Chief Constable Of Northumbria Police v Erichsen

In assessing future loss, an Employment Tribunal must allow for realistic contingencies, rather than every remote possibility. It may express that assessment by a percentage or by a reasoned assessment of the period for which loss would probably continue.

Compensation for pension loss must provide full and fair compensation. A Tribunal may use a recognised or bespoke method, but any departure from recognised actuarial approaches requires cogent, intelligible and appropriate reasons. It must not make a further deduction for accelerated receipt where the chosen pension-loss tables already reflect it. Pension loss should ordinarily be assessed net of tax; grossing up is appropriate only where the underlying loss has been assessed net and the compensatory award is taxable.

The Employment Tribunal awarded the claimant compensation for disability discrimination, including pension loss arising from his resignation from police service. Had he remained in service, he could have retired at 52 with a full police pension. Following resignation, he could not draw an unreduced pension until 60 and would then receive a lower pension.

The employer appealed the Tribunal’s refusal to discount pension loss for the prospect that the claimant might become a teacher and join a final-salary pension scheme. It also challenged the tax gross-up. The claimant cross-appealed the calculation of loss between ages 52 and 60 and the deduction for accelerated payment after 60. The employer also sought to revive a ground rejected at the Rule 3 sift stage.

1. Appeal allowed in part and cross-appeal allowed. The Tribunal was entitled to find that there was no realistic chance that the claimant would obtain teaching work or otherwise replace his final-salary pension benefits. Its references to that outcome as almost certain did not show that it had wrongly applied a balance-of-probabilities test.

2. Where a past contingency or future event may affect loss, the Tribunal must assess realistic or substantial chances. It need not discount for every imaginable possibility. It may reflect a realistic chance by a percentage or by selecting a reasoned period of continuing loss. The EAT will not interfere where the Tribunal has applied that approach lawfully.

3. A ground rejected under Rule 3(7) could not simply be renewed at the Full Hearing. No timely application under Rule 3(10) had been made, and there was no basis for an extension of time.

4. The Tribunal erred in its calculation of pension loss between ages 52 and 60. Although it could adopt a bespoke method because the 2003 pension-loss guidance did not readily address that period, its averaging and HMRC-based multiplier were not cogent, intelligible or appropriate. They did not provide full and fair compensation for the earlier, higher annual loss.

5. The Tribunal also erred by discounting the post-60 substantial-loss award for accelerated payment. The relevant tables already allowed for accelerated receipt. Any recalculation of the 52-to-60 loss must itself make an appropriate allowance for accelerated payment.

6. The Tribunal further erred by grossing up pension loss after assessing it on gross figures. The award was taxable under Part 6, Chapter 3 of the Income Tax (Earnings and Pensions) Act 2003, but grossing up is appropriate only after loss has been assessed net of tax. The parties were invited to agree consequential arithmetic; the 52-to-60 calculation would otherwise be remitted.

• Employment Appeal Tribunal: Appeal allowed in part and cross-appeal allowed: [2015] UKEAT 0027_15_0909.
• Employment Tribunal, Newcastle: Liability judgment dated 16 October 2013 upheld most disability-discrimination claims. Remedy judgment dated 26 June 2014 awarded £258,551, including pension loss and a tax gross-up.