Whitney vs Monster Worldwide Ltd

The Court of Appeal upheld a High Court decision that assurances given by an employer to an employee about his pension entitlement (referred to as a "no detriment" pension guarantee) were capable of amounting to a binding commitment that could be enforced against a transferee of the employer's business almost 20 years later.

Although the pension guarantee was excluded from transfer under the statutory mechanism provided by TUPE, it passed to the new employer by way of contractual novation, as the previous employer's holding company had promised to honour all existing pay and benefit commitments.

Implications

This case provides an important reminder and warning to employers that the "pension exception" under TUPE should not be seen as creating a complete bar on the transfer of pension rights and liabilities. Such rights and liabilities may still transfer under contract law. In light of this, employers who are contemplating buying a business should ensure they undertake proper due diligence and obtain adequate warranty protection from the seller in relation to pension promises given.

Background

In this case, changes to the pre-transfer employer's pension scheme had been implemented in 1989/1990. The court found that the claimant employee had received a guarantee from his "pre-transfer" employer that he would be no worse off on retirement in the new scheme than he would have been had he remained in the old, final salary scheme...