Pension loss: simplified " and "substantial" compensatory approaches

Sibbit v The Governors of St Cuthbert's Catholic Primary School [2010] UKEAT 0070/10/ZT

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In Sibbit v The Governors of St Cuthbert's Catholic Primary School whereby a teacher was unfairly dismissed for gross conduct one year before her pension, HHJ McMullen of the EAT has decided on the proper use of the Guidance to Tribunals on the assessment of compensation for pension loss, when the "simplified loss" or the "substantial loss" compensatory approach applies.

The EAT justified its intervention in that the employment tribunal had made an error in principle when it awarded pension loss using the simplified loss approach contrary to the judges' guidance that provides:

4.13 Experience suggests that the simplified approach will be appropriate in most cases. Tribunals have been reluctant to embark on assessment of whole career loss because of the uncertainties of employment in modern economic conditions. In general terms the substantial loss approach may be chosen in cases where the person dismissed has been in the Respondent’s employment for a considerable time, where the employment was of a stable nature and unlikely to be affected by the economic cycle and where the person dismissed had reached an age where he is less likely to be looking for new pastures. The decision will, however, always depend on the particular facts of the case.

4.14 More particularly, we suggest that the substantial loss approach is appropriate in the following circumstances:

(a) when the applicant has found permanent new employment by the time of the hearing and assuming no specific uncertainties about the continuation of the lost job such as a supervening redundancy a few months after dismissal; further, the Tribunal has found that the applicant is not likely to move on to better paid employment in due course;

(b) when the applicant has not found permanent new employment and the Tribunal is satisfied on the balance of probabilities that he or she will not find new employment before State Pension age (usually confined to cases of significant disability where the applicant will find considerable difficulty in the job market):

(c) when the applicant has not found new employment but the Tribunal is satisfied that the applicant will find alternative employment (which it values, for example, with the help of employment consultants) and is required then to value all losses to retirement and beyond before reducing the total loss by the percentage chance that the applicant would not have continued to retirement in the lost career. See Ministry of Defence v Cannock and Others [1994] ICR 918 et al subject to our comment below.

The simplified approach becomes inappropriate in these cases because there is a quantifiable continuing loss which can be assessed using the pension data and Tables 1 to 4 of Appendices 5 and 6. These tables use factors similar to those in the Ogden Tables for personal inquiry and fatal accident cases. Although tables for pension loss are included in those tables, the tables in this booklet use some different assumptions to those underlying the Ogden Tables (see Appendix 2).”

The EAT found that the fact that as there was no uncertainty as to the Claimant’s employment in that she would work for a further year and then retire, and that there was no uncertainty about the economic conditions, pointed to the assessment of whole career loss rather than the simplified case of paragraph 4.13 being applicable.

That the employment (23years)was stable the Claimant and that she was not affected by the economic cycle or likely to be looking for new work decided the EAT in favour of the substantial approach (and against the simplified approach as there was a quantifiable continuing loss).

The EAT is only allowed to intervene as to compensation if the judgment is perverse or wrong in principle. The EAT found that the judgement was wrong in principle according to the previous judgment of Langstaff J who indicated that if a clear loss were identified a tribunal should compensate he claimant according to the loss sustained by him.