Health And Social Care Pension Scheme · CAS-36051-K6P2

CAS-36051-K6P2

Ombudsman’s Determination Applicant Ms G

Scheme The Health and Social Care Pension Scheme (the Scheme)

Respondents HSC Pension Service (HSC Pensions) The Department of Health Northern Ireland (the DoH)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

Detailed Determination Material facts

1 HSC was dissolved on 31 March 2022 pursuant to section 1 of the Health and Social Care Act (Northern Ireland) 2022 (the 2022 Act) and its functions were transferred to the DoH while its staff were transferred

1 CAS-36051-K6P2

under a “hosting arrangement” to HSC Business Services Organisation (HSC BSO) and its assets and liabilities were transferred by the DoH pursuant to powers under the 2022 Act to the DoH or to other entities. 2 CAS-36051-K6P2

3 CAS-36051-K6P2

4 CAS-36051-K6P2

5 CAS-36051-K6P2

6 CAS-36051-K6P2

2 Ms G referred to The Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000.

7 CAS-36051-K6P2

8 CAS-36051-K6P2

3 HSC Pensions included the relevant extracts of the 1995 Regulations.

9 CAS-36051-K6P2

4 Ms G quoted the relevant extracts from the consultation in her submissions. 5 Ms G provided a table with calculations to show how this had affected her.

10 CAS-36051-K6P2

Summary of Ms G’s position

11 CAS-36051-K6P2

6 Ms G referred to examples 2 and 4 from a document entitled: ‘The draft National Health Service Pension Scheme Transitional Provisions Regulations 2015, The draft National Health Service Pension Scheme Injury Benefits and Additional Voluntary Contributions (Amendment) Regulations 2015 – Consultation Document and Explanatory Notes.’ 7 Ms G referred to a document entitled: ‘The draft National Health Service Pension Scheme (Amendment) Regulations 2014. Consultation Document and Explanatory Notes.’ 8 Ms G referenced documents entitled: ‘Tiered Contributions for Scheme Years 2015/2016 through to 2018/2019’ and ‘NHS Pay Review Body Thirtieth Report 2017’ (the 2017 Report). 12 CAS-36051-K6P2

Summary of HSC Pensions’ position

9 EIM42750 - Salary sacrifice: what is a salary sacrifice: arrangement of guidance - HMRC internal manual -

GOV.UK (www.gov.uk)

13 CAS-36051-K6P2

Adjudicator’s Opinion

14 CAS-36051-K6P2

15 CAS-36051-K6P2

10 See footnote in the summary of material facts.

16 CAS-36051-K6P2

17 CAS-36051-K6P2

11 HSC referred to paragraphs 170.1 and 170.2 in the Decision.

18 CAS-36051-K6P2

19 CAS-36051-K6P2

20 CAS-36051-K6P2

21 CAS-36051-K6P2

Conclusions

22 CAS-36051-K6P2

12 See regulation 30(2) of the 2015 Regulations. 13 See paragraph 2 and 3 of Schedule 9 to the 2015 Regulations. 23 CAS-36051-K6P2

14 See paragraphs 18 and 46 above and 191 below.

24 CAS-36051-K6P2

25 CAS-36051-K6P2

26 CAS-36051-K6P2

15 See Malik v BCCI [1997] 1 HL, Eastwood v Magnox Electric plc [2004] UKHL 35, Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597. 16 See Lord Nicholls in Eastwood v Magnox.

27 CAS-36051-K6P2

Having regard to the above, I find that the DoH had a sufficient degree of involvement in setting the remuneration and pension terms for Ms G’s employment with HSC and determining the variation of her pay under the Pay Award, to find a duty in respect of the remuneration aspects of her employment with HSC. I find that the relationship was akin to an employment relationship and that the DoH was a quasi-employer of Ms G in the sense used in James-Bowen v Metropolitan Police Commissioner [2018] 4All ER 1007 (James-Bowen), although such relationship not being defined by a contract of employment, any duty arising from such relationship can only sound as a duty of care (see Rihan v Ernst & Young Global Ltd [2020] EWHC 901 at 572 (Rihan)).

