The President of the Employment Tribunals has issued a Consultation Paper about the way in which pensions loss is assessed by Tribunals in employment disputes.

The Paper proposes abandoning the current guidelines, and suggests a new approach to this complex issue.

Current Guidelines

The current guidelines on how to asses loss of pension rights in employment claims were published in 1991, with the latest revision being in 2003. In summary:

  • For a defined contribution pension scheme, compensation could be assessed as equivalent to the value of contributions the employer would have paid into the scheme during the period of loss; and
  • For a defined benefit pension scheme, the tribunal could choose to adopt a "simplified approach" or a "substantial loss" approach, both of which use multipliers devised by the Government Actuary's Department in 2003.

These guidelines were not mandatory and many considered them out of date. The Court of Appeal in the case of Griffin v Plymouth Hospital NHS Trust [2014] EWCA Civ 1240 pointed out that the guidelines had not been updated for over a decade, and called for a revised version to be produced. This resulted in the guidelines being amended to state that they had been withdrawn.

Proposed Approach

A group of employment judges was asked to consider the future approach of tribunals in calculating pension loss, and on 30 March 2016 the President of the Employment Tribunals issued his Consultation Paper.

The group recommends the following approach be adopted:

  • Ending "lost state pension rights" as a separate head of loss;
  • Creating a new category of "simple" cases, which would be for claimants who are members of either a defined contribution or defined benefit scheme. In these cases, the suggesting is that the Tribunal will use the "contributions method" to assess compensation for pension loss; and
  • A new category of "complex" large value cases (these are likely to be rare), to be identified at an early stage, in which liability and remedy would be listed for separate hearings. The parties would be given a period of time to agree a figure for pension loss and failing this, the Tribunal would take one of two approaches:
    • Applying the Ogden Tables maintained by the Government Actuary's Department (this would apply in most "complex" cases); or
    • Using actuarial evidence ideally from a jointly instructed expert (which should rarely be required).
  • The parties would be free to propose an alternative approach if they wished.
  • Judicial mediation could be offered by the Tribunal to assist in reaching an agreement on the amount of pensions loss.
  • This new approach would be set out in Presidential Guidance and could be integrated into current case management guidance.

Conclusion

The proposed new guidance is a welcome development and allays some of the concerns about the existing guidelines. The "simple" cases category provides a method suitable for the majority of claimants but the position is still slightly unclear for those claimants who fit in to the "complex" cases category, given the ever-changing financial environment and its effect on actuarial calculations.

The Consultation Paper is seeking views on these proposals, and a number of default assumptions intended to be included in the guidance. The consultation closes on 20 May 2016.

New Immigration Skills Charge

The Government has confirmed that it is proceeding with its proposal to introduce a new skills charge for non-EEA migrant workers.

They intend to charge employers £1,000 per year for each migrant they employ in a skilled position. This will be reduced to £364 for small or charitable organisations and there will be an exemption for PHD level jobs and international students switching from a student visa to a working visa. The new charge is due to be introduced in April 2017.

The Government's intentions in introducing the levy are to incentivise employers to invest in training British staff but to ensure talented workers and students who are vital to the British economy are also protected.