Gone are the days when children were regarded as a retirement plan. Today many people invest in pension plans with the hopes of being financially secure in their old age. This security is often ensured by membership in a pension scheme. There are times however when receiving pension benefits is a matter of the employer’s discretion. It is imperative that such discretion be exercised rationally and in good faith.

In  Williamson and  Roberts v The Port Authority of Jamaica, the Court of Appeal ruled that the Port Authority of Jamaica (PAJ) pay two former employees, Mrs. Beverley Williamson, who served as a senior vice-president, and Mr. Richard Roberts, who was vice-president of legal services, $22,351,000.00  plus interest at three per cent  per annum from June 30, 2016, to the date of payment and $16, 044,184.00 plus interest at three per cent per annum from December 31, 2014 to the date of payment, respectively, as retirement benefits they were denied after they left the agency. The Appellants were represented by Mr. Allan S. Wood, Q.C. and Mrs. Daniella Gentles-Silvera.

Mrs. Williamson retired on June 30, 2016, after 21 years of service to the PAJ, under a total of eight consecutive contracts of employment, while Mr. Roberts retired on December 31, 2014, after 16 years of service under a similar arrangement. Neither Ms. Williams not Mr. Roberts were permanent PAJ staff and therefore were not entitled to claim pension benefits on that basis. However, Regulation 41 of the Port Authority (Superannuation) Regulations and their respective contracts of employment gave the PAJ a discretion to grant a retirement benefit.

The PAJ’s decision not to pay the retirement benefits was based on a report of the Auditor General which concluded that the PAJ could not properly pay the said retirement benefits, notwithstanding its contractual obligation to the Appellants, because the benefit was contrary to a guideline issued by the Ministry of Finance under the Public Bodies Management & Accountability (PBMA) Act. The Court found that a contractual discretion, no matter how widely drawn, must be exercised rationally and must take into account the context in which it was conferred. The Court further found that a rational exercise of the PAJ’s discretion to grant retirement benefits demanded it to be mindful of the contractual purpose of the retirement benefit clause and the reasonable expectations of the Appellant’s. Hence the Court found that PAJ, in taking the Auditor General’s views at face value, exercised its discretion irrationally. 

This decision of the Court of Appeal overturns the 2017 Supreme Court ruling that the PAJ was not in breach of its duty of good faith to the Appellants and did not act irrationally in declining to grant them retirement benefits.