Private sector employers warned over Tupe pension benefits

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. They should seek to
obtain 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.

In
the case, Beckmann was transferred under Tupe from an NHS trust to a private
sector employer.

When
she was made redundant in 1997 she argued that because 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.

McMullen
said: "The decision refers to all early retirement benefits intended to
enhance the conditions of early retirement payable before the end of normal
working life."

The
precise impact of the ruling on employers will be known once the High Court in
London, which referred the case to the ECJ, interprets the decision.

By Ben Willmott

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