AMNT urges TPR to intervene as tribunal case stirs debate over trustee protections
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The Association of Member Nominated Trustees has called for greater protections for actively employed MNTs after a judge ruled against an employee who complained that her workload should have been adjusted when she became a pension scheme trustee. Do we need more guidance from the Pensions Regulator on what employee trustees need from employers to discharge their duties?
The Pensions Regulator’s guidance states that employers “should make sure that your trustees have the time and resources they need to run the scheme well. They should have a budget to get good advice, and the right training and skills." However, the regulator remains largely silent on what that implies in terms of workload, leaving this to be decided by employers and line managers – a fact which has led to an employment tribunal case for Transport for London.
An internal auditor at TfL and member-elected trustee of the TfL Pension Fund had raised a grievance with her employer saying she suffered detriment because of her role as a pension scheme trustee. The case revolves around her workload and the amount of time off she was given.
The claimant said her managers failed to reduce her performance targets and displayed underlying disapproval of her taking up the trustee role. Sonja Folarin first became a trustee in March 2019, and her workload was not reduced until September 2019, in response to an informal grievance meeting. The disagreement followed an internal restructuring and a period of long-term sickness absence by the employee, who was later put on a performance plan.
Employment judge Gardiner found that Ms Folarin had no statutory right to a reduced workload because of her trustee duties and had not asked for a reduction until September 2019. He ruled that it was “reasonable for the respondent to expect the claimant to carry out at least some of her responsibilities outside core working hours”. He also said that TfL’s - Ms Folarin’s managers’ - understanding of the time commitment for being a pension trustee “was evolving over time” and that when the chair of trustees asked for the claimant to be given more time for these duties, TfL agreed to do so.
In his judgment, he points out that one of Ms Folarin’s managers was clearly “not previously aware of the significance of an employee under her line management being appointed as a Pension Trustee. In particular, she did not know whether prior consent could be required from TfL before accepting such a role. She did not know whether a Pension Trustee was entitled to time off work in order to discharge their responsibilities.”
Ms Folarin was initially given 11 days off for her trustee role but asked the trustee chair to intervene on her behalf. In one of these interventions, trustee chair Stephen Field wrote to her manager that he was grateful release had now been given but hinted that managers had micromanaged this by negotiating it to the hour: “Mike and Ex Co are fully supportive of ensuring release is granted for carrying out the important role of Trustee and I must admit trying to time release down to the hour is really not that productive.” The release was raised to 15, and in the end 20 days.
Can you have time off without a reduction in workload?
The tribunal's statement that the claimant had no statutory or contractual right to a reduced workload to reflect the extent of her trustee duties “may be technically correct as a point of law but makes a total mockery of the entitlement to time off”, said co-chair of the Association of Member Nominated Trustees, Janice Turner, adding: “We urge the Pensions Regulator to intervene on this matter.”
The AMNT has been warning TPR that trustees' rights to time off need to be clarified and not left on an assumption that all MNTs are senior enough and in the kind of jobs where they have complete control over their own workload, she said. “This case highlights that this is clearly not the situation,” she said, and that those not in control of their own workload needed extra protection from the regulator.
In practice, it was no use giving trustees time off without also adjusting their workload where the amount of time is at all significant, Turner argued. “In effect, this ruling highlights that under the current legislation trustees are merely allowed not to be disciplined for undertaking trustee duties in work time,” she said. “According to the tribunal trustees need to spend their own spare time to catch up on any work they hadn't been able to complete as a result.”
Member-nominated trustees were introduced by law following the Maxwell scandal, where an employer misappropriated pension fund money. Turner said that “anything which weakens the resolve of dedicated individuals to stand as MNTs is a retrograde step".
‘Trusteeship should not be a burden’
A partner at law firm Baker McKenzie, Chantal Thompson, said it appeared that the employer had acted in accordance with regulator guidance. She said it was “more debatable whether [an] employer is obliged to reduce workload”, noting that TPR guidance “is quite thin in this area”.
More definitive guidance from TPR might be needed that employee trustees should have a reduced workload, as well as paid time off, she suggested, saying: “Can you have one without the other?”. This would also help to ensure that trustee boards have the right set of skills and diversity.
The TfL tribunal case gives no direction on whether it was reasonable for the claimant to have her workload reduced. “Good practice from the employer - if they want employee trustees - should message the right to paid time off but also manage workload expectations,” she argued, saying a balance has to be struck between employer expectations and needs on one hand, and member trustee duties on the other. “Trusteeship should not be a burden,” she said.
Younger working trustees can add diversity
A legal case on this section of the Employment Rights Act 1996 is very rare, said Matthew Giles, partner at law firm Squire Patton Boggs, which suggests that most employers are accommodating of the demands of pension trusteeship.
However, he noted that as the expectations of pension trustees grow, so does the time commitment involved, with the new code of practice further ramping up governance requirements, making it harder to combine pension trusteeship with a day job.
These higher governance requirements are driving the trend towards professional trustees and for lay trustees to be mainly retired former employees, he observed, echoing the concerns about diversity. “This is a shame given that younger working trustees can add diversity in terms of skills and attitudes,” he noted. Trustees who are current employees also offer a valuable link to the sponsoring employer as long as conflicts are managed.
“The lesson from the case is for trustees to be properly engaged with the employer as they plan the future governance framework for their pension scheme, so that employees are made available by the sponsor to fill the seats around the trustee table,” he said.
Employers should ensure line managers understand trusteeship
Others also highlighted the need for employers to better understand trusteeship and any implications for employees. Stefan Martin, an employment law partner at Hogan Lovells, said the key point from the case for employers was to make sure that line managers of employees who are pension scheme trustees understand from the outset what their legal obligations are to provide time off.
“This may involve reducing the employee’s duties to reflect the amount of time they will spend on trustee duties,” he said, adding that “it would be sensible to have guidelines in place to help managers understand what is required and to encourage an open discussion between managers and employee trustees at the outset to agree appropriate arrangements”.
However, he does not think that Ms Folarin was not in control of her workload, saying the internal audits varied in complexity and time commitment and employees had some say over which audits they would carry out.
The TfL case comes against a backdrop of disputes between TfL and the unions representing its employees, centering on pensions, job cuts and working conditions as the transport operator is under pressure from government to cut spending.
Do employers and trustee need clearer guidance from TPR on time commitment and workload of MNTs who are active employees?