Tribunal ruled that new job broke the chain of causation in pension claim
Ms S Roberts was made redundant by Aegon UK Corp Services Ltd (Aegon) in January 2007. She subsequently made a successful complaint of unfair dismissal. Roberts obtained alternative employment with another company, Just Retirement Ltd, which took effect immediately following her dismissal. The total remuneration in her new employment was worth £136 net per week more than her package with Aegon. This took account not only of her salary but also of other benefits, such as the value of a car and car insurance and permanent health insurance.
In her new employment, Roberts was entitled to participate in a money purchase pension scheme. At Aegon, she had been a member of a final salary scheme, which was more favourable. However, her loss in pension benefits was more than offset by the other more favourable remuneration terms offered by her new employer. Before the tribunal came to consider Roberts’ remedy in respect of her unfair dismissal from Aegon, she left her new job in September 2007. Therefore, at the remedies hearing, Roberts was still unemployed.
In assessing compensation, the tribunal had to decide how much of Roberts’ losses were attributable to her dismissal by Aegon. It had to decide whether her losses could be attributed to that first dismissal or whether the new employment could be treated as having broken the chain of causation.
The tribunal concluded that at least as far as the question of remuneration was concerned, Roberts’ employment with her new employer had broken the chain of causation. She was not therefore entitled to be awarded any compensation in respect of her loss of earnings subsequent to her dismissal by the new employer.
However, the tribunal did not apply the same causation principle to the pension loss. Its reasoning for this was that Roberts had not obtained the benefit of a final salary scheme when she joined her new employer and the tribunal considered she was unlikely to do so in any other employment. It was, therefore, a continuing loss that did not cease when Roberts obtained permanent employment that paid the same or more.
Aegon appealed the tribunal’s decision but it was upheld by the EAT. Aegon therefore appealed to the Court of Appeal, which overturned the decisions of the tribunal and EAT. The Court of Appeal said that the tribunal could have found that the new employment had not broken the chain of causation, but it had not. In light of this, the tribunal could not legitimately carve out special treatment for pension loss. It said that a pension does not have special status, but it is simply part of an overall remuneration package.
This case highlights the importance of a tribunal’s findings on the impact of new employment, on the same or more favourable terms, where an employee has been unfairly dismissed from their previous employment. Where the tribunal finds that the new employment has broken the chain of causation in respect of the employee’s future losses, the previous employer will not be liable for any ongoing loss in respect of remuneration, including any pension loss. The fact that Roberts’ compensation in this case was reduced from £37,180 – the amount of the original award – to just £300 shows how important the tribunal’s decision on causation is.
Russell Bradley, partner, DLA Piper