The claimant in Chief Constable of Northumbria v Erichsen resigned from the police service after becoming ill with stress and depression. He was in his early forties at the time and had over 20 years' service and membership of a final salary pension scheme. He made successful disability discrimination claims and was awarded £258,551, of which £126,877 related to pension loss.
Guidance on "Compensation for Loss of Pension Rights" recommends that tribunals use either a "simplified" or "substantial loss" valuation. The substantial loss approach, which values the pension rights right up to retirement date, is used where the claimant is unlikely ever to find another job, or a job with a comparable pension/higher remuneration which compensates for this.
Last year the Court of Appeal in Griffin v Plymouth Hospital warned about the use of the guidance, which dates from 2003, and called for it to be reviewed. But the ET in this case decided to use it.
By the time of the remedy hearing the claimant had made a good recovery. He did not claim loss of future earnings but maintained that he would never be able to mitigate his loss of pension benefits. If he had not resigned he would have been able to retire at the age of 52 on a full pension.
The ET found that the claimant had failed to mitigate his loss of earnings, but accepted that he could have done little about the pension loss. The EAT agreed. The ET had thought that it was "almost a certainty" that he would not be able to find a job with a comparable final salary scheme, nor earn the capital needed to fund a replacement benefit.