With the introduction of automatic enrolment, increasing longevity, and employees focusing on the full benefit package offered by an employer, rather than just salary, an employer’s pension offering is under the spotlight. However, despite the increased relevance, the difference between types of pension scheme is not always clear. So, what are the key differences between a workplace trust-based pension scheme (“Trust Scheme“) and a workplace contract-based pension scheme (“Contract Scheme“)? Continue Reading To trust or not to trust, that is the question

A traffic policeman on motorway patrol passed a car that appeared to be driving at 11mph. The policeman pulled the car over, and asked the driver why he was going so slowly.

“I saw a sign saying that the speed limit was 11mph” said the driver. “A big blue sign, with white numbering.”

“That’s not the speed limit, that’s the road name – the M11” said the policeman. The policeman then looked at the passenger, who was sitting rigid in her seat, a rictus grin on her face. “What’s the matter with her?” asked the policeman. “Well” said the driver, “we’ve just joined the motorway from the A120.”

Interpreting laws and regulations can be difficult – particularly in highly technical areas such as pensions, where legislation can be opaque at the best of times. The Pensions Act 2004 tried to ameliorate this problem by giving the Pensions Regulator the power to flesh out legislation by issuing Codes of Practice. Codes of Practice have a special status: they have to be laid before Parliament before they come into force; they are admissible in legal proceedings; and if they appear to be relevant to the question the court has to decide, the court has to take them into account. (Albeit, on occasion, judges have “taken into account” Codes of Practice by brusquely dismissing them.)

Continue Reading Sign of the times …

As mentioned in our earlier posts, we will be featuring contributions from our global Employment & Benefits team on this blog, highlighting particular topics and issues of interest to UK employers with operations overseas.

Here is some recent commentary and guidance from our Employment & Benefits team in Hong Kong:

  • Our Employment & Benefits team in Hong Kong produce the “Asia Employment Law: Quarterly Review”, a publication covering 15 jurisdictions in Asia. The twenty-fourth edition flags the anticipated employment law developments during the second quarter of 2019, highlighting some of the major changes to look out for in 2019.
  • Following case law in 2018, in June 2019, the Hong Kong Court of Final Appeal took a further step towards internationally accepted norms by making it unlawful for the Hong Kong government to provide lower benefits to a spouse in a same-sex marriage than to a spouse in a heterosexual marriage. This recent update from Employment & Benefits partners Duncan Abate and Hong Tran provides more information about this key development.
  • On 4 April 2019, the Hong Kong government published the long-awaited Occupational Retirement Schemes (Amendment) Bill 2019. This update from Duncan Abate and Hong Tran provides a flavour of the more important consequences of the legislation and some of the concerns arising from the changes.
  • In addition to the above, this follow-up update from Duncan Abate and Hong Tran dives deeper into the Bill to identify three of the ugliest or weirdest “devils” in the detail of the Bill.

If you would like further guidance on employment and benefits issues in Hong Kong, and/or would like to register for our Asia legal updates, please contact Duncan Abate or Hong Tran.

The possibility of a Pensions Bill in the next parliamentary session should provide clarity on the funding framework for defined benefit (DB) schemes.

The Government’s white paper in March 2018 proposed that the Pensions Regulator should issue a revised code of practice focusing on how prudence is demonstrated when assessing scheme liabilities, appropriate factors for recovery plans, and ensuring that a long-term view is considered when setting the funding objective. Some or all of the funding standards contained in this revised code would be given statutory force.

Continue Reading DB scheme funding: all about the long-term

Our latest blog post reviews two important developments in the calculation of holiday pay. First, the Government announced late last year that it will extend the reference period for calculating holiday pay. Second, the recent decision in Flowers v East of England Ambulance Trust clarifies the uncertainty surrounding whether voluntary overtime should be included in the calculation of holiday pay.

New reference period

From 6 April 2020, holiday pay will be calculated on the basis of average weekly pay over 52 weeks, replacing the current reference period of 12 weeks. The amendment will give effect to one of the key recommendations of the Taylor review of modern working practices, published in July 2017, which was to resolve the concern that a 12-week reference period did not take into account the seasonal nature of casual and zero-hours work arrangements. In December 2018, the Government published the Good Work Plan, where it committed to enacting the legislation that will now come into effect next April, extending the reference period.


The calculation of statutory holiday pay is governed by the UK Working Time Regulations (the “WTR”), which provides that, during statutory annual leave, workers are entitled to be paid at a rate of a week’s pay for each week of leave. A week’s pay has been interpreted as being ‘normal remuneration’. Various cases have considered the extent to which overtime should be included in this calculation. It was established fairly early on that compulsory non-guaranteed overtime should be included in the calculation, however, uncertainty remained over voluntary overtime.

The position has now been resolved by the Court of Appeal in Flowers v East of England Ambulance Trust, which decided that voluntary overtime payments should be included as long as they are sufficiently regular and paid over a sufficient period. The Court rejected comments made by the ECJ, in an earlier case, where it was suggested that overtime pay could only be included to the extent that it was provided for in the worker’s contract. Although Flowers was a case under the Working Time Directive (the “WTD”) rather than the WTR, UK courts and tribunals will interpret the WTR to conform with the WTD, and so the case is likely to apply equally to private employers. The question then becomes: when will overtime be “sufficiently regular”, and that will remain something that will turn on the facts of each situation.

Recent determinations of the Pensions Ombudsman¹ have considered the extent to which employers should provide information on pension rights to employees who have notified them of a terminal illness.

The law

There is no general duty on employers to advise employees about their pension rights, or to safeguard employees’ economic well-being. Indeed, the law prohibits anyone other than a person authorised by the Financial Conduct Authority from advising on pension rights.

