Staff employed by the London Fire Brigade are in line for a backdated pay rise of £1.5m after the Court of Appeal backed a legal challenge over the wording of a three-year pay deal.
In July 2007 the London Fire & Emergency Planning Authority struck a collective three-year pay deal with the GMB and Unison unions entitling staff to a series of pay increases.
An initial increase 2.9% was due from 01/04/07 with further increases of 2.75% on 01/04/08.
For the third year staff were entitled to either increase of 2.5% on 01/04/09 or a rise equal to the National Joint Council for Local Government Services settlement “plus any uplift required to ensure general pay increases for the period 2007-09 are 1% above the NJC settlements for the same period.”
However in light of UK’s worsening public finances, LFEPA concluded in 2009 that it was not obliged to increase salaries by 2.5% and instead offered an increase of 1.825%.
After staff rejected the offer, the Authority imposed an increase of 1.575% which was the amount required to ensure that pay increases for the 2007-09 period were 1% above the NJC settlements.
Two employees took LFEPA to Employment Tribunal, claiming that they were entitled to an increase of at least 2.5% and that in awarding less, the Authority had made illegal deductions from their salaries.
LFEPA argued that the provision for a 2.5% increase in the third year was not binding and that the agreement allowed it to implement one of two alternative increases.
The Tribunal backed this position, ruling that there was no entitlement to a 2.5% increase. A subsequent appeal by the employees to the Employment Appeal Tribunal was rejected.
The employees took their case to the Court of Appeal which, on Thursday morning, overturned the previous rulings and found the agreement did entitle staff to a 2.5% increase in the final year.
Giving his reasons for allowing the appeal, Lord Justice Maurice Kay said the agreement meant “the employees would receive an increase of 2.5% or NJC plus 1%, whichever was the greater” rather than allowing LFEPA to choose which increase it wished to award.
The Judge added that: “No other meaning would have represented a three-year deal which the Unions would have contemplated and, objectively, that must have been obvious to the Employer. A provision which begins with the words “will be increased by 2.5% or …” cannot be given a meaning whereby the award might fail to reach 2.5%.”
LFEPA’s application for leave to appeal to the Supreme Court has been denied, although the Authority can made a direct application to the court within the next 28 days.
A briefing note circulated to LFEPA members following publication of the Court’s findings says “it is estimated that back pay will cost £1,500,000 and this would be chargeable to the 2012/13 accounts.”
The Authority will also need to pay a further £400,000 per year in ongoing salary liabilities, in addition to “administrative costs relating to implementation of pay arrears”.
The Brigade is currently implementing spending cuts after Government and City Hall funding was reduced. An unexpected increase in its salary obligations is likely to increase pressure on budgets.
LFEPA’s Head of Legal and Democratic Services is expected to seek guidance from the body’s Appointments and Urgency Committee before deciding whether to accept or seek to appeal the ruling.
Commenting on the Court of Appeal’s verdict, Dave Prentis, General Secretary of UNISON, said: “When employers make an agreement with UNISON we expect them to stick to it. Trust is an integral part of any negotiations and I am pleased that we have been able to deliver pay justice to our members at the LFEPA. Times are tough for many public service workers without being denied a pay rise that they are entitled to.
“It has taken a four year legal battle to win this case. Without the union to fight this case the employers would have got away with a gross injustice and members and their families would have lost out.”
In response, a spokesperson for the London Fire Brigade said: “The disagreement stemmed from the Fire Authority’s interpretation of the pay formula for the year 2009, which differed to that of the unions’. There was no deliberate attempt to deny people any part of their wages, it was a difference of interpretation, which has been found in the unions’ favour.
“A committee of the Authority will now be consulted on the way forward.”