The Assessment of Career-Long Pension Loss in the Employment Tribunal

Background

In the case of Jhuti v Royal Mail Group Ms Jhuti claimed she had been automatically unfairly dismissed as a result of making protected disclosures. The case went all the way to the Supreme Court, which upheld Ms Jhuti's claim. A first remedy hearing took place in order to determine the amount of compensation owed to Ms Jhuti. The Employment Tribunal has now heard a second remedy hearing to determine the issue of how the compensation for Ms Jhuti's pension loss should be calculated.

Pension Loss at the Employment Tribunal

Claimants have the ability to claim Tribunal compensation in respect of pension loss suffered as a result of an employment dispute.

In simple cases, the basis for calculating pension loss will be the value of the employer's contributions for the period of loss identified by the Tribunal (Contributions Method). However, the position is more complicated when it comes to assessing the value of career-long loss of earnings. The Employment Tribunals "principles for compensating pension loss" guidance contains non-statutory guidance (Guidance) on calculating compensation for pension loss in more complicated cases. The Guidance includes the Ogden tables, which are actuarial tables used to calculate certain types of lump sum compensation, including compensation for career-long loss of earnings. The Ogden tables contain multipliers which are calculated to allow for the effects of various factors, including inflation, interest rates and life expectancy.

Tribunal Decision

The issue for the Tribunal was what method should be used in order to calculate Ms Jhuti's pension loss. The Tribunal found that the Contributions Method in this case would result in overcompensation as it would avoid applying the discounts catered for by the Ogden tables. The Tribunal also found that the approach set out in the would also result in overcompensation in Ms Jhuti's case.

The Tribunal instead decided to use the annual employer pension contributions (subject to a 2% annual increase) and the Ogden table multiplier that had been used in the first remedy hearing to calculate Ms Jhuti's future loss of earnings.

Learning Points

There are not many reported cases on the assessment of pension loss at the Employment Tribunal. This case demonstrates that it is  possible to depart from the guidance in order to suit the specific circumstances of any particular case.

For more information on the assessment of career-long pension loss  please contact Michael Halsey in our Employment team on 020 7665 0842, or complete the form below.