The recent Employment Tribunal case of Mr Jordi Casamitjana, which caused quite a stir in the media, focused on the Tribunal’s decision that ethical veganism was eligible to qualify as a “protected characteristic” under the Equalities Act 2010. In that case, Mr Casamitjana was dismissed on the grounds of gross misconduct by his employer, the League Against Cruel Sports, where he was a policy adviser. More details on the case can be found in my colleague David Whincup’s blog.

A little reported feature of the case was that the straw that broke the camel’s back (as it were) for the employee was that when he rejoined his company’s employment, after a break of several years working on other causes, he was automatically enrolled in a defined contribution pension arrangement where the default fund, among other things, invested in companies which engaged in animal testing, contrary to his philosophical beliefs. Mr Casamitjana chose to invest his contributions in an alternative ethical fund but believed that his colleagues were unaware of the default fund’s investments. He decided to take matters into his own hands and publicised his views to his fellow workers to encourage them to switch to one of the ethical funds offered. The employer concluded that he had failed to follow an instruction not to provide what could be construed as financial advice to his colleagues and he was dismissed. He subsequently challenged the grounds for his dismissal and the outcome of that part of the Employment Tribunal’s deliberations is still awaited.

The principle that workers should not be discriminated against for protected characteristics is familiar in other areas of pensions law, although most of the equality legislation focus in pensions concerns gender or sexuality issues. There has been relatively little case law in relation to religious or philosophical beliefs in the pensions context. However, a recent determination by The Pensions Ombudsman (TPO) addressed this point. The complaint was from a member of the West Yorkshire Pension Fund who argued that she would never have joined the Local Government Pension Scheme (into which she had been automatically enrolled) had she known that West Yorkshire invested its fund in part in equities, which the member argued was contrary to her religious beliefs (i.e. contrary to the principles of Sharia law). That member lost her case before TPO, who held that if a scheme member holds strong beliefs, it is up to the individual to make the necessary enquiries about a scheme’s investments (which is of course exactly what Mr Casamitjana did).

What do automatic enrolment regulations say about workers’ rights not to be discriminated against? Does it matter that the scheme is defined benefit or defined contribution, where there is a much clearer link between the member and the arrangement’s investments? The short and strict answer is, whether an employee is an ethical vegan or can demonstrate some other protected characteristic in relation to his/her beliefs, that the regulations are silent. Instead, the automatic enrolment regime focuses to a large extent on the requirements of the charge cap applying to the default fund of defined contribution qualifying schemes. In relation to defined benefit pensions, such as the Local Government Pension Scheme, the qualifying scheme test issue is remote from any considerations relating to equality legislation (and of course the charge cap is not relevant) as the test is driven by the accrual rate.

That is not to say that the law regards environmental, social and corporate governance issues as irrelevant. The chair’s statement for automatic enrolment schemes requires disclosure of trustees’ policies on these matters, but it is not the case that members have the right not to be discriminated against in the event that an investment fund which is provided for them, whether the default fund or otherwise, is contrary to their religious or philosophical beliefs. The UK is not alone in grappling with such pensions issues – the position under US automatic enrolment rules has recently been clarified (see our blog).

It is tempting to think that Mr Casamitjana’s complaint was merely an isolated incident. However, Extinction Rebellion appearances and other, more orderly activist groups, have gained access to Local Government Pension Scheme pensions meetings frequently in recent months. Furthermore, a TPO case which was reported in August 2019 concerned a deferred pensioner of the Shell Contributory Pension Fund who complained about that scheme’s policy in relation to fossil fuels. The member in question was the beneficiary of financial support from ClientEarth. In that case, the claim concerned disclosure obligations, but TPO found that there were no grounds on which the member could complain that he had been given misleading or inadequate information about the scheme’s investments. Indeed, TPO found that the trustees and employer had gone above and beyond their strict legal duties. Of course, as a deferred member, the complainant could not opt out of the Shell scheme (although he could presumably have taken a transfer if he was so concerned about the issue).

These cases illustrate that, notwithstanding the inertia on which automatic enrolment rests, many members do care how their pension fund is invested. Whether members actually understand that, in either a trust based or a contract based arrangement, decisions have to be made collectively remains to be seen. However, the argument that the money in such a collective arrangement is not technically the members’ money but belongs to the trustees/the insurer is of little relevance to complainants. Trustees should note the potential strength of feelings behind member questions and complaints on scheme investments and should seek advice if they are unsure about disclosure obligations.