Bradbury v British Broadcasting Corporation

An employer’s proposal to alter the pension consequences of a pay award may be implemented by individual contractual agreement, provided the process does not breach the implied duty of trust and confidence. The governing question is whether the employer’s conduct, viewed objectively and in context, was calculated or likely to destroy or seriously damage trust and confidence and lacked reasonable and proper cause.

For a genuine contractual discretion, irrationality or perversity may be the appropriate application of that standard. The court must assess the employer’s conduct cumulatively, but separate matters which are individually incapable of amounting to a breach will rarely become a breach merely through combination. Hard choices, a collateral benefit, alleged discrimination against others, or imperfect consultation did not establish a breach on the facts.

John Bradbury appealed against a Further Determination by the Pensions Ombudsman, which had rejected his complaint that the BBC breached the implied duties arising from his employment contract.

The complaint concerned the BBC’s proposal to make a pay increase conditional on a 1% cap on the proportion treated as pensionable salary. Mr Bradbury argued that the contractual mechanism, the alleged collateral purpose of encouraging staff turnover, age-discriminatory effects, and the consultation process breached the duties of trust and confidence. The central issue was whether the BBC’s conduct, considered overall and in its financial and pension context, amounted to such a breach.

1. The appeal was dismissed. Permission to appeal was granted, but the Pensions Ombudsman’s conclusion that the BBC had not breached the implied duties was upheld.
2. The implied term requires an objective assessment of whether the employer conducted itself in a manner calculated or likely to destroy or seriously damage trust and confidence, and whether there was reasonable and proper cause. This is not the “range of reasonable responses” test. In a genuine exercise of contractual discretion, irrationality or perversity may provide the appropriate formulation.
3. The BBC was entitled in principle to seek agreement from employees to the 1% cap as a condition of a pay increase. Mr Bradbury had not established any employer-generated reasonable expectation that changes to pension accrual could be made only through a formal amendment to the pension scheme rules. Presenting him with difficult choices did not, without more, amount to improper coercion.
4. The BBC’s principal purpose was to address the pension deficit and ongoing pension costs. Even assuming that encouraging staff turnover was a secondary purpose, choosing the contractual route rather than a smaller fully pensionable pay increase did not itself breach the implied duties. The alleged age discrimination against other employees could not, by itself, establish a breach of Mr Bradbury’s own contract.
5. The consultation had to be assessed as part of the overall conduct, but the Pensions Ombudsman was entitled to conclude that it did not itself breach the duties. The BBC did not have to consult the trustees before formulating its proposals, particularly given the urgency of the pension valuation and the availability of representations during consultation.
6. The separate complaints did not amount to breaches individually. Although cumulative conduct can constitute a breach, each component must be capable in principle of contributing to one. The disparate matters relied on here could not collectively produce a breach which none could produce separately.

High Court (Chancery Division): The appeal from the Pensions Ombudsman’s Further Determination dated 23 December 2013 was dismissed. Permission to appeal was granted.