David Craig QC (together with Michael Furness QC and Emily McKehnie) acted for the BBC in the Court of Appeal against an appeal brought by John Bradbury in respect of the BBC’s decision to cap at 1% the amount of any pay rise that would count as pensionable pay under the BBC’s defined benefit (final salary) pension scheme. The CA dismissed the appeal.
The cap was introduced in circumstances where the BBC was faced with a multi-billion pound deficit in the pension scheme, but Mr Bradbury argued that its imposition amounted to a breach of the implied term of trust and confidence, including because it breached s.91 of the Pensions Act 1995. The Court of Appeal held that: (a) the BBC was entitled to decide whether or how much of an increase in pay counted as basic salary for pension purposes; (b) the cap did not offend s.91 of the Pensions Act; (c) there had been no discrimination and no improper motive; and, (d) there was no breach of the implied term of trust and confidence. The BBC had not placed undue financial pressure on Mr Bradbury to surrender his existing bundle of pension rights, had not threatened the erosion of the economic value of his pay and pension, had not singled out a class of employees for less favourable treatment and had not acted for a collateral purpose. The BBC’s conduct had to be assessed against the reality that it was faced with a multi-billion pound deficit and the trustees, the unions and the BBC all agreed that something had to be done. Absent reform, the BBC would have needed to increase its contributions to the Scheme from the equivalent of 3.5% of the licence fee to 10% of the licence fee. That would have been unaffordable and damaged the BBC’s ability to maintain the quality and range of is services to the licence fee payer.
David Craig was instructed by David Young at DLA Piper.
