appropriate and reasonable, between the date of dismissal and the date on which the individual may obtain alternative employment, or otherwise receive their full pension at normal pension age…

As both the PCSPS and CSCS are statutory schemes, neither MyCSP nor the Cabinet Office has discretion to calculate your compensation other than in accordance with the provisions of the rules. I am satisfied that you have received the correct amount under the scheme rules…”

Following the complaint being referred to The Pensions Ombudsman (TPO), Mr L and the Respondents made further submissions that have been summarised below.

Mr L’s position

Mr L said that:

“Having gone through the dismissal process, it was clear that the DWP wanted all my service to count. Indeed, they initially tried to get me enrolled into an exit scheme that would have achieved that outcome, but that scheme was withdrawn. In addition, the issue of the start date was raised by me at my meeting with the decision maker just prior to my dismissal who acknowledged my concern and the impact it could potentially have. Following that meeting, I understand that discussions were held with a “case worker” which I understand to be an HR representative. Sometime after that my line manager confirmed to me that she had sent my earlier start date to MyCSP for my compensation to be calculated.

12 PO-29563 …under CSCS it is for the Employer to determine the level of compensation and whilst I appreciate that I can only receive what the rules allow for, it would have been open to the DWP to achieve that objective under the rules even if that meant creating an exit scheme for one person or asking for a Minister’s ruling under the CSCS rules.”

Rule 11.3 of the CSCS rules states that, “A person who has at any time opted out of the 1972 Section and who is dismissed for inefficiency may be paid compensation in accordance with rule 11.1 with all service treated as service as a civil servant.” He was in the 1972 Section until he resigned in 2005.

Even if the Cabinet Office’s legitimate aims for tapering are accepted: (a) there was a gap of some ten months between his dismissal and getting his “incorrect pension award”; and (b) it has not provided any evidence to show that it was a proportionate method of achieving these aims.

He said that:

“As an unemployed 64-year-old, with cancer, approaching pension age, I would suggest it is likely you would need more support until a job is found rather than less. Once the compulsory retirement age was removed, it is the gap to finding work not the receipt of the pension which needed to be bridged. Also, with people being encouraged to work beyond pension age, I don’t believe their argument holds true anymore. In my own case, I always knew that I would have to work beyond pension age as my wife’s state pension is not now payable until 2022.”

The Pensions Ombudsman concluded in another complaint concerning the CSCS (reference number PO-8991) that the application of a taper to a CSCS award was age discrimination.

The Cabinet Office’s additional representations in April 2025 in relation to the lawfulness of the taper are an attempt to re-run arguments which should have been made earlier. The compensation decision in his case was made in 2018, and it is unfair now to adduce reasoning developed at a later date.

The inter-relationship between the CSCS and PCSPS is not relevant in all cases, as some employees have been outsourced or insourced meaning their ability to accrue substantial amounts payable at retirement age has been affected. He was transferred less than four years from NPA.

The Cabinet Office needed to justify the outcome of the process, and it had not done so. It was not reasonably necessary to apply the taper, and it went beyond what was actually needed.

The Respondents’ position

Rule 11.3 of the CSCS rules does not apply in Mr L’s case. “Opting out” means when a person opts to leave the pension scheme while continuing in civil service 13 PO-29563 employment. The significance of this is that benefits under the CSCS are for loss of employment, and are not impacted by whether or not the individual is a member of the civil service pension arrangements during some or all of that employment. When Mr L resigned from the civil service in 2005, he became a deferred member of the PCSPS. This is not the same as opting out of the PCSPS.

The tapering of the efficiency dismissal compensation lump sum is to reflect the relatively short period of time between the person leaving service and being able to draw their civil service pension unreduced. The provisions are aimed at the average civil servant in such circumstances. The CSCS rules are statutory and neither the Cabinet Office nor MyCSP have the discretion to vary how they apply to individual members. So it is not possible to allow for each individual’s particular circumstances. No adjustment can consequently be made on account of Mr L’s medical condition or the income of his spouse.

The Cabinet Office provided a comprehensive response in April 2025 to the Adjudicator’s request for evidence to demonstrate that the application of a tapering provision under rule 5.1 of the CSCS rules on dismissals for inefficiency could be objectively justified as a proportionate means of achieving a legitimate aim. The key points of this are that:-

• Case law in the Employment Tribunal (ET) and Employment Appeals Tribunal (EAT) has held that the taper is a proportionate means of achieving the legitimate aim of bridging the gap between loss of employment and re-employment/receipt of pension benefits. Mr L’s situation is not relevantly different.

• Mr L seeks to disapply the taper, which would have the effect of older dismissed employees receiving the same benefit as younger ones, which:

o does not recognise the lost opportunity to continue earning;

o over-compensates the older dismissed employees, when it is not clear what they are being compensated for; and

o ignores the generous benefits under the PCSPS which are reduced actuarially by a lesser amount the closer the member is to retirement age.

• For immediate early retirees, the amount of compensation broadly covers the amount required to actuarially buy out the reduction for retiring early.

• Inefficiency dismissal benefits are gratuities and not earned benefits, and there is no general entitlement at law to compensation derived from dismissal on these grounds. Funds are limited and funded publicly, and it would be a lawful alternative to ‘level down’ benefits, resulting in no compensation.

