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High Court reaffirms meaning of "Public Servants"

under FEMPI (No.2) Act

High Court reaffirms meaning of “Public Servants” under FEMPI (No.2) Act


The recent case of Damhnaic Nic Bhradaig and the Employment Appeals Tribunal [2014 No. 423 MCA) concerned a new point of law brought under Section 7(4)(b) of the Payment of Wages Act 1991 concerning a decision of the Employment Appeals Tribunal with regard to the applicability of the Financial Emergency Measures in the Public interest (No.2) Act 2009 (“FEMPI (No.2) to the appellant. The key question for the court was whether the appellant was a public servant governed by the provisions of the FEMPI (No.2) Act below.

There were a number of notice parties to this case including Mount Anville Seconday School where the appellant was employed, the Minister for Public Expenditure and Reform and the Minister for Education and Skills.

General

The appellant in this case was employed by Mount Anville as a school secretary since 8th July 1991 and her salary was paid by the school. The appellant asserted that a reduction in her salary imposed by her employer under FEMPI (No.2) was unlawful and in breach of the Payment of Wages Act 1991 as she did not consent to the reduction as mandated under Section 591)(c) of the Act. The appellant contended that she was not a public servant within the meaning of the legislation and that FEMPI (No.2) reductions could only be made against the salary of a public servant. A Rights Commissioner decision of 20th March 2012 confirmed that she was a public servant and this decision was affirmed by a majority of the Employment Appeals Tribunal on 29th July 2014.

Facts

The appellant’s salary in this case was funded entirely by private funds raised through the fee structure in operation in the school which is a fee paying private school. The school is owned by a trust company. The appellant had no pension rights arising from her employment and her pension was privately funded.

Financial Emergency Legislation

The FEMPI (No.2) Act came into operation on 20th December 2009 and its purpose was to facilitate the making of significant savings in its direct and indirect expenditure on public service remuneration. The FEMPI (No.1) Act came into force on 27th February 2009 and made provision for the compulsory payment of a pension contribution by certain persons employed in the public service.

Section 2 of the FEMPI (No.2) Act provided for the reduction in the remuneration of public servants as defined in the Act and in accordance with a sliding scale as set out under subsection 2. The Minister also made directions by way of circulars including Circular 0070/2010 which contained a number of directions in respect of FEMPI (No.2). It provided inter alia….”Following receipt of legal advice it has now been determined that all staff employed by a recognised school or VEC come within the definition of “public servant” solely for the purposes of the Act. this applies regardless of the source of the money used to fund their salary, notwithstanding the fact that the Minister does not determine their terms and conditions of employment, and irrespective of whether or not they are eligible for, or members of, a public service pension scheme“.

The Circular also set out the list of categories of staff  who would be affected by FEMPI (No.2) and these included school secretaries and other non teaching staff.

The Law

The net legal question in this case concerned what was meant by the category of persons defined as “public servants” within the meaning of the legislation.

Section 1 of the FEMPI No.2 Act defines a public servant as “a person who is employed by, or who holds any office or other position in, a public service body” and includes an office holder. Public service body is defined under Section 1 as “a body (other than a body specified or referred to in the Schedule) that is wholly or partly funded directly or indirectly out of money provided by the Oireachtas or from the Central Fund or the growing produce of that Fund and in respect of which a public service pension scheme exists or applies or may be made“.

The High Court concluded that the definition of a public service body included two elements (a) the body must be in whole or in part funded whether directly or indirectly from Exchequer funds and (b) a public service pension scheme must exist or apply or be one that may be made in respect of that body.

The second and third notice parties argued that FEMPI (No.2) applied to all public service bodies and to the staff employed by those bodies even if the salary of that staff was not paid by the Exchequer.

Direct or Indirect Funding

The High Court noted that it was evident from the affidavit of Philip Crosby, principal officer in the Department of Education and Skills that the Exchequer pays the salaries of the teachers in the school in accordance with the pupil/teacher ratio for fee charging schools and also pays the salaries of special needs assistants allocated to the school. The Exchequer does not pay the salary of the applicant but the school receives funding both directly and indirectly. The High Court concluded that “the evidence overwhelmingly points to the fact that Mount Anville Secondary School receives state funding. The amount of direct State subvention received by the school is small, but it receives very substantial indirect funding through the payment of the salaries of its teaching staff….“. The Court ultimately held that due to the “language of the statute” being clear that the first part of the legislative test was satisfied.

Does the public service pension scheme exist in the school?

The Court then considered whether a public service pension scheme “exists or applies or may be made in respect of the relevant body“. The appellant in this case argued that a public service pension was not available to staff employed by and paid by the school itself and that such a pension scheme is available or applies to teachers at the school who were employed by the Department of Education and Skills. The High Court observed that the appellant was correct when she stated that there are some school secretaries whose salaries are paid by the Department and who have the benefit of a public pension scheme and that those persons “enjoy better terms and conditions of employment than I have and ever will”, have differential and preferential terms and conditions of employment and public sector pensions. In any event the appellant claimed that no public service pension exists in her favour or applies to her.

Baker J noted that the teacher’s pension scheme was created by S.I. 435 of 2009, the Secondary Community and Comprehensive School Teacher’s Pension Scheme 2009. Part 2 of the SI provides that certain persons are automatically deemed to be members of the scheme and Section 4(1)(a) provides that any person appointed after 5th September 2001 as a teacher in a secondary school, community school or comprehensive school was automatically a member. Baker J observed that the school which employed the appellant was a school which fell within the definition of “secondary school” as defined as it was a school in which Exchequer funds pay for the remuneration of teachers. Baker J also referred to Section 24(3) of the Education Act 1998 and the case of Kelly v Board of Management of St. Joseph’s National School [2013] IEHC 392 and concluded that it was clear that while the State pays the salaries of teachers, they are employed by the individual school in which they work.

Arguments from the purpose of the legislation

The appellant argued that the purpose of the legislation was not served by any reduction in her salary and that the Court ought to take note of the fact that a saving by the School of the percentage by which her salary had been reduced by virtue of the direction in her salary does not have the effect that the amount saved is returned to the Exchequer. The appellant stated that the purpose of the legislation was to improve finances and that as there was no improvement in public finances by virtue of the reduction in her individual salary, that the purpose of the legislation was not properly achieved by the reduction. Baker J however noted that while the appellant “may be correct as a matter of fact that the school does not benefit from the reduction in her salary, the legislation defines her as a person to whom the statutory deduction must be applied, and she is for the purpose of the Act, and no other purpose a “public servant” and employed by a “public service body” as defined in FEMPI (no.2)” Baker J also noted that because the legislation in his view contained no ambiguity, he could not “as a matter of law call in aid the recitals to add or to take from the clear statutory provisions“.

Conclusion

Baker J dismissed the appellant’s appeal and affirmed the order of the Employment Appeals Tribunal.