Ellis v The Cabinet Office

In a defined-benefit scheme, an extended definition of resignation may include involuntary termination of Civil Service employment. The phrase termination of service in rule 1.13 was not confined to voluntary departures merely because it was paired with voluntary retirement. Rules 3.11 and 3.12 therefore applied when employment ended through an outsourcing transfer to a private-sector employer. Continued work in the same role did not prevent the Civil Service employment from terminating. Later pension options, asserted unfairness and a post-dating statement of practice could not alter the meaning of the rules. TUPE continuity principles did not transfer accrued pension rights and did not support a different construction.

The appeal concerned a prison officer whose employment transferred from the Civil Service to G4S when HM Prison Birmingham was outsourced. She retained her accrued benefits in the Principal Civil Service Pension Scheme rather than transferring them to the G4S scheme. The Pensions Ombudsman held that the transfer constituted resignation under rule 1.13, engaging rules 3.11 and 3.12 and postponing payment of her preserved pension to age 60.

Rose J allowed Ms Ellis’s appeal under section 151(4) of the Pension Schemes Act 1993 and declared that the compulsory transfer was not a resignation. The Cabinet Office appealed. The central issue was whether involuntary termination of Civil Service employment through a transfer of undertaking fell within the scheme’s definition of resignation.

Appeal allowed. Lord Justice Vos gave the judgment, with which Lady Justice Rafferty and Lord Justice Moore-Bick agreed. The Pensions Ombudsman’s determination was restored.

1. Rule 1.13 defined resignation as termination of service or voluntary retirement from the Civil Service before pension age. The words termination of service were general and were not limited to voluntary termination. The use of or did not justify reading the definition as if voluntary qualified both parts.
2. Rules 3.11 and 3.12 were concerned with both voluntary and involuntary departures. Rule 3.12’s exclusion for early retirement under the Compensation Scheme, rule 3.14’s reference to a person who had left the service, and rule 3.10a’s reference to ceasing to be a civil servant all supported that construction. Rule 3.18a, which gave a dismissed civil servant benefits as if he had resigned voluntarily, was a further indication that resignation could encompass involuntary departure.
3. The compulsory transfer ended Ms Ellis’s employment within the Civil Service, even though she continued working in the same institution for G4S. Rules 3.11 and 3.12 therefore applied, making her preserved pension payable at age 60 and calculated on the basis of uniform accrual.
4. The proper construction of the rules was a legal question. The employee’s rejected option to transfer to the G4S pension scheme, alleged unfairness and the Government’s later Statement of Practice could not affect the meaning of rules drafted in 1972. The latter had no bearing on construction.
5. The court treated regulation 10 of the Transfer of Undertaking (Protection of Employment) Regulations 2006 as confirming that TUPE secures continuity of employment but does not transfer accrued pension rights. The reference to section 71 of the Pension Schemes Act 1993 supported the inference that the scheme was intended to address reasonably conceivable involuntary departures.

1. Court of Appeal (Civil Division): In [2015] EWCA Civ 252, the appeal was allowed and the Pensions Ombudsman’s determination was restored.
2. High Court of Justice, Chancery Division: Rose J allowed Ms Ellis’s appeal under section 151(4) of the Pension Schemes Act 1993 and declared that the compulsory transfer did not constitute resignation under rule 1.13.
3. Pensions Ombudsman: The final ruling rejected Ms Ellis’s complaint and held that the scheme rules treated the transfer as resignation.