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The problem with Death Benefits for NHS Locum Practitioners

Despite working tirelessly in the current crisis, families of locum doctors could miss out on death benefits if they die on a much needed day off.

A quirk in the rules of the NHS Pension Scheme 1995, as interpreted by the High Court in Sanderson v NHSBA [2019] EWHC 2900 (Ch), means that the relatives of locum doctors may suffer from significantly reduced death benefits if they die on a day they are not in fact working.

Given the enormous contribution NHS staff are making in the current crisis, Keith Bryant QC and Saaman Pourghadiri summarise the Sanderson decision and explores the extent to which the same conclusion would apply to the 2008/2015 NHS Pension Schemes.

The Problem – The 1995 Scheme

The widows and widowers of members of the NHS Pension Schemes are entitled to lump sums and survivors pensions on the death of a member. The death benefits payable in respect of an employee who dies in service are considerably more generous than those payable in respect of an employee who dies at some other time.

NHS Locum staff are engaged on a self-employed basis. Notwithstanding this they are entitled to benefits pursuant to the NHS Pension Schemes on a broadly equivalent basis to ordinary employees.

In each of the 1995, 2008 and 2015 NHS Pension Schemes a substantially more generous death benefit is payable to those practitioners who die in service. However, the courts have defined what constitutes death in service surprisingly narrowly.

In the 1995 Scheme the more generous death benefits are available in respect of a member who “dies in pensionable employment” (see regulations F1, G2 and G7). Pensionable employment is defined as “NHS employment in respect of which he is contributing to the Scheme.” (see regulation A2).

The definition of pensionable employment is extended to a medical practitioner who is engagedunder a contract for services by [a NHS Employer] to deputise or assist temporarily in the provision of services pursuant to an NHS standard contract…”  (see paragraph 1 Schedule 2).

In Sanderson v NHSBA [2019] EWHC 2900 (Ch) Dr Sanderson was a locum GP. She died on 24 December 2014, a day on which she was not working. She had worked 15 of the previous 23 days in December and was next booked to work on 8 January 2015 – i.e. she was taking a break over Christmas. Trower J held [66-68] that Dr Sanderson’s widower would only be entitled to death benefits if, at the time of death, Dr Sanderson:

  • was actually subject to an obligation to provide services (i.e. she died at a time when she ought, pursuant to her contract, to have been providing services);
  • was engaged in an activity which she would not be doing but for that obligation, e.g. driving to work or on a lunch break; or
  • was not doing something she would otherwise have been doing but for her obligation to provide services.

Whilst Trower J did not make a determination on the point, he suggested that if someone was committed to work for all of their normal working hours for a number of days, such that they could not devote time to other work, then that entire period (including presumably evenings and nights not actually working) would be a single engagement such that they might be entitled to death in service benefits (see [72-73]).

The judge specifically held that the mere fact that a person dies at a time when they are subject to a future obligation to provide services was insufficient to constitute “engagement” such that they were entitled to death in service benefits.

The Court of Appeal refused permission to appeal in January.

The Problem  – 2008 and 2015 Schemes

The structure of the 2008 and 2015 Schemes is different. In those Schemes it is “active members” who are entitled to death in service benefits (e.g. 2008 Scheme Reg 3.E.3 and 3.E.10, 2015 Scheme Reg 115, Reg 123). Active members are those who are in pensionable service (2008 Scheme Reg 3.A.1, 2015 Scheme Reg 163). Pensionable service in both Schemes is defined as (amongst other things) a period of service in which a member contributes to this scheme under [the contribution regulations]” (2008 Scheme Reg 3.A.3, 2015 Scheme Reg 20).

Both the 2008 and 2015 Schemes generally envisage pension contributions being taken directly by the employing authority from self-employed locums. They envisage contributions being paid monthly (e.g. 2008 Scheme Reg 3.C.2(5), 2015 Scheme Reg 31(7)(b) and (8))

Sanderson was concerned with the 1995 Scheme. The issue is whether the reasoning which led Trower J to a narrow definition of “is engaged” in the 1995 Scheme would also apply to “a period of service” in the 2008/2015 Schemes. If it does, then members of those Schemes would face the same problem as Dr Sanderson and her widower.

Trower J’s judgment in Sanderson depended on his analysis that a type of relationship must exist between locum and practice – “is engaged” requires that the locum be subject to a current obligation to work for a practice.

However, one does not need to arrive at that result in the context of the rules of the 2008/2015 Schemes. The words “period of service” can be interpreted more broadly. The words “period of” specifically point towards a broader approach that does not require the locum literally to be performing a service (or incidental / ancillary activities). It does, however, give rise to the question – what period?

In our view, one must look to the regulations themselves to identify the relevant period of time. The definition of pensionable service specifically refers to the regulations which specify that contributions are to be paid monthly. In our view the “period of service” is therefore (arguably) the month in which work has been performed. If that is correct then a locum’s survivor would be entitled to death in service benefits if the locum dies in a month during which they were contracted to provide services.

Conclusion

Following the judgment in Sanderson, members of the 1995 Scheme face the unpalatable risk that if they die over the weekend, or during a planned break from work (e.g. a holiday) they will not receive a death in service benefit. Whilst the position is not clear in respect of members of the 2008 or 2015 Schemes, in our view the different language of those Schemes should lead to a different result.

Given the demands we are currently placing on NHS staff, it is suggested that this unfairness which locum members of the 1995 Scheme face ought urgently to be addressed by legislative intervention. Similarly, judicial clarification of the position of 2008/2015 members would be welcome.

Find Out More

This article was written by Keith Bryant QC and Saaman Pourghadiri.

Keith’s pensions practice covers both contentious and non-contentious work. Keith has particular expertise in statutory pension schemes and regularly advises in relation to the police, firefighters’, teachers’, NHS and local government pension schemes. He also has extensive recent experience of equalisation and rectification claims. His recent cases include an appeal in a police pension case  challenging the denial of a widow’s benefits in R (Carter) v Chelmsford Crown Court and another [2019]. Keith is ranked in the directories and described as:

  • “Highly rated by respondents for his skill in high-value, complex matters.”
  •  “He provides excellent knowledge and practical advice in relation to the employment and pension law crossover area.”

Saaman is regularly instructed in high value, complex and novel pensions cases. His recent instructions include the most substantial pensions professional negligence case of the past few years, a substantial and unusual exercise of tPR’s power to issue contribution notices for material detriment and the significant court of appeal judgment in Bic v Burgess [2019] Pens. L.R. 17 . In addition Saaman advises in relation to local government pension schemes, applications to the Pensions Ombudsman and on non-litigious matters such as scheme restructurings and buy-outs. He is ranked in the directories for pensions, where he is described as:

  • “a rising star. He demonstrates impressive judgement for his level of call, as well as an ability to assimilate huge amounts of disclosure with no fuss.”
  • “very calm and very measured.”

Our Pensions Team would be happy to discuss these regulations in the strictest of confidence. Please contact David Smith on +44 (0)20 7427 4905 or Nick Levett on +44 (0)20 7427 4908  for further information.

Covid-19, News, Private Client & Trusts during Covid-19 7 Apr, 2020

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