27 August 2009
The Court of Appeal has overturned a tribunal decision that gave
an unfair dismissal victim compensation for the loss of her defined
benefit pension.
In the case of Roberts v Aegon UK Corporate Services, despite
the claimant finding new employment, the loss of her defined
benefit was a "very significant factor" for the Employment Tribunal
and Employment Appeals Tribunal (EAT). This was down to the fact
that her new employer only offered membership and contributions
into a money purchase pension scheme.
Ms Roberts compensation for loss of her defined benefit pension
scheme was measured up to her retirement date at 50. The employment
tribunal said it was entitled to decide that the loss of membership
of a final salary pension scheme was a very significant factor -
the loss of which could not be quantified in purely monetary
terms.
However, the company successfully appealed the EAT decision. The
Court of Appeal is reported to have allowed the employer's appeal,
by determining that a final salary pension scheme is not a unique
benefit but, rather, an important part of the total remuneration
package. Consequently, the EAT is not entitled to apply different
tests to different aspects of the remuneration package.
Law firm Wragge & Co said that if this case had not been
overturned, this could have added significant costs in unfair
dismissal claims - particularly in the current market where
dismissed employees may feel more likely to sue former
employers.
Nabarro partner Anne-Marie Winton said: "As this case shows,
tribunal findings can be appealed. Where final salary provision is
still on offer, it can be a significant part of the pay package.
Therefore, it is perhaps no surprise that the loss of a final
salary scheme on re-entering employment formed the subject of this
tribunal complaint. In this economic climate we may well see more
employees prepared to seek redress for loss of final salary
provision. Here the employer was lucky that the complainant found
employment elsewhere, and this meant that the former employer was
not liable for pension loss. This will not always be the case."
