High Court dismisses appeal against BBC pensionable pay cap

The High Court has dismissed an appeal against the BBC after the organisation imposed a 1% cap on increases in pensionable salary in a bid to reduce its defined benefit (DB) pension schemes deficit.

In the case of Bradbury v British Broadcasting Corporation, the High Court ruled that the BBC conduct did not amount to a breach of the implied duty of trust and confidence, which arises from an employees’ employment contract.

The BBC decided to introduce the cap to its three DB schemes to cut its pension liabilities. Bradbury a member of the new benefits section of the scheme, which provided career average benefits.

Bradbury brought a claim to the Pensions Ombudsman that he had contributed to the scheme in good faith on the basis that his pensionable salary was his basic salary.

The ombudsman found that it was open to the BBC to determine that only part of Bradbury’s basic pay was pensionable and it dismissed the case.

Bradbury appealed to the High Court.

In the initial High Court ruling in 2012, it held that a binding agreement was formed if an active member of a scheme accepted a pay rise on the grounds that only part of it would be pensionable.

However, it also found that the ombudsman had not properly considered the relationship of trust and confidence between the BBC and the employee, with the case referred back to the ombudsman in 2013.

The Pensions Ombudsman again dismissed the claim that the BBC had breached its terms, trust and confidence.

Bradbury’s overarching submission was that the PO had wrongly failed to engage with the argument that, “taken overall, the conduct of the BBC was in breach of the implied duties in particular because of the mechanism and methodology which it used to achieve what it did and its alleged failure to consult”.

But in the latest ruling on 15 May 2015, the High Court rejected the claims by Bradbury’s appeal that the broadcaster breached its duty and pressured employees into accepting its pension changes and dismissed the appeal.

High Court Judge Mr Justice Warren: “It would require a very strong case indeed for a number of disparate objections [even though they arise out of the same conduct] to give rise, when taken together, to a breach of the implied duties when none of the objections itself gives rise to such a breach.”