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Roberts v Aegon UK Corporate Services Ltd

Taking on a new job can bar an employee from making a claim for unfair dismissal against their previous employer, both in relation to loss of earnings and pension rights.

The employee, Ms Roberts, made a claim for unfair dismissal against her former employer, Aegon UK Corporate Services Ltd.

Ms Roberts had obtained new employment immediately following her dismissal however within nine months she had left her new employment.

The Employment Tribunal made no award for loss of earnings. The Tribunal held that because she had obtained employment immediately after her dismissal at an overall higher level of remuneration, she should not receive any compensation for loss of earnings as the link of causation had been broken.

However she was awarded compensation for her loss of pension rights. Aegon had provided a final salary scheme whereas she had only had access to a money purchase scheme in her new position. The Tribunal decided that a pension loss consequent upon unfair dismissal would not necessarily cease when an employee gained new permanent employment. It found that a final salary pension is a unique type of benefit that Ms Roberts was unlikely to find in any other employment. The Tribunal considered that it was a continuing loss and the chain of causation was not broken by finding work that pays the same or more after dismissal. The Tribunal therefore considered it appropriate to distinguish between pension loss and loss of earnings.

Aegon appealed on the grounds that the Tribunal had erred in awarding compensation for pension loss when it had decided that as a result of Ms Roberts’ new employment there was no claim in relation to loss of earnings. However the Employment Appeal Tribunal (EAT) upheld the decision. The EAT determined that the Tribunal was entitled to differentiate between “the purely arithmetic exercise in comparing the remuneration packages of the two employments coupled with the permanent qualities of the second employment” and the “significant loss of pension rights”.

However the Court of Appeal has allowed the employer's appeal. The Court determined that a final salary pension scheme is not a unique benefit but, rather, an important part of the total remuneration package. Consequently, the EAT was not entitled to apply different tests to different aspects of the remuneration package.

The Court determined that when Ms Roberts gained new employment elsewhere, this was a break in the chain of causation which meant that she could neither claim ongoing salary nor pension-related loss.

The Tribunal’s award was duly set aside.

For More Information Contact:

Matthew Wolton
TPP Law Limited
53 Great Suffolk Street
London SE1 ODB

t 020 7620 0888
f 020 7620 0778
e info@tpplaw.co.uk

Email: Matthew

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Tuesday, 07 September 2010