Legislation protects employees from discrimination on the grounds of religion as well as a philosophical belief (or lack of it). Political beliefs are definitely not covered but what counts as a philosophical belief ? Ever since the law came in (2003) I have thought it inevitable that this would spark litigation sooner or later – and now it has. It’s the issue in an employment tribunal case which was widely reported in the national press last week. The outcome could have important implications for pension schemes.

Tim Nicholson’s claim against Grainger plc is that his views on climate change – which he says lead to his dismissal – amount to a philosophical belief that ‘mankind is heading towards catastrophic climate change and that, as a result, we are under a duty to do all that we can to live our lives so as to mitigate or avoid that catastrophe for future generations.’ 

So what are the implications for pension schemes if Nicholson succeeds?

The legislation applies to pension scheme trustees as well as employers. Since 2003 lawyers have been advising trustees on how far they need to go to accommodate religious beliefs. The issue has come up in schemes providing money purchase benefits including additional voluntary contribution (AVC) facilities in final salary schemes.  In these schemes the trustees have the responsibility for choosing the funds to make available to members for the investment of their contributions. Does at least one of these funds has to be such as to allow all employees to join? This has commonly arisen in relation to the need for Sharia compliant investments.

Lawyers have struggled with this as the law is unclear as to how far trustees have to go. So the advice has tended to take a ‘wait and see’ approach. Having said that, the issue in the case of a religious belief is relatively easily to resolve. There are Sharia compliant funds readily available on the market and one of them could be added to the range on offer in the scheme. Some employers have done this having carried out staff  needs assessments.

If however the Nicholson claim succeeds and environmental beliefs are covered by the legislation, trustees will have a more complicated job – assessing how green their existing funds are and the suitability of  funds marked as ethical. And, if the environment counts, what about other beliefs – armaments, tobacco …the list could go on.

The case continues…

Jonathan Goodwin is a consultant at Allen & Overy LLP.

Comments published on Pensions Talk do not necessarily reflect the views of Allen & Overy.
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