• Individual compensation decisions in respect of dismissed employees would be impracticable and unrealistic. It would provide an incentive for members to argue 14 PO-29563 for the maximum benefit in every case.

• Under Rule 3.3 in calculating compensation, the CSCS in fact favours age directly in relation to service years over 40 and indirectly in relation to length of service. This demonstrates the CSCS is trying to strike a balance.

• The terms of the CSCS were the product of negotiation and consultation with the unions.

Adjudicator’s Opinion Mr L’s complaint was considered by one of our Adjudicators who concluded that no further action was required by the Respondents. The Adjudicator’s findings are set out in paragraphs 56 to 84 below.

The first part of Mr L’s complaint was essentially that MyCSP used an incorrect start date of 1 December 2014 to calculate the compensation award available to him from the CSCS following his dismissal by the DWP in February 2018. In his view, MyCSP should have used a start date of 29 May 2007, that is, the date on which he started work with HP.

The DWP did not have a record of the terms and conditions for Mr L’s TUPE transfer from HP in December 2014 because it occurred before its TUPE team was formed. So the DWP could not say categorically whether Mr L had a previous contractual entitlement to compensation on dismissal following the TUPE transfer.

The DWP was, however, able to contact two employees who were involved with this TUPE transfer. One of them, Ms F, recalled that the transfer included some HP employees who had previously TUPE transferred from the Civil Service to HP. She said that these “legacy civil servants” retained their contractual Civil Service terms and conditions which might have included entitlement to compensation on dismissal. She could not, however, say whether Mr L fell into this category.

Mr L left the DWP on 31 July 2005 and did not start work with HP until 29 May 2007, nearly two years later, after a clean break of service. In the Adjudicator’s view, he was not TUPE transferred from the DWP to HP and consequently one of these “legacy civil servants”. Moreover, if he had been one, the Adjudicator concurred with SSCL that he should have rejoined the classic section of the PCSPS on TUPE transfer from HP to the DWP. Mr L, however, joined the nuvos section of the PCSPS because his HP service was deemed as “out of Civil Service”.

According to MyCSP Note EPN 471 “Changes to Efficiency Compensation and revised guidance”, published on 10 November 2016:-

• The Cabinet Office had reformed the tariff for inefficiency compensation to align with voluntary redundancy terms.

15 PO-29563 • The Cabinet Office had also reviewed the guidance for cases of inefficiency compensation.

• MyCSP would now be authorised to make inefficiency compensation payments to members of the nuvos and alpha schemes.

• The new tariff for efficiency departures would take effect from 9 November 2016 except for cases where an agreement to exit under inefficiency compensation had already been made before this date or a notice of dismissal was given before this date (but a final decision on payment had not yet been made).

In the Adjudicator’s view, this would explain why during Mr L’s dismissal process, his line manager had: (a) informed him that his compensation terms would be the same as those available on voluntary redundancy; and (b) provided him with guidance showing that compensation tariffs aligned with voluntary redundancy terms.

However, as explained in MyCSP Notes EPN 513 “CSCS judicial review: action for employers” and EPN 584 “Efficiency Compensation” posted in October 2017 and November 2019 respectively:-

• Following a Judicial Review in July 2017, the 2016 voluntary redundancy terms were no longer available and employees who left via an efficiency departure in future should have their award processed under pre-2016 terms going forward.

• So the Judicial Review quashed the changes to the calculation of the award, but it did not quash the changes to the process of determining whether an award was due.

• Broadly, this meant a compensation payment was calculated as follows:

o two weeks’ final pensionable earnings for each year of reckonable service during the first five years of qualifying service; plus

o three weeks’ final pensionable earnings for each year of reckonable service during the next five years of qualifying service; plus

o four weeks’ final pensionable earnings for each year of reckonable service after the first ten years of qualifying service; plus

o two weeks’ final pensionable earnings for each year of reckonable service after the fortieth birthday, up to a maximum of two years’ final pensionable earnings.

• For any member who joined, or re-joined, the Civil Service on or after 1 April 1997, only their current period of continuous Civil Service employment counted towards this lump sum.

16 PO-29563 So when Mr L was dismissed by the DWP in February 2018 for efficiency reasons due to ill-health, it was consequently rule 11.1(iii) of the CSCS rules that provided he may be paid compensation up to the amount calculated in accordance with rule 3.3, subject to rule 5.1.

Having carefully studied the reasoning given by MyCSP and the Cabinet Office in their IDRP decision letters, the Adjudicator agreed with their conclusion that Mr L met the definition of “a new entrant” under rule 1.10 of the CSCS rules. So in accordance with rule 3.4a of the CSCS rules, any award made under rule 3.3 to Mr L, other than an award of pension benefits, must be calculated by reference to his current reckonable service, that is, his reckonable service since re-joining the Civil Service on 1 December 2014.

The Adjudicator was consequently satisfied that the maximum compensation Mr L was entitled to on dismissal on efficiency grounds from the CSCS was the award based on his service from 1 December 2014 only.

MyCSP and the Cabinet Office must comply with the CSCS rules when calculating the compensation available from the CSCS to Mr L. As the CSCS rules were statutory, neither MyCSP nor the Cabinet Office had the discretion not to apply them or to vary how they were applied.

