Private sector employers could be liable for the early retirement pension
benefits of staff transferred from the public sector following a ruling by the
European Court of Justice.
The ECJ decided that employment terms entitling a female employee, Katia
Beckmann, to an early retirement pension and lump sum if made redundant, should
have transferred with the employee from her public sector employer to her new
private sector employer.
John McMullen, head of employment law at Pinsent Curtis Biddle, said the
case should make private sector employers involved in Transfer of Undertakings
Protection of Employment agreements with the public sector extra vigilant.
"Employers should be especially careful in respect of TUPE transfers
and seek an indemnity (an agreement where the public sector employer undertakes
to remain liable for certain benefits) from a transfer in respect of the
triggering of such early retirement benefits," he said.
Beckmann was transferred under TUPE from an NHS trust to a private sector
When she was made redundant in 1997 she argued that, as she would have been
entitled to an early retirement pension and a lump sum under the terms of her
NHS employer, she was still entitled to those benefits.
Benefits for old age provided under occupational pension schemes do not
transfer under TUPE, but Beckmann persuaded the court that this exemption only
applies when an employee reaches the end of their normal working lives.