Aegon UK Corporate Services Ltd v Roberts

Once a tribunal has decided that a claimant has been unfairly dismissed, it then looks at the issue of compensation. In Aegon UK Corporate Services Ltd v Roberts (IDS 876), the Employment Appeal Tribunal (EAT) said that tribunals still have to calculate a claimant’s loss (even if they have found better paid employment) by comparing both the monetary and non-monetary benefits of the two jobs.

Basic facts

Following Ms Roberts’ dismissal by Aegon on the basis of redundancy on 15 January 2007, she started work with Just Retirement on the same day. She only lasted eight months in this job which came to an end when she was told either to resign or be dismissed due to health problems.

Her overall remuneration package with Just Retirement was worth £136 net per week more than the package with Aegon, but the pension scheme was less favourable. Aegon offered a final salary scheme which would have paid out 1/60th of the final pensionable salary for each year of completed service. The Just Retirement pension scheme was a money purchase scheme into which the employer made contributions of £400 per month.

Ms Roberts pursued a claim for claimed unfair dismissal against Aegon. At the time of the tribunal hearing in February 2008 she was still unemployed.

Tribunal decision

The tribunal agreed with Ms Roberts that she had been unfairly dismissed, but decided that she was not entitled to an award for loss of earnings because she had found new work straight away. This broke the “chain of causation” and although she subsequently resigned from Just Retirement, her loss of earnings following her resignation could not be attributed to Aegon.

The pension scheme was different, however, as it was a “unique type of benefit” which was not replicated when Ms Roberts joined Just Retirement and she was not likely to be able to join a similar scheme in any other job. It was, therefore, a continuing loss that would not stop even if she were to find permanent employment paying the same or more as Aegon.

Her overall loss could be reduced if she were to find a job in which she benefited from a money purchase scheme and/or by receiving a higher salary, but the loss of membership of the final salary scheme was “attributable to and in consequence of the unfair dismissal” from Aegon.

Aegon appealed on two grounds. Firstly, it thought the final salary pension scheme should not have been treated as a unique benefit which could not be quantified in monetary terms. Secondly, Aegon thought the tribunal should have considered when Ms Roberts would have retired from Just Retirement had the employment not been terminated

EAT decision

Dismissing the appeal, the EAT said that “ fresh employment does not by itself stop the clock running as far as losses flowing from the original dismissal are concerned, and a tribunal is obliged to carry out a proper comparison of the two employments both in purely financial terms and in other benefits which may be incapable of being compared in purely mathematical terms”.

Having heard evidence from an employment expert, the tribunal had therefore been perfectly entitled to decide that the loss of the final salary pension scheme in this case was a very significant factor which could not be quantified in “purely monetary terms”.

The EAT emphasised that because the risk is very much on the employer in a final salary scheme, but not in a money purchase scheme, it was clear that “it was in particular that element of risk the Tribunal must have had in mind”.

Because of this difference in risk and the significance of losing a final salary scheme, the tribunal had been entitled to reject the approach of “throwing in the pension loss with the loss of other benefits”.

In relation to the second ground of appeal, the EAT concluded that the tribunal had been correct in not delving into the reasons for Ms Robert’s dismissal from Just Retirement. As a result it had to consider only what happened in reality up until the date it was making the assessment on how much compensation should be paid, and not what might have happened had Ms Robert’s employment not been terminated at Just Retirement.