The government has applied for an order which could limit the amount of compensation paid to workers who have lost their pensions.
Two trade unions, Amicus and Community, presented a test case to the European Courts of Justice on 1 June on behalf of 1,000 Allied Steel and Wire (ASW) workers who lost their pensions when the firm wound up.
The barristers on behalf of the unions ad workers, argued pensions legislation in the UK is in breach of Article 8 of the 1982 Insolvency Directive which says “necessary measures” should be taken to “protect the interests of employees and of persons having already left” the employer when it becomes insolvent, including the “immediate or prospective entitlement to old-age benefits”.
However at the same time as the case was brought before the court, barristers for all three governments involved in the dispute, UK, Ireland and Holland, applied for a temporal limitation order, which would mean a win by the unions would only apply to workers who have submitted a writ before a specific date.
The unions now fear if the order is granted, the cut-off date could be as early as the 13 July, the same date as the Advocate General will deliver her opinion on the case.
Although the court is not scheduled to announce its judgement until the early Autumn, despite the Advocate General being an officer of the court rather than a judge, her opinion is usually followed by the in 80-85% of cases.
Amicus claims the application for the order can be seen as a strong indication the government is anxious the judgement will go against them, although both unions and the Pensioner’s Action Group (PAG) are urging as many people as possible to submit writs as soon as they can.
Derek Simpson, general secretary of Amicus, says: “It is vital all our members whose pension has been or thinks they may be affected by company insolvency, should contact their local regional office to find out more.”
Dr Ros Altmann, a spokeswoman and adviser for the PAG who are in the process of starting their own legal challenge, says the application for an order is “another dirty trick by the government to try and isolate some members”.
But she warns even if the government is found guilty of being in breach of article 8 of the insolvency directive, the European Court of Justice may not have the power to make the government pay compensation, with or without a temporal limitation order.
Altmann says the government could also argue the Financial Assistance Scheme (FAS) is adequate to meet the costs, but she says while Europe may not be able to force the government to pay up, MP’s could if they chose to.
She adds: “A lot of MP’s are very unhappy with the way the government has handled this, and if they don’t do something and let the government get away with failing thousands of people, we could have a serious constitutional crisis.”
However Altmann says the possible temporal limitation order and the impending decision on the insolvency directive case will have no affect on the PAG’s own judicial review over the government’s failure to provide compensation for 85,000 workers following the Parliamentary Ombudsman’s findings of government maladministration.
She says the order will only affect the insolvency directive case, but she says the PAG case has been adjourned form the High Court temporarily while the PAG waits for the findings of an inquiry by the Public Administration Select Committee (PASC).
Altmann says: “We expect the PASC report in the next two or three weeks, and once we get that we will decide whether or not to proceed with the case immediately, as we do believe the report will give a damning verdict and there are also a lot of MPs who are not happy about the issue.”
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