Compensation – Final salary schemes – Unfair dismissal

Aegon UK Corporate Services Ltd v S Roberts: CA (Civ Div) (Lords Justice Keene, Dyson, Elias): 21 July 2009

The appellant employer (X) appealed against a decision of the Employment Appeal Tribunal (Roberts v Aegon UK Corporate Services Ltd [2009] Pens LR 105) upholding an employment tribunal’s decision that its final salary pension scheme, of which the respondent former employee (R) had been a member, was a unique benefit and that there was a continuing loss of pension. Following R’s dismissal by X she had obtained employment with another company (J) at a higher salary and with a money purchase pension scheme. In calculating the compensation award, the tribunal had concluded that R’s subsequent employment brought to an end any possible loss-of-earnings claim. However, it found that the final salary pension scheme offered by X was a unique type of benefit, and that there was a continuing pension loss to R by reason of the less advantageous nature of J’s money purchase pension scheme. R received an award of compensation for unfair redundancy dismissal. X appealed against the award on the basis that the tribunal should not have separated the issues of earnings and pension because R’s higher salary at J offset her less favourable pension arrangements to such an extent that she was better off under the overall package provided by J. The Employment Appeal Tribunal rejected that argument. R submitted that it was a matter for the tribunal to assess the award of compensation and treat the various aspects of the benefits differently.

Held: Benefits did not have specific status and were not unique. They were an important part of the remuneration package. The Employment Appeal Tribunal was not entitled to apply different tests to different aspects of the remuneration package. It had made an error of principle, Bentwood Bros (Manchester) Ltd v Shepherd [2003] EWCA Civ 380, (2003) ICR 1000 and Dench v Flynn & Partners [1998] IRLR 653 CA (Civ Div) considered.

Appeal allowed.

Ian D Truscott QC (instructed by MacRoberts) for the appellant; Simon Plaut (instructed by ASB Law) for the respondent.