In the Adjudicator’s view, MyCSP and the Cabinet Office had interpreted and applied the provisions of the CSCS rules correctly to determine the start date of Mr L’s CSCS award and so the first part of his complaint should not be upheld.

The Adjudicator turned to the second part of Mr L’s complaint that the tapering of his CSCS award by MyCSP constituted age discrimination.

The age discrimination requirements relating to pensions could be found in the Equality Act 2010, section 13(2). Section 61 of the Equality Act 2010 applied a non- discrimination rule to all occupational pension schemes which overrode any discriminatory rules in a scheme. Therefore, the Respondents’ arguments that they must follow the rules of the CSCS were only effective as far as the rules were not discriminatory.

Direct discrimination on the grounds of age occurred when a member of a pension scheme or an employee was treated less favourably because of their age. Indirect discrimination occurred where there was a policy or practice that did not use age as the criterion for different treatment, but put members or employees of a particular age or age group at a substantial disadvantage. Unlike other types of discrimination, both direct and indirect age discrimination could be objectively justified if it could be shown that the less favourable treatment is/was a proportionate way of achieving a legitimate aim. To justify direct discrimination, only social policy aims could be legitimate whereas indirect discrimination could be justified by real business needs.

17 PO-29563 Objective justification could be difficult to prove and required a meticulous investigation of the particular facts of the case in order to assess whether the action was a proportionate way of achieving the legitimate aim.

In their IDRP decision letters, MyCSP and the Cabinet Office explained to Mr L why they considered that the tapering of his CSCS award was not unlawful because:-

• The aim of compensation under the CSCS was to provide a proportionate financial cushion until alternative employment was found or as a bridge into (earlier-than-planned) retirement.

• The tapering rules provided a proportionate way of achieving the legitimate aims of: o providing compensation for employees who were fairly dismissed because of ill health but not medically retired, and who would not otherwise be legally entitled to compensation for loss of employment; and

o bridging the gap, so far as appropriate and reasonable, between the date of dismissal and the date on which the individual might obtain alternative employment, or otherwise receive their full pension at NPA.

18 PO-29563

• Although no arguments justifying the directly age discriminatory aspects had been established when the taper was implemented, justification after the event was permissible.

• The tribunal identified that the benefit had two legitimate aims: (1) providing appropriate and reasonable compensation to employees who were dismissed on grounds of ill health, but who would not otherwise be legally entitled to any compensation for loss of employment; and (2) bridging the gap between the date of dismissal and NPA, at which age the member might receive a full pension.

• The taper was a proportionate means of achieving the second of these two aims, as: o it was necessary to ensure equity between those close to retirement and those in retirement receiving their pension – tapering the benefits as the temporal gap decreased reflected the decreasing reduction applying to pension benefits;

o the features of the taper were reasonable, as imposing a longer tapering period would be against CSCS member interests (as the reduction would be greater and more people would be tapered). A shorter tapering period would be closer to a ‘cliff edge’ scenario, which the taper sought to avoid; and

o there was a broad correspondence between the CSCS payment and the amount needed to buy out actuarially the shortfall in full pension before NPA. As a result, untapered efficiency payments would increase the inequality between those above and below NPA.

19 PO-29563

• In principle, a taper was proportionate for ensuring equity between those close to retirement and those in retirement receiving pensions, and tapering the benefit as the temporal gap reduces to reflect decreasing losses helped in this regard.

• This particular taper was proportionate as, at each age during the taper period, there was broad correspondence between the amount payable as an efficiency payment and the amount needed to buy out any actuarial reduction for early receipt of pension. This helped demonstrate that:-

o The benefit bridged the gap to NPA.

o The taper should not be disapplied as it would result in a windfall benefit for those very close to retirement.

o The taper should not be longer as this would cause more age discrimination that was disadvantageous to beneficiaries. It also should not be shorter as this would resemble a ‘cliff edge’ effect.

20 PO-29563

Mr L did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr L provided his further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Mr L.

Mr L’s further comments

In May 2025, SSCL asked him to repay an overpayment of his net salary while employed by the DWP of £3,220.34. He challenged this request because, according to his payslips, the overpayment had already been recovered from his salary between January and March 2017.

He sought the assistance of his Member of Parliament (MP) with this dispute and, in August 2025, the DWP informed his MP that:-

• SSCL had made a series of administrative errors during the debt recovery process. It would like to sincerely apologise to Mr L for the poor service he had received from SSCL.

• SSCL was currently reviewing Mr L’s case and would contact him directly with its findings.

In October 2025, SSCL informed Mr L that, following the outcome of his appeal, it would not pursue recovery of the overpayment. Its decision was based on the fact that the matter was considered time barred under the provisions of the Limitation Act 1980 within “the handling of public money guidance”.

SSCL did not address the issues which he had raised about how the overpayment was calculated. So he could not be sure that MyCSP had used correct pensionable earnings figures in the calculation of his CSCS award.

His dispute is “a contractual dispute” as the terms of the CSCS were incorporated into his contract on the TUPE transfer date.

