Pension pot

Sibbit v The Governing Body of St Cuthbert’s Catholic Primary School

When using the employment judges’ guidelines to assess pension loss, tribunals have to decide whether to use the “simplified” or the “substantial” approach. In Sibbit v The Governing Body of St Cuthbert’s Catholic Primary School, the Employment Appeal Tribunal (EAT) said that tribunals should use the substantial approach if the claimant has a long period of service and is nearing retirement age.

Basic facts

Mrs Sibbit, who had been a teacher at the school from 1 April 1985, was dismissed on 9 June 2008. She brought a claim for unfair dismissal and won.

The tribunal awarded her compensation, including an element to take account of her loss of pension (she had been due to retire the following year).

Her pension - a final salary scheme - was based on receiving one eightieth of her salary for each year of pensionable service. At the date of dismissal, she had 23 years service.

The tribunal relied on the pension rights guidelines published by employment judges, which allows for two approaches to pension loss - the simplified and the substantial.

The tribunal opted for the former which gave her £5,427. She appealed arguing that it should have used the substantial approach which would have given her £9,797.

Relevant law

Section 123(1) ERA states: “… 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." EAT decision

The EAT agreed with Mrs Sibbit, stating that the starting point for the assessment of loss was section 123 (1) ERA. In other words, that what was “just and equitable” was a matter for the tribunal to decide, once it had assessed the loss.

But, said the EAT, the tribunal had clearly not followed the guidelines which stated in paragraph 4.13 that the substantial loss approach should be chosen “in cases where the person dismissed has been in the Respondent's employment for a considerable time, where the employment was of a stable nature and unlikely to be affected by the economic cycle and where the person dismissed had reached an age where he is less likely to be looking for new pastures”.

The EAT pointed out that Mrs Sibbit had been employed in a stable job for 23 years; she was unlikely to be affected by the economic cycle in a public sector teaching job; and she was one year off retirement and so was unlikely to be looking “for new pastures”.

In addition, it pointed to paragraph 4.14(b) which said that the substantial loss approach should be used “when the applicant has not found permanent new employment and the Tribunal is satisfied on the balance of probabilities that he or she will not find new employment before State Pension age”.

On that basis, the EAT said it was clear that the tribunal should have adopted the substantial approach. It therefore set aside the tribunal's judgment in relation to Ms Sibbit’s pension loss and substituted the higher figure of £9,797.75.