Loss of final salary pension rights continued beyond loss of earnings

In Roberts v Aegon UK Corporate Services Ltd, the EAT upheld a tribunal’s decision that an unfairly dismissed employee was entitled to compensation for ongoing pension loss even though, immediately after her dismissal, she obtained a new job with a remuneration package that was more favourable overall.

The EAT held that while Ms Roberts had immediately found a new job with a better salary, meaning there could no award for actual or future loss of earnings, the tribunal had been entitled to approach her pension loss differently. Prior to being unfairly dismissed, she had enjoyed the benefit of a final salary scheme, whereas in her new job she had access only to a money purchase scheme. She had therefore lost a unique type of benefit because there was ample evidence to show that final salary schemes are being eased out in the private sector. In this respect the tribunal were entitled to find that she was unlikely to receive this type of benefit again in the future, calculate loss of the final salary scheme benefit until she attained the age of 50 and award her compensation of £37,188.

It is becoming increasingly difficult for unfairly dismissed final salary scheme members to mitigate their pension loss, and, as this case shows, that factor will be taken into account when assessing compensation. This principle will inevitably become part of negotiations with any employees in an effort to settle claims or when negotiating in an attempt to try and agree a termination by consent for financial consideration backed by a compromise agreement.