Beckmann Rights: Back To Basics

"Beckmann" rights are pension benefits, which, contrary to the general position, transfer under TUPE.

In the next of our back to basics series, Gowling WLG's Combined Human Resources Solutions (CHRS) team provides a recap of the key points to be aware of and how these rights can be dealt with in practice.

Background

There is a specific pensions exemption in the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) which carves out certain rights under an occupational pension scheme from the normal operation of TUPE. However, this exemption only applies to rights under an occupational pension scheme relating to "old age, invalidity or survivors' benefits".

The Beckmann case, and subsequent case law, considered the meaning of these words and the extent of the pensions exemption. Pension rights, which fall outside the exemption and which therefore transfer under TUPE, are therefore often referred to as "Beckmann" rights.

For further background, please see our "back to basics" note on TUPE and Pensions.

Leading cases - Beckmann and Martin

The two leading cases in this area were decided by the European Court of Justice (ECJ) in the early 2000s.

Beckmann v Dynamco Whicheloe Macfarlane Ltd

This case concerned Mrs Beckmann, who worked for the NHS. Her employment was transferred to a new employer under TUPE and she was made redundant a couple of years after the transfer.

While employed by the NHS, Mrs Beckmann's employment terms provided for enhanced redundancy benefits. These were immediate payment of an early retirement pension from the NHS Pension Scheme, plus a top-up compensation payment from her employer (to compensate for the extra pension she would have built up if she had not been dismissed). There was also a lump sum payment above the statutory redundancy compensation.

On dismissal, Mrs Beckmann's new employer paid her the lump sum, but did not pay the compensation to top-up her pension. Mrs Beckmann sued for breach of contract and the case went as far as the European Court of Justice. In this case, the ECJ held that certain enhanced pension benefits on redundancy could not be classed as an "old age" benefit and so fell outside the pensions exemption. As such, they passed to the transferee under TUPE.

Martin v South Bank University [2001] IRLR 74

Around the same time as the Beckmann litigation, a similar issue arose in the case of Martin v South Bank University.

While the Beckmann case concerned enhanced redundancy...