In Rihan, the court undertook a review of previous cases on the liability of employers and quasi-employers for economic loss suffered by an employee18. As relevant, I find that: -

17 According to the 2017 Report. 18 The review considered James-Bowen and also Spring v Guardian Assurance plc [1995] 2AC 296, Scally v

Southern Healt and Social Services Board [1992] 1 AC 294, Calvely v Chief Constable of Merseyside Police [1898] AC 1228, Chandler v Cape plc [2012] EWCA Civ 525, Vedanta Resources plc v Lungowe [2019] 2WLR 1051 (SC), AAA v Unilever plc [2018] EWCA Civ 1532 and 28 CAS-36051-K6P2

19 Caparo Industries PLC v Dickman [1990] UKHL 2. 20 Rihan at 617. 21 See James-Bowen.

29 CAS-36051-K6P2

Turning to the question of foreseeability on Caparo principles, in recommending a 1% Pay Award, the Review Body explicitly warned in the 2017 Report about the risk of a reduction in take-home pay, both in the executive summary and in the section of the 2017 Report addressed to Northern Ireland, where the issue was highlighted in bold text, as follows:

“The tiered structure of pension contribution rates combined with the fixed nominal value of contribution thresholds led to the unintended and perverse consequence of the 2016/17 pay award translating into a significant reduction in take-home pay for some staff since it has led to them crossing contribution threshold boundaries. We believe that action is required to ensure that the annual pay award has the intended effect of increasing, rather than decreasing, take-home pay for all staff. (emphasis added)

The Health Departments in England, Wales and Northern Ireland should ensure that annual pay awards do not have unintended consequences in reducing the take-home pay of staff whose pay award causes them to cross pension contribution thresholds.”

30 CAS-36051-K6P2

31 CAS-36051-K6P2

32 CAS-36051-K6P2

33 CAS-36051-K6P2

34 CAS-36051-K6P2

Finally, I consider that the experience of having a pay cut effectively imposed without reason and while others received a pay rise, with a retrospective element and so as to be paid less than employees in a band below and to have to engage as Ms G did with HSC Pensions and the DoH to seek proper consideration of the issue and fair 35 CAS-36051-K6P2 redress would have caused Ms G serious distress and inconvenience. The DoH has recognised this issue and made changes for the future but still not remedied the financial harm caused to Ms G. The difficulties over the Salary Sacrifice which were eventually determined to be ineffective and, in fact, could not have been effective given the timing of the announcement of the Pay Award and the provisions of the 2015 Regulations, would have added to her distress and inconvenience.

Directions

Take such other steps as are necessary to ensure Ms G’s pay net of pension contributions is not reduced by the Pay Award; and

36 CAS-36051-K6P2

Pay Ms G £1,000 for the serious distress and inconvenience caused to her.

Camilla Barry

Deputy Pensions Ombudsman 20 January 2026

37 CAS-36051-K6P2 Appendix Relevant section of The Health and Social Care Pension Scheme Regulations (Northern Ireland) 2015 taken from Part 4, Chapter 1, Section 30 (Members’ contributions: employees).

“Members' contributions: employees

30.— (1) This regulation applies in relation to an active member (M) who belongs to group A, B or C in regulation 27(1).

(2) M must make contributions to this scheme (“members' contributions”) -

(a) in respect of M's pensionable earnings;

(b) at M's contribution rate for the scheme year22 in question.

(3) Where paragraph 2 of Schedule 9 (determination of pensionable earnings for the purposes of setting a contribution rate for members) applies23, M’s contribution rate for each of the scheme years 2015/16 to 2018/19 is the percentage specified in column 2 of the following table in respect of the corresponding pensionable earnings band specified in column 1 into which M’s pensionable earnings fall.

Table: Scheme Years 2015-2016 to 2018-2019

Column 1 Column 2

Pensionable earnings band Contribution percentage rate

Up to £15,431 5%

£15,432 to £21,477 5.6%

£21,478 to £26,823 7.1%

£26,824 to £47,845 9.3%

£47,846 to £70,630 12.5%

£70,631 to £111,376 13.5%

£111,377 to any higher amount 14.5%

22 “scheme year” is defined as a 12 month period from 1 April each year in Schedule 13 to the Regulations. 23 Para. 2 of Schedule 9 applies to any member who was employed on the last day of the previous scheme

year and the first day of the next scheme year. It also provides that the pensionable earnings to be used are those earned in the previous scheme year and makes adjustments where there had been change to that rate and to apply the whole-time equivalent rate for part-time employees. 38 CAS-36051-K6P2

…”

39