The DWP failed to retain his employment records for “civil service pension and employment records until age 72” as specified in its letter dated 6 February 2018 to him. He has found copies of the following documents that the DWP should have kept:

• “Final Measures to be adopted when HP employees Transfer into DWP”;

• A letter dated 20 November 2014 from the DWP titled “Confirmation of Transfer of Employment to the DWP”;

• “Attendance Management Advice”

He says that: 21 PO-29563 “These are key documents that DWP should have retained following the transfer as they demonstrate the term and conditions that they wished to change. If not included here, then they are not valid. There is no mention of managing absence according to DWP practice. My previous employer ran a long-term absence scheme which would have given me half pay until they decided to terminate my contract. So, this was detrimental to me and should not have been allowed under the TUPE regs. However, DWP have now destroyed the documentation relating to my transfer so they cannot reasonably justify their arguments. It is for the employer to justify their actions not the employee.”

No TUPE transfer was involved in the Coombes case so he disagrees that it is similar to his case. Following a TUPE transfer, “the employee has additional rights to preserve their employment” so the two cases are not comparable.

Furthermore, his CSCS award should have been calculated by MyCSP on the better of “CSCS redundancy rates and HP rates”.

The Respondents’ further comments

The alleged overpayment of Mr L’s net salary is an employment issue.

MyCSP used the correct pensionable earnings figures for Mr L in the calculation of his CSCS award.

They say that:

“…we do not agree with Mr L that following the TUPE transfer from HP to DWP, he is entitled to the better of “CSCS redundancy rates and HP redundancy rates” in the calculation of his compensation award.

The payment in issue is a discretionary compensation payment under the CSCS in a case of dismissal arising from ill health. The compensation payment is referred to as “inefficiency” (or “efficiency”) compensation and is made in accordance with CSCS rules. It is not a redundancy rate as Mr L has said.

TUPE provides certain employees of the transferor (here HP) to transfer to the transferee (here DWP) on the same terms of employment and with their continuity of service intact. TUPE means therefore that, if the transferor employer provided a contractual right to compensation for a dismissal of this kind, an employee would be entitled to those same terms from the transferee employer, on the basis that their combined service had been with the transferee employer.

TUPE does not enhance rights, it protects terms of employment as at the date of the transfer. Therefore it does not mean that the efficiency dismissal compensation terms under the CSCS must be applied on the basis of Mr L’s combined service as the scheme does not provide for this”. 22 PO-29563 Ombudsman’s decision The PCSPS and the CSCS are statutory schemes made under the Superannuation Act 1972. The rules of the PCSPS and CSCS govern payment of benefits from these schemes. In its capacity as the administrator of the PCSPS and CSCS, MyCSP must act in accordance with these rules and within the framework of the law. MyCSP consequently had to follow any procedure laid down in the provisions of the CSCS rules, as qualified by overriding pension legislation when calculating the award available to Mr L from the CSCS following his dismissal by the DWP in February 2018 for efficiency reasons due to ill-health. The Cabinet Office had reformed the tariff for inefficiency compensation to align with voluntary redundancy terms from November 2016 and also reviewed the guidance for cases of inefficiency compensation.

I concur with the Adjudicator’s view as to why during Mr L’s dismissal process the DWP had consequently: (a) informed him that his compensation terms would be the same as those available on voluntary redundancy; and (b) provided him with guidance showing that compensation tariffs aligned with voluntary redundancy terms.

However, following a Judicial Review in July 2017, the 2016 voluntary redundancy terms were no longer available and employees who left via an efficiency departure in future should have their award processed under pre-2016 terms going forward.

So the Judicial Review had quashed the changes to the calculation of the award and the information that the DWP had provided Mr L about them were no longer valid.

Mr L was not made redundant by the DWP so the CSCS rules for redundancy terms did not apply to him.

Calculation of Mr L’s inefficiency compensation

Mr L considers that the terms of the CSCS were incorporated into his contract on the TUPE transfer date and it was the intention of the DWP that 29 May 2007 should be used as the start date to calculate his CSCS award.

I have carefully studied the explanations given by MyCSP and the Cabinet Office in their IDRP decision letters as to why 1 December 2014 was used as Mr L’s start date for the purpose of his CSCS award and reviewed the CSCS rules.

I agree with the Adjudicator’s view that Mr L was not one of the HP employees who had previously TUPE transferred from the DWP to HP and retained contractual Civil Service terms and conditions which might have included entitlement to compensation on dismissal for efficiency in respect of his service with HP.

I find that:

106.1. Mr L left employment with the DWP on 31 July 2005 and was not transferred under TUPE to HP or any other employer at that time;

106.2. Mr L’s employment with HP commenced on 29 May 2007;

23 PO-29563 106.3. His employment was transferred under TUPE to the DWP on 1 December 2014;

106.4. Mr L was dismissed on 8 February 2018 for efficiency on grounds of ill- health; and

106.5. Mr L was not dismissed on grounds of redundancy.

Pursuant to regulation 4(1) of TUPE, Mr L’s employment contract with HP had effect after the transfer on 1 December 2014 as if originally made between Mr L and the DWP.

However, as no evidence of any rights to compensation or other benefit on retirement for inefficiency or similar grounds has been provided, I find that no benefits or other compensation is payable to Mr L pursuant to TUPE and the terms of his contract with HP prior to the transfer.

I also find that rule 1.7 of the CSCS rules that permits a Minister to make provision following a TUPE transfer is not engaged as I find that Mr L’s contract with HP did not include any terms and conditions relating to compensation for early retirement or severance that would be applicable in respect of termination for efficiency on grounds of ill-health and no undertaking was given by any Minister about such compensation.

