The Court of Appeal has overturned the EAT's decision in Aegon UK Corp Services Ltd v Roberts that an unfairly dismissed employee was entitled to compensation for ongoing pension loss even though she had obtained a new job which provided a more favourable remuneration package.

Prior to her unfair dismissal, Ms Roberts was member of Aegon's final defined benefit pension scheme. She found a new job which gave her access only to a a defined contribution scheme. She then lost her new job. The tribunal and the EAT found that this broke the causal connection between her dismissal by Aegon and her future losses, except in relation to pension.

The Court of Appeal disagreed, deciding that pensions should not be carved out for special treatment and simply form part of the overall remuneration package. Different tests should not be applied to different parts of the package and Mrs Roberts had no claim for ongoing pension loss. It reduced her compensation from around £37,000 to just £300.

Impact on employers

The Court of Appeal's decision highlights the implications for a dismissed employee and the dismissing employer of the employee obtaining a new job elsewhere on the same or better terms. As this case demonstrates, if the new job breaks the chain of causation, it can have a significant impact on the amount of compensation the tribunal may award when loss of remuneration and pension are taken together, even if the employee will never again have access to a valuable defined benefit pension.