UK - Firms should review pension benefit terms for staff taken on through a business transfer to minimise the risk of compensation claims, lawyers warn.
Concerns follow views of the Advocate General on Martin v South Bank University – a case which lawyers have described as “Beckmann revisited”.
The Advocate General’s opinion confirmed that early retirement benefits of staff subject to a transfer deal fall under Transfer of Undertakings (Protection of Employment) law, as indicated in last year’s Beckmann ruling at the European Court of Justice.
Pin sent Curtis Biddle partner Alistair Meeks said: “This opinion, if followed by the ECJ, will put an end to the government’s view that Beckmann is not likely to have much impact on business transfers.
“It seems that the right to a particular level of early retirement benefit paid either on dismissal or where the employee leaves with the agreement of the employer would transfer to the new employer, even though benefits paid at retirement age would not.”
The Martin v South Bank University case involves three nursing lecturers at Redwood College who were members of the NHS pension scheme.
In 1994, their employment was transferred to South Bank University and they joined the Teachers’ Superannuation Scheme. All three complained that they should be entitled to certain employment rights and, in particular, entitlements to their early retirement pension benefits which would have applied if they had still been employed by Redwood College.
Meeks stressed employers should look “very carefully” at the terms of any pension benefits of employees who are taken on as part of a business transfer or who have been the subject of a previous business transfer.
“This is particularly important if the employer intends to make any redundancies, voluntary or otherwise,” he said.
The ECJ is expected to give its decision in the autumn.
However, Norton Rose partner Lesley Browning predicted that the ECJ would follow the Advocate General’s opinion.
She said the chances of the ECJ overruling the decision it made in the Beckmann case was “pretty much nil”.
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