Mr L’s entitlement to compensation for dismissal for efficiency on grounds of ill-health therefore arises solely under the rules of the CSCS and in particular rule 11.

The applicable provisions of rule 11.1 provide essentially that, if (a) a civil servant is dismissed for inefficiency; (b) the employing department (here the DWP) decides that payment of compensation would be appropriate; (c) the civil servant has served for at least one year; and (d) the dismissal occurs on or after 1 April 1998, the maximum compensation which may be paid is that calculated in accordance with rule 3.3 of this scheme, subject to rule 5.1.

The DWP exercised its discretion in Mr L’s favour. Calculation of the benefit is then provided for in rule 3.3 subject to rule 5.1 of the CSCS rules.

As summarised in MyCSP’s response set out at paragraph 40, the calculation is based on “reckonable service” which, as provided in rule 1.13, has the same meaning as in the PCSPS rules (and rule A9 of the PCSPS rules in particular). However, under rule 3.4a of the CSCS rules, for “new entrants”, i.e. persons who took up civil service employment after 1 April 1997 (see rule 1.10), it is based on “current reckonable service”. I find Mr L is a “new entrant” for these purposes having commenced his pensionable service in December 2014 after 1 April 1997.

The definition of “current reckonable service” in rule 1.8 essentially excludes:

114.1. any period otherwise qualifying as “reckonable service” which is “attributable to service prior to the current period of continuous service in the Civil Service”; and

24 PO-29563 114.2. any notional periods of “reckonable service” arising from added years, additional contributions and transfers in.

I find the phrase “current period of continuous service in the Civil Service” is specific and clear enough to exclude service with HP and any prior period of Civil Service employment, subject to TUPE (discussed below).

Under rule A9 and A3 of the PCSPS rules, periods of sick leave on reduced pay qualify as “reckonable service” and are not excluded, under rule 1.8 of the CSCS rules from “current reckonable service”. Unpaid sick leave is not included.

As such, I find that:

117.1. Mr L’s previous period of service with the DWP that terminated in 2005 cannot be included in his “current reckonable service” because it is not part of “the current period of continuous service in the Civil Service”;.

117.2. Mr L’s period of service with HP prior to the transfer of his employment on 1 December 2014 cannot be included for the same reason (subject to TUPE); and

117.3. Mr L’s period of paid sick leave must be included but his unpaid sick leave from 20 May 2017 to 8 February 2018 cannot (as eventually recognised by the Cabinet Office, see paragraphs 41 and 42 above).

I have considered the effect of regulation 4(1) of TUPE deeming that the contract of employment after the transfer applies “as if originally made” with the DWP. The Court of Appeal determined in the case of Jackson v Computershare Investor Services Plc9 that, TUPE being protective, regulation 4(1)10 does not create rights to benefits that the employee would have had if they had been employed by the transferee employer throughout the time that they were employed by the transferor employer. While it transfers rights the employee had under their contract of employment with the transferor employer, rights that arise only from the employment with the transferee apply on their own terms: in that case, the employee having transferred in 2004, she was not entitled to benefits on the terms applicable to pre-2002 joiners but only those applicable to post-2002 joiners, notwithstanding that her service with the transferor employer had commenced in 1999.

While in that case the terms of the relevant benefit for post-2002 joiners took account of all continuous employment, including employment with the transferor employer11, this did not arise from TUPE but from the terms under the transferee’s arrangements.

In the present case, the efficiency compensation payment is a provision applicable to Mr L arising from his civil service employment from December 2014 and not from

9 [2007] EWCA Civ 1065. 10 The case related to its predecessor regulation 5(1) in the predecessor TUPE regulations but regulation

4(1) of the 2006 TUPE regulations is in the same terms. 11 This is as would also apply with transferred entitlements or statutory benefits based on continuous service,

such as statutory redundancy compensation. 25 PO-29563 TUPE and his prior employment with HP. TUPE does not operate to require the benefit to be calculated taking account of his continuous employment period from 29 May 2007 and does not modify its terms.12

As such, I find that MyCSP and the Cabinet Office are correct in calculating Mr L’s efficiency compensation disregarding Mr L’s service with HP prior to the transfer of his employment on 1 December 2014.

12 A different conclusion might result if Mr L had had an entitlement (discretionary or otherwise) to an efficiency compensation benefit while employed with HP either under HP’s own terms or on the basis of civil service terms transferred under TUPE on a transfer out of the civil service. A different conclusion might also apply in relation to redundancy compensation under rule 12 of the CSCS since an employee in non-Crown employment would be entitled to statutory redundancy pay and their rights to such pay would ordinarily be protected under TUPE and be calculated by reference to period of continuous employment both pre and post transfer. CSCS compensation on redundancy under rule 12 of the CSCS is calculated differently to efficiency compensation and so as to be no less than statutory redundancy pay. 13 Seldon v Clarkson Wright & Jakes [2012] UKSC 16

26 PO-29563

27 PO-29563

For the reasons set out above, I do not uphold Mr L’s complaint.

