Unfair dismissal compensation and loss of pension rights

Mark Minns, 28 September 2009

Ms Roberts was employed by Aegon UK Corporate Services Limited (Aegon) and, as part of her employment package, was a member of Aegon’s final salary pension scheme.

Her employment with Aegon was terminated in January 2007. However, she immediately started a new job with Just Retirement Limited (Just) where she was employed for eight months. Whilst the remuneration package she received at Just was overall more favourable than that she received at Aegon, she only had access to a money purchase pension scheme.

An employment tribunal upheld Ms Roberts claim of unfair dismissal against Aegon however it was decided that she should receive no compensation for future loss of earnings because lost earnings after her employment with Just ended could not fairly be attributed to Aegon’s actions in dismissing her. However, the employment tribunal did award Ms Roberts compensation for loss of pension rights on the basis that she had enjoyed the benefit of a final salary scheme with Aegon which was a unique type of benefit that she did not retain when she moved to Just.

The employment tribunal’s decision was eventually overturned by the Court of Appeal on the basis that the employment tribunal was wrong to treat loss of earnings and loss of pension rights differently. Pension loss should not be the subject of special treatment. An employee’s pension is part of their overall remuneration package, albeit a deferred and important part, that should be assessed accordingly. The original award of £37,188.30 compensation by the employment tribunal was reduced to £300 (for loss of statutory rights) by the Court of Appeal.

Aegon UK Corporate Services Limited v Roberts 2009 EWCA Civ 932, 21 July 2009