In our February 2009 update, we reported on the Employment Appeal Tribunal (EAT) case of Roberts v Aegon. In this case, the EAT upheld the earlier tribunal decision that an unfairly dismissed employee was entitled to compensation for her ongoing pension loss even though, immediately after her dismissal, she obtained a new job with a remuneration package that was more favourable overall.
The fact that the employee found a new job meant that she received no award for loss of earnings, but the EAT held that the tribunal had been entitled to approach her pension loss separately. Prior to being unfairly dismissed, Ms Roberts had enjoyed the benefit of a defined benefit (final salary) pension scheme, whereas in her new job she had access only to a defined contribution (money purchase) scheme. She had therefore lost a unique type of benefit which, given that final salary schemes are "being eased out in the private sector", she was unlikely to receive again in the future.
The employer successfully appealed to the Court of Appeal (CA) on the basis that the tribunal should not have separated the issues of loss of earnings and loss of pension. The CA agreed with the employer and held that the tribunal had not been entitled to put different heads of loss to the awards and that it had been an error of principle to apply different heads.
Comment: the decision that final salary pensions are not unique benefits but instead are an important part of the overall remuneration package will be welcomed by employers who still offer such schemes. However, in this case the employee found new employment quickly and it may be that, in other circumstances where the employer is found liable for loss of earnings as part of a successful unfair dismissal claim, pension loss is also assessed as part of the compensation package.
View the judgment.