Camilla Barry

Deputy Pensions Ombudsman 24 March 2026

28 PO-29563 Appendix One Relevant sections of the CSCS rules

Section 1 Application

Rule 1.7

Where in consequence of any transfer of employment any person becomes entitled to benefits under sections 2 to 11 of this scheme the Minister may apply the rules of this scheme to that person with any modifications which may be necessary to reflect:

(a) the terms and conditions of employment relating to compensation for early retirement or severance transferred with such person; or (b) any undertaking by a Minister of the Crown given about compensation payments for early retirement or severance payable to such person.

Rule 1.8

Except as otherwise provided in this scheme, “current reckonable service” shall have the same meaning in relation to a person as “reckonable service”, except that:

(a) it shall not include any reckonable service which is attributable to service prior to the current period of continuous service in the Civil Service unless the prior service ended on resignation for the purpose of taking up a permanent appointment with a relevant body as defined in rule 1.8a and that appointment continued until reemployment in the current period of continuous service in the Civil Service; (b) it shall not include any reckonable service which results from a credit of reckonable service in accordance with the transfer provisions of section 6 of the 1972 Section, unless the department or other body employing him in the Civil Service has decided that it shall and the credit is in respect of a period of employment which: (i) before the credit was given was reckonable under a scheme the rules of which are in the Minister's opinion analogous for the purposes of this rule to those of the 1972 Section, and (ii) continued until his employment or reemployment in his current period of continuous service in the Civil Service; (c) it shall not include any reckonable service which results from a purchase of added years under section 7 of the 1972 Section or from a grant of added years under rule 2.24 of the 1972 Section.

Rule 1.8a

For the purposes of paragraph (a) of rule 1.8 a relevant body is:

(a) a body which, in the opinion of the department or other body employing him, is a European Union institution; or (b) a coordination or international body that the Minister has determined shall be regarded as a relevant body for the purposes of paragraph (a) of rule 1.8

29 PO-29563 Rule 1.10

“new entrant” means any person who on or after 1 April 1997 takes up employment or is reemployed in the Civil Service on a full time or part time basis except the following:

(i) casual staff; (ii) staff employed on a fee paid or sessional basis or on a fixed term appointment; (iii) staff employed locally overseas; (iv) staff who are covered for their service in the Civil Service by other compensation arrangements arising out of their employment; (v) staff whose terms of appointment are to the effect that they are not entitled to benefits under section 2 or section 3 or, as the case may be, under section 2A or section 3A of this scheme; (vi) a person who was in post on or before 31 March 1997 and is reemployed in the Civil Service, if his earlier service in the Civil Service ended on his resignation for the purpose of taking up a permanent appointment with a body which, in the opinion of the department or other body employing him, is a European Union institution and that appointment continued until his current period of service in the Civil Service; (vii) a Joining By analogy Member, if the department or other body in the Civil Service employing him so decides.

Section 3 Flexible category (1972 Section members)

Early severance (or leaving with less than 5 years’ service)

Rule 3.3

Subject to rule 3.4. where a civil servant who is retired early under the Flexible category has less than five years’ qualifying service or is under the age of 50, he or she is eligible for benefits under rule 2.7. In addition, and provided the civil servant has at least one year’s qualifying benefits, a compensation payment may be made, subject to rule 5.1, calculated as follows:

(a) two weeks’ pensionable earnings for each of the first five years of reckonable service; plus (b) three weeks’ pensionable earnings for each of the next five years of reckonable service; plus (c) four weeks’ pensionable earnings for each year of reckonable service after the first ten years; plus (d) two weeks’ pensionable earnings for each year of reckonable service after the fortieth birthday;

up to a maximum of two years’ pensionable earnings. In the case of a prison officer to whom rule 2.27 of the 1972 Section applies, reckonable service for the purposes of calculating compensation under this rule shall be reckonable service determined in accordance with that rule.

30 PO-29563 Early severance for new entrants

Rule 3.4a

In the case of new entrants any award made under rules 3.3 (other than an award of pension benefits)…shall be calculated by reference to current reckonable service and to current qualifying service, and references in those rules to reckonable service and to qualifying service respectively shall be construed accordingly.

Section 3A Flexible category

Rule 3A.7.3

For any person who is within three years of pension age, any flexible early severance benefit shall be reduced by 1/36 for each month of service within that three year period, counting any part of a month as a full month.

Section 5 Further provisions

Civil servants within 3 years of the pension age

Rule 5.1

Subject to rule 5.1a, for a civil servant, or a person who at any time has opted out of the 1972 Section who is within three years of the pension age, the lump sum compensation payment under rule 2.3, 2.6a, 2.8, 3.2a, 3.3, 11.1 or 11.3 will be reduced by one thirty-sixth for each month of service within that period, counting any part of a month as a full month.

Section 11 Dismissal for inefficiency

Rule 11.1

If a civil servant is dismissed for inefficiency and:

(a) the employing department decides that payment of compensation would be appropriate; and (b) the civil servant has served for at least one year,

(iii) if the dismissal occurs on or after 1 April 1998, the maximum compensation which may be paid is that calculated in accordance with rule 3.3 of this scheme, subject to rule 5.1.

