Employers are waiting to see if the High Court will limit the scope of a
potentially disastrous European Court decision on the transfer of early
retirement benefits from the public to the private sector.
Judges are considering the ECJ’s ruling in the Beckmann case that an NHS
early retirement pension is not an "old age benefit" and so should
transfer with employees under the TUPE regulations. Benefits for old age under
occupational pension schemes are currently exempt from the TUPE regulations.
The key issue will be whether the High Court follows the EAT’s reasoning in
a previous case that because the obligation to make the early retirement
payments lay with the NHS superannuation scheme rather than the employer
itself, it was not an "obligation of the transferor" and so did not
transfer.
If it does not do so, it will create severe difficulties for employers
involved in TUPE transfers from the public sector.
The ECJ decision follows rumours in recent months that the government is
moving away from including pensions in the imminent reform of the TUPE
regulations.
John McMullen, head of employment law at Pinsent Curtis Biddle, said the
case meant private sector employers involved in TUPE agreements with the public
sector should be extra vigilant.
"They should require an indemnity from a transfer in respect of the
triggering of such early retirement benefits," he said.
The case before the High Court concerns Katia Beckmann, who was made
redundant in 1997 after transferring from an NHS trust to a private contractor.
She argued she was still entitled to the early retirement pension and the lump
sum she would have received under the terms of her NHS contract.
Beckmann persuaded the ECJ that the exemption for occupational pension
schemes only applies when an employer retires at the end of his or her normal
working life.
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