However, a distinction should be drawn between “advising” and “providing information”. In some situations the law imposes specific duties on employers to provide information about pension rights to employees. When the law is silent, however, getting things right can be tricky.

Continue Reading Providing information about pensions to terminally ill employees – how far should employers go?

Mayer Brown’s UK Pensions Group has launched a monthly video series providing a snapshot of recent developments and issues of current importance in the UK pensions industry. In the first episode, available on our YouTube channel, partner Richard Goldstein looks at the issue of DB superfunds and, in particular, the UK government’s recent consultation on an authorisation and supervision framework for DB superfunds. This series will also be available as podcasts, available for streaming and download from iTunes, Google and Yahoo!. Viewers/listeners can also subscribe to our YouTube, iTunes, Google and Yahoo! channels.

Whistleblowing has been a hot topic for employers in recent years. In our latest blog post, we set out a reminder of the key points and highlight some recent developments.

What is whistleblowing?

  • Since 1999 the Public Interest Disclosure Act 1998 (PIDA), which introduced sections 43A to 43L and 103A to the Employment Rights Act 1996 (ERA), has afforded whistleblower protection to employees and workers against victimisation and dismissal following a disclosure of employer wrongdoing.
  • A disclosure may take place after employment has ended. In Onyango v Adrian Berkeley T/A Berkeley Solicitors the appellant, a solicitor, sought to rely upon disclosures he had made after the termination of his employment, which resulted in him being investigated by the Solicitors Regulation Authority. Since detriment may arise post-termination, the EAT saw no reason to limit a disclosure to the duration of the employment.
  • There is no minimum period of service before a claimant can bring a whistleblowing claim, and there is no financial cap on compensation that can be awarded. If the claimant is an employee and the detriment is dismissal, the claimant will need to comply with the usual unfair dismissal time limits. A detriment claim must be brought within three months of the act or failure relied upon, subject to any extension as a result of the ACAS pre-claim conciliation process.
  • A whistleblower will qualify for protection if they have made a qualifying disclosure that is also a protected disclosure.

What is a qualifying disclosure?

  • The disclosure must involve information that ‘conveys facts’, rather than simply raising a concern or allegation. This can occur orally or in writing, but a written disclosure is obviously less likely to be contested.
  • The information must relate to one of six types of wrongdoing by the employer: criminal offence, breach of any legal obligation, miscarriage of justice, danger to health and safety of any individual, damage to the environment, and the deliberate concealment of information about any of these.
  • The employee or worker must hold a ‘reasonable belief’ that the information tends to show that the wrongdoing has occurred, and that the disclosure is in the public interest. Importantly, a belief of wrongdoing can be reasonable even if it is mistaken. Up until 25 June 2013, a qualifying disclosure had to be made ‘in good faith’. This requirement was removed but good faith is still relevant to the question of compensation.

What is a protected disclosure?

  • A qualifying disclosure will be a ‘protected disclosure’ when it is made to the employee or worker’s employer. Disclosures made to third parties will only be protected in certain, more limited, circumstances, and may be subject to additional requirements. For example, disclosures made to ‘prescribed persons’ such as the Financial Conduct Authority or Prudential Regulation Authority will only be protected if the worker ‘reasonably believes’ that the information disclosed is ‘substantially true’.

Recent developments:

  • In Chesterton Global Ltd (t/a Chestertons) and another v Nurmohamed, the EAT found that a disclosure could be in the ‘public interest’ without necessarily relating to people outside of the employer. Here, there was an allegation of accounting irregularities affecting 100 branch managers.
  • In Timis and Sage v Osipov the Court of Appeal decided that two non-executive directors, instrumental in the dismissal of the company’s CEO, could be held personally liable for losses flowing from the dismissal (in addition to the employer).
  • In Royal Mail Ltd v Jhuti a protected disclosure was made to the Claimant’s line manager but was unknown to the individual who made the decision to dismiss the Claimant. The Court of Appeal decided that the employer should only be attributed with the knowledge or state of mind of the decision-maker and so the claim failed. It has been appealed to the Supreme Court, where it will be heard later this year.
  • In Foreign and Commonwealth Office and others v Bamieh it was determined that a whistleblowing detriment claim brought by a British national against an overseas co-worker, could not be brought in a British employment tribunal as the relationship between the relevant co-workers did not have a sufficient British connection.

We recently advised a pension scheme on a buy-out of its defined benefit (DB) liabilities with an insurer. In the run up to the transaction, the employer and the trustees looked very carefully at whether the scheme had enough assets to make the transaction possible. It was touch and go, but in the end the assets were just enough.

This made me think about how important taking benefit de-risking action as part of the journey to full funding can be. On its own, each benefit de-risking step does not have a transformative effect on funding. But, as part of a wider programme of funding and investment action, benefit de-risking can make the difference between getting to 100% funding on a buy-out basis and not.

Continue Reading Benefit de-risking – steps towards full funding

Guaranteed minimum pension (GMP) conversion offers the opportunity for defined benefit schemes to simplify their benefits, potentially saving costs and making schemes more attractive to be bought out with an insurer.

Age-old question

One of the great unanswered questions of pensions law has finally being answered. In October last year, the High Court in the Lloyds Bank case determined that pension schemes have to equalise for the effect of GMPs. As part of the judgment, the Court confirmed the effectiveness of the GMP conversion legislation issued by the Department of Work and Pensions (DWP).

Also, in a follow-up judgment, the Court confirmed that GMP conversion, known as the “D2 method”, can be used as a route to achieve equalisation. This effectively allows a scheme to pay the higher of two amounts, based on the value of the member’s GMP and an opposite sex comparator’s GMP, rather than run on dual records for service between May 1990 and April 1997.

Continue Reading GMP conversion – an opportunity to simplify benefits