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31 PO-29563 Appendix Two MyCSP Note EPN 471 – Changes to Efficiency Compensation and revised guidance

Date posted : 10/11/2016

Action:

>To note the changes to the efficiency compensation tariff >To note the new guidance attached which replaces PIN 40. >To note that MyCSP are now authorised to make these payments to members of the nuvos and alpha schemes. >To note the transitional arrangements

Timing:

>Immediate

Detail:

Please see EPN584 for revised instructions

1. Alongside the reforms to the CSCS tariffs, Cabinet Office has reviewed the tariff and guidance for cases of Inefficiency Compensation. The tariff for Inefficiency Compensation has been reformed to align with Voluntary Redundancy terms which have been announced in EPN 470.

2. New guidance has been produced which limits payments to staff with an underlying health condition. This guidance which you will find below replaces PIN 40 with immediate effect.

3. The maximum level of compensation which may be payable if, the employing organisation decides that such compensation is appropriate, is set out in Section 11 of the Civil Service Compensation Scheme regulations.

4. The revised CSCS offer included reforms to inefficiency compensation whereby the tariff for inefficiency would align with revised Voluntary Redundancy (VR) terms (I.e. a maximum if (sic) 18 months’ salary) as part of a package of reforms, which also limits its use to cases of underlying ill health and confirms eligibility for alpha and nuvos members.

The Guidance

5. The guidance now refers to ‘Efficiency Departures’. This is the preferred title for these cases and payments under the reformed terms. Compensation must no longer be awarded in dismissals where there is no evidence that it is related to an underlying ill-health condition or conditions.

6. In considering whether employees are to be compensated when dismissed on efficiency grounds the decisions about compensation should be based only on the employee’s health condition(s) and circumstances. The new guidance now includes a guide for calculating compensation. The scale is a sliding scale and any 32 PO-29563 percentage figure from 0 to 100 per cent can be used.

7. The new guidance now makes it clear that there is an obligation on employees to co-operate with measures to improve, make reasonable adjustments and keep in touch and that a failure to engage where possible should be expected to have a negative effect on any compensation awarded.

Changes to the tariff

8. The inefficiency compensation tariff will align with the new voluntary redundancy terms. This will mean that the maximum (100%) compensation is calculated by using a tariff of 3 weeks per year of service, capped by 18 months’ salary. The calculation should also include the use of the £24,500 underpin and will mean that employees above scheme pension age could receive compensation (capped at 6 months’ salary).

Eligibility

9. This package of reforms will also formally bring members of the Nuvos and alpha pension scheme into the CSCS for inefficiency compensation purposes. This means that My CSP will now be authorised to make these payments and re-charge the employer in the usual way. It will no longer be necessary for employers to make the payments on an Ex Gratia basis as has currently been the case.

Transitional Arrangements

10. The new tariff for Efficiency departures will take effect immediately (i.e. from 9 November 2016) except for cases where an agreement to exit under inefficiency compensation has already been made before this date or a notice of dismissal was given before this date – but a final decision on payment has not yet been made.

11. As a transitional measure, employers should use their judgement on a case by case basis as to whether ‘an agreement’ was reached before the new scheme came into effect. The expectation is that there may be some cases currently being assessed which can continue to use the unreformed tariff provided that the date of departure is on or before 31 December 2016.

12. Any ‘Efficiency’ departure on or after 1 January 2017 regardless of when the case was initiated must use the reformed tariff for the compensation figure. However, The new guidance must be used immediately for all new ‘efficiency’ cases.

13. Please note that you will need to inform MyCSP which of the terms you intend to use.

Further information

14. This new guidance provides an opportunity for employers to break away from old precedents and use the introduction of the new approach to start afresh and not be bound by previous precedent. For example, we are aware that in the past some employers have always awarded 100% in cases of ill health regardless of the co- operation of the employee. Please judge each case on its merits.

33 PO-29563 15. It is for employers to judge on how or if they make the new guidance available to all staff. Clearly managers and employees will require access for advice on the process and it is helpful in clarifying the need for employees to take positive steps and engage with their employer.

16. Civil Service employers, you should be aware that changes have been made to Civil Service Management code (CSMC) to reflect these changes

17. If you have any questions, please see EPN584.

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MyCSP Note EPN 584 – Efficiency Compensation

Date posted : 08/11/2019

Summary

This EPN replaces the instructions in EPN 471 on the calculation of Efficiency Compensation.

Actions:

>Employers and Payroll providers to ensure correct basis for compensation is being utilised.

Background

1. In EPN 471, we advised of changes to efficiency compensation, which linked the tariff basis to voluntary redundancy terms and provided revised guidance on the process for granting compensation.

2. Subsequently in EPN513 we confirmed that following a Judicial Review the 2016 voluntary redundancy terms were no longer available and that Employees who leave via an efficiency departure in future should have their award processed under pre-2016 terms going forward (equal to what would have been paid under the old (pre-2010) Flexible Early Severance terms).

3. We have been asked to clarify the position for the efficiency calculations and details are provided in this EPN.

Guidance

4. The guidance note provided in EPN471 remains valid and is attached to this EPN as Annex A.

5. The 2016 Judicial Review quashed the changes to the calculation of the award but it did not quash the changes to the process of determining whether an award was due.

34 PO-29563 6. In considering whether employees are to be compensated when dismissed on efficiency grounds, the decisions about compensation should be based only on the employee’s health condition(s) and circumstances. The guidance note includes a guide for calculating the proportion of compensation payable. The scale is a sliding scale and any percentage figure from 0 to 100 percent can be used.

