You may recall that the previous administration's attempt to revise the Civil Service Compensation Scheme ("the Old Scheme") last year failed. This was due to the fact that one of the trade unions representing civil servants had not consented to the proposed changes, as required by section 2(3) of the Superannuation Act 1972.
Coalition Government's response
The Coalition Government sought to overcome this set-back. In December 2010, legislation  was passed:
- to impose a cap on any payments under the Old Scheme while it remained in operation; and
- to remove the statutory requirement for union consent to be obtained prior to implementing any changes to the Old Scheme.
Shortly after the above changes were implemented, a revised Civil Service Compensation Scheme was introduced with effect from 22 December 2010 ("the New Scheme").
The legality of the New Scheme was subsequently challenged in Public and Commercial Services Union and others v The Minister for the Civil Service. 
What the judge said
Article 1 of the Protocol to the European Convention for the Protection of Human Rights and Fundamental Freedoms contains a statement that:
"No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law."
Mr Justice McCombe decided that the rights of civil servants under the Old Scheme were possessions capable of being protected by Article 1.
Having made this determination, Mr Justice McCombe then had to decide whether the new legislative provisions and the replacement of the Old Scheme with the New Scheme interfered with the affected civil servants' possessions and if they did, whether or not such interference was legitimate.
In reaching his decision Mr Justice McCombe referred to the Coalition Government's view that reduction of the country's budget deficit was urgently required. As a consequence, the Coalition Government believed there was a need to cut government department budgets and the size of the civil service, as well as reducing the cost of departing civil servants' severance terms.
Mr Justice McCombe noted that although a court has to look at the proportionality of any action taken to achieve a public interest aim (in this instance the reduction of the national budget deficit), there are some questions which a court is not equipped to determine. He considered that a court cannot interfere with the government's assessment of spending priorities, thereby requiring it to take money from one spending area in order to allot it to another:
"...the only question is whether the Defendant [the Minster for the Civil Service] has shown that the interference with scheme members' rights was a proportionate one within the limits of what can be afforded." 
As part of his deliberations, Mr Justice McCombe referred to the Minister for the Civil Service's view that the Old Scheme was "absurdly generous" and "out of kilter with the wider public sector as well as the private sector" and that if the Government could not reduce the size of the Civil Service because of the cost of redundancy, savings would have to be made elsewhere in spending programmes and services to the public. 
Consequently Mr Justice McCombe opined that:
"...the reduction in benefits was 'reasonable and commensurate' and the interference with [civil servants' rights] did not go beyond what was 'reasonably necessary' to achieve the legitimate interests recognised on both sides of this case." 
Redundancy packages for civil servants must be negotiated on the basis of the New Scheme. 600,000 civil servants are potentially affected by the changes introduced by the New Scheme.
Contractors providing services to Government should understand, and cost for, the redundancy terms offered to civil servants and which contractors may be required to replicate following any Transfer of Undertakings (Protection of Employment) transfers of Civil Service staff.
The Public and Commercial Services Union has suggested that there could be further challenges to the New Scheme, as the legal challenge before Mr Justice McCombe was only ever "one strand" of its opposition.
When combined with the reaction to the proposed changes to the Principal Civil Service Pension Scheme resulting from the Hutton report, there is clearly some unrest among civil servants. Comments from certain unions indicate that further industrial action is under consideration in response to the changes to civil servants' pay and pensions.