No Distinction Between Loss Of Earnings And Pension Loss When Assessing Compensation

When an employee is successful in a claim for unfair dismissal,

the Employment Tribunal will assess compensation, taking into

account loss of earnings. This will often include pension loss. The

amount of the compensatory award "shall be such amount as

the tribunal considers just and equitable in all the circumstances

having regard to the loss sustained by the complainant in

consequence of the dismissal in so far as that loss is attributable

to action taken by the employer".

The question, ultimately for the Court of Appeal, in the case of

Aegon UK Corporate Services Ltd v

Roberts, was whether pension loss should be

considered separately and distinctly from loss of earnings and

whether different considerations applied.

Mrs Roberts was dismissed by reason of redundancy by her

employer, Aegon. She brought a claim for unfair dismissal and won.

In awarding her just over £37,000 in compensation, the

tribunal noted that she had found new employment at a higher rate

(although that employment had ended 8 months later). The new

package left her better off overall despite the move it brought

from a final salary scheme to a money purchase arrangement. She was

therefore not awarded loss of earnings beyond the start date in her

new job. The Tribunal did, however, consider that she had a

continuing pension loss. This was owing to the change to the (less

favourable) money purchase scheme with her new employer and the

Tribunal was of the view that the final salary scheme was a

"unique type of benefit".

Aegon appealed to the EAT, arguing that the higher overall

package in the new employment offset reduced the pension, making

her better off and the tribunal had been wrong to separate earnings

and pension in the way it did.

Although the EAT dismissed the appeal, Aegon has been successful

in the Court of Appeal. It argued that the tribunal had been wrong

to find that Mrs Roberts' final salary pension loss revived

after the loss of her new employment when it had already ruled that

Aegon was not responsible for her loss of earnings

after the loss of her subsequent employment. It was wrong to make a

distinction between loss of earnings and pension loss.

The Court of...