Staff transferred into Clarion from local authorities who have not accepted a new pension deal have been told they will be dismissed and rehired under new terms.
A letter seen by Inside Housing that Clarion sent on 6 September has given affected staff 12 weeks’ notice that their contracts will be terminated.
The letter offered a new contract on the same terms of employment, but with new pension terms and conditions.
This practice is known as fire and rehire.
The dispute concerns staff members who joined the landlord through a historic stock transfer from local authorities to Circle, one of the social landlords that ultimately became Clarion.
They were members of the Local Government Pension Scheme (LGPS), under defined benefit terms. This offers members a guaranteed payment in retirement, rather than being dependent on the amount they paid in and the performance of invested assets.
Clarion maintains that there is a disparity in pension benefits between its staff members, and its “motivation has always been to provide a fair and consistent offering”.
It said the changes affected fewer than 7% of all staff at Clarion, with fewer than 1% asked to sign a new contract. It called this “a position we had very much hoped to avoid”.
The fire-and-rehire tactic is legal, but there are specific redundancy and dismissal practices any employer must follow. Unison and several other unions have previously called for the practice to be banned.
Legally, if a fire-and-rehire proposal relates to 20 or more employees, the employer must comply with a legal duty to “inform and consult” with trade unions.
The landlord said it told staff about its proposals in January and then began a consultation that included Unison.
However, John Gray, the representative for Unison at Clarion, said: “When we were transferred from the local authority, we were promised in no uncertain terms that we could keep our council pension scheme, and the reason why is [that] it’s a good scheme, it’s inflation proof, it’s not subject to the whims of the stock market.
“Clarion thinks it can break our contracts with impunity and no consequences. If they tried to break any other contract with a supplier or a delivery partner, there would be commercial compensation. So we want them to negotiate a settlement which is acceptable to all involved.
“Employment law exists to protect the workers, but the negotiations so far have been pretty rubbish and have not really tried to resolve the situation, and now they have sent everyone these fire-and-rehire dismissal letters.”
Mr Gray said the proposed changes originally affected 280 Clarion staff members, but now there were only 55 after the landlord sent out this dismissal letter.
He added: “I think the whole dispute could damage the landlord’s relationship with partners and stakeholders in future. If you make a promise to staff, local authorities and organisations previously involved in a scheme, and then you change your mind, can you be trusted to do what you say you’re going to do, going forward?”
Mr Gray explained that, under the new scheme, Clarion would pay 10% if the employee paid 10% into their pension, but most people on the LGPS scheme were paying 6.5%.
He added: “Most people can’t afford to put 10% of their salary into a pension pot. I’ve had people in tears, who have made plans about their retirement on the basis that they are in the current scheme until they retire.”
One anonymous staff member told Inside Housing: “Part of the only thing that has kept me going is that I know I have my final salary scheme. Now they are offering a tiny amount in compensation to accept a scheme with worse terms, and if you don’t accept it, they’re going to fire and rehire you.
“How do you treat people like that? I worked out my final pension pot will be tens of thousands of pounds worse off, and [I will] lose about £10,000 annually when I retire. Why should people accept being poorer when they retire? It’s not something I expected from them.”
Many social landlords have ended defined benefit schemes in recent years, as investments have performed sluggishly and major deficits have opened up.
In response, a spokesperson for Clarion said: “Clarion notified colleagues of the proposal to close its defined benefit pension schemes in January 2023 and entered into consultation with colleagues and Unison representatives. There is currently a disparity in pension benefits provided to Clarion colleagues, so our motivation has always been to provide a fair and consistent offering.
“Following extensive consultation, on 30 May we announced the plan to close our defined benefit schemes and sought the consent of all affected colleagues to make the change to their contractual pension entitlement.
“These changes impact fewer than 7% of all staff at Clarion and we’re encouraged that the majority of those affected provided their consent to the changes. Less than 1% of our people have been asked to sign a new contract and it is a position we had very much hoped to avoid. Our judgement is that this is the right decision, allowing us to provide a fairer pension offer to all of our people.”
#UNISON have corrected some minor typos above but also would like to point out that most staff losing their pensions by fire and refire are not ex-council worker but were directly recruited on the promise of a decent defined benefit scheme.
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