Newham v Skingle

For pension purposes, overtime is excluded from remuneration only when it is non-contractual overtime. Whether overtime is contractual depends on the true construction of the employment terms. An express command to work extra hours is unnecessary. Duties concerning maintenance, security and out-of-hours use may oblige an employee to work overtime, subject to proper arrangements for suitable cover. Direct evidence of an employer’s intended meaning, and evidence about the availability of other workers, do not determine contractual construction. Under regulation C2 of the Local Government Pension Scheme Regulations 1995, payments for contractually required overtime must therefore be included in pensionable pay.

Mr Skingle, a local authority Site Supervisor, worked overtime supervising out-of-hours lettings. The Council excluded those earnings from his pensionable pay. The Chief Executive and Secretary of State upheld that approach, but the Pensions Ombudsman upheld Mr Skingle’s complaint.

The Council appealed under section 151(4) of the Pension Schemes Act 1993. Jacob J allowed the appeal and rejected Mr Skingle’s contention that the overtime was compulsory. A second appeal was limited to whether his employment terms obliged him to work the overtime. The central issue was whether the payments were for contractual or non-contractual overtime.

Appeal allowed unanimously. The order of Jacob J was set aside, and a declaration was made that the overtime earnings were remuneration for the purposes of regulation C2 of the Local Government Pension Scheme Regulations 1995.

1. The Court of Appeal had jurisdiction under section 151(4) of the Pension Schemes Act 1993. Whether the employment terms entitled the Council to require the overtime was a question of law involving contractual construction, not a challenge to disputed factual findings.
2. The relevant obligation had to be determined from the contractual documents. Direct evidence of what the Council or Secretary of State intended the documents to mean was inadmissible. Evidence about the availability or willingness of other workers was also irrelevant to construction.
3. The Contract Document, the incorporated Purple Book, the Job Specification and the Purpose of Job Document, read together, showed that a Site Supervisor might be required to work overtime. The responsibilities for maintenance, security and out-of-hours use required attendance at lettings and other out-of-hours activities. Mr Skingle was obliged to work the overtime unless he made proper arrangements for another suitable person to provide the cover. The Site Supervisors’ Agreement did not negate that conclusion, and its contractual status therefore did not require determination.
4. The court derived no assistance from Martin v Solus Schall [1979] IRLR 7 in construing these documents. Applying the contractual construction reached, the overtime was not non-contractual overtime under regulation C2(2)(a). Its payment therefore fell within remuneration under regulation C2(1) and had to be included in pensionable pay.

The Council was ordered to pay 25 per cent of the costs before the judge and all of the costs in the Court of Appeal. Permission to appeal to the House of Lords was refused.

• Court of Appeal (Civil Division) — On 20 February 2003, allowed Mr Skingle’s second appeal, set aside Jacob J’s order and declared that the overtime earnings were remuneration under regulation C2 of the Local Government Pension Scheme Regulations 1995. Permission to appeal to the House of Lords was refused.
• High Court, Chancery Division — On 23 May 2002, Jacob J allowed the Council’s appeal under section 151(4) of the Pension Schemes Act 1993 from the Pensions Ombudsman’s determination and rejected Mr Skingle’s cross-appeal.
• Pensions Ombudsman — On 30 January 2002, upheld Mr Skingle’s complaint and determined that the overtime earnings were pensionable remuneration.