Sibbit v St Cuthbert's Catholic Primary School

In assessing pension loss after unfair dismissal, an Employment Tribunal must first identify the loss and then determine a just and equitable compensatory award. The simplified pension-loss approach is inappropriate where the claimant has long service in stable employment, is close to retirement, faces no material employment or economic uncertainty, and the continuing pension loss can be quantified. In those circumstances the substantial loss approach should be used. Choosing the simplified approach despite an objectively identifiable loss is an error of principle, permitting appellate intervention and substitution of the correct figure.

The Claimant, a teacher with 23 years’ service in the Teachers’ Pension Scheme, succeeded in an unfair-dismissal claim before an Employment Tribunal. The Tribunal awarded compensation for pension loss using the simplified approach and made a 40 per cent deduction for contributory conduct. On appeal, the sole issue was whether the Tribunal had erred in choosing the simplified rather than the substantial approach. The parties agreed the relevant figures. The central question was whether the pension loss was sufficiently identifiable to require assessment under the substantial approach.

1. Appeal allowed in part. The parties agreed that one element of the pension calculation should be increased to £5,427. That point was allowed by consent. The Tribunal’s pension-loss assessment was otherwise set aside and the EAT substituted £9,797.75 for pension loss.
2. The starting point was section 123(1) of the Employment Rights Act 1996. The Tribunal must assess the loss sustained in consequence of dismissal and then stand back to determine what compensation is just and equitable in all the circumstances. The assessment may involve informed prediction.
3. An appellate tribunal may interfere where the Employment Tribunal has erred in principle or reached a perverse conclusion. The EAT adopted the approach summarised in Aegon UK Corporate Services Ltd v Roberts [2010] ICR 596, referring to Bentwood Bros (Manchester) Ltd v Shepherd [2003] ICR 1000.
4. The Employment Judges’ pension-loss guidelines recognise two permissible approaches: simplified and substantial. The choice remains fact-sensitive, but the guidelines indicate that the substantial approach is appropriate where employment was long-standing and stable, the claimant was near retirement, the employment was unlikely to be affected by economic conditions, and the claimant was unlikely to move to better-paid employment.
5. Those considerations applied cumulatively. The Claimant had 23 years’ service, intended to retire shortly after her sixtieth birthday, would not obtain further employment before retirement, and had a final-salary pension loss capable of precise calculation. She would receive 23/80ths rather than 24/80ths of final salary for life. The Tribunal therefore erred in principle by using a method which did not remedy the objectively identifiable continuing loss.

• Employment Tribunal, Manchester: found the dismissal unfair and awarded compensation, including pension loss, in reasons registered on 27 June 2009.
• Employment Appeal Tribunal: allowed part of the appeal by consent, set aside the simplified pension-loss assessment, and substituted £9,797.75 for pension loss.