Tariff

1. EPN 513 confirmed employees who leave via an efficiency departure should have their award processed under pre-2016 terms going forward.

2. The maximum lump sum payable to someone dismissed on efficiency grounds under the pre-2016 terms is equal to what would have been paid under the old (pre- 2010) Flexible Early Severance terms.

3. Broadly, this means a compensation payment calculated as follows:

(a) two weeks’ final pensionable earnings for each year of reckonable service during the first five years of qualifying service;

plus

(b) three weeks’ final pensionable earnings for each year of reckonable service during the next five years of qualifying service;

plus

(c) four weeks’ final pensionable earnings for each year of reckonable service after the first ten years of qualifying service;

plus

(d) two weeks’ final pensionable earnings for each year of reckonable service after the fortieth birthday, up to a maximum of two years’ final pensionable earnings.

(Note: For any member who joined, or re-joined, the Civil Service on or after 1 April 1997, only their current period of continuous Civil Service employment counts towards this lump sum.)

4. My CSP will provide quotes for efficiency compensation upon request.

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MyCSP Note EPN 513 – CSCS judicial review : action for employers

Date posted : 04/10/2017

Summary

35 PO-29563 >The Government lost a judicial review on the Civil Service Compensation Scheme (CSCS) on 18 July 2017. >As a result, the 2010 CSCS terms are now the lawful terms in place. >Employers will now need to use the 2010 terms. They will soon also need to repay any difference for staff that have already exited on Voluntary or Compulsory Redundancy 2016 terms and may have to repay any difference for staff that have exited under Voluntary Exit 2016 terms. We will be providing further guidance about this shortly. >The Government launched a new consultation on 25 September proposing further reforms to the CSCS. >The Government has now informed the Court of Appeal that it no longer wishes to pursue the appeal it previously lodged.

Action

>You should note the changes to the CSCS following the recent judicial review…

Timing

>Immediate

Detail

This EPN sets out the action employers should now take in response to the judicial review.

1. For each of the Voluntary Exits, Voluntary Redundancies and Compulsory Redundancies, the scenarios can be summarised into the four categories below: 1. Category One: staff who have already left under 2016 terms 2. Category Two: staff who have agreed an offer under 2016 terms but not yet exited the organisation. 3. Category Three: exit schemes “in train”, where quotes have been issued but there has been no formal acceptance of an offer. 4. Category Four: schemes about to be launched or just launched but member quotes are yet to be issued.

The tables in Annex A set out in more detail the position and action needed for the different exit types (for example, Voluntary Exit, Voluntary Redundancy, Compulsory Redundancy (VE/VR/CR)).

1.1 Completed schemes under 2016 terms

For VE schemes, you will shortly need to review the scheme you offered. We will provide information and guidance on this shortly.

For VR and CR schemes there will be no need to review or re-apply, payments will be re-calculated using 2010 terms and the difference paid to the member. Again, we will shortly provide further information and guidance

36 PO-29563 1.2 Schemes underway

You should immediately contact the Cabinet Office if you are running any live exit schemes (schemes in Category two or three) and have not already been in contact.

For VE schemes, you will need to review the scheme in line with guidance in Annex B. Please inform Cabinet Office of your decision regarding which terms to apply by 16 October using the form in Annex C, whatever decision you reach.

Cabinet Office would like to receive details of your decision by no later than 16 October but preferably sooner. Please note that approval from Cabinet Office will be required if any of the terms from the original application are changed and the Scheme Administrator will require Cabinet Office approval to produce quotes.

If your scheme requires re-quotes to be issued, you will need to confirm with the Scheme Administrator which members need to be requoted and consider whether any changes to Last Day of Service are required.

VR and CR schemes in category three and four will need to be run on standard 2010 terms.

1.3 Future exit schemes

Future VE exits will be under the 2010 CSCS terms, which include the flexibility not to offer the maximum tariff. As currently, all VE schemes will need Cabinet Office approval and bulk schemes will need Ministerial approval. We will provide further information on approvals and scrutiny for future VE schemes shortly.

VR and CR exits will be under standard 2010 terms.

1.4 Timeline for processing of existing quotes and awards

All members that have received an exit payment under the 2016 scheme will be contacted by early October to inform them of the judicial review verdict and that their award may be revised.

Members will then be contacted by the end of 2017 to confirm their position.

By the end of October 2017 we intend to have worked through all schemes in-train at the time of the verdict and those scheduled shortly afterwards, and be operating business-as-usual service for exits. Further information will be provided about revisiting past cases once policy decisions are taken about the detail of how to revisit these cases.

We plan to have revisited all cases where members have left and received a payment that needs revising by the end of 2017.

37 PO-29563 1.5 Exit calculators

Calculators based on 2010 terms have replaced the calculators with 2016 terms, and are available at…

1.6 Approval of high-cost exits

The Cabinet Office requirement for approval of awards exceeding £95,000 (including any pension top-up) continues in all cases.

1.7 Efficiency Departures

Employees who leave via an efficiency departure and have not yet been informed of their award are being processed under pre-2016 terms going forward. Members who received an award under the post-2016 terms will be revisited once policy decisions are taken about the detail of how to revisit these cases, and it is expected these cases will be reviewed by the end of 2017….

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