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calculating pension loss in employment tribunal claims

17 October 2014

Sharan Griffin v Plymouth Hospital NHS Trust

The NHS pension scheme is one of the most generous schemes around today. As such, pension loss is not something that should be ignored when assessing the potential value of an employment tribunal claim.

There are two options the tribunals use to calculate an employee's pension loss in an unfair dismissal claim: the simplified approach and the substantial loss approach. Tribunal guidance suggests that the simplified approach should be used in most cases and looks at the contributions the employer would have made to the pension scheme. The substantial loss approach involves a more detailed examination of the employee's pension loss and uses actuarial tables to assess the value of pension rights which would have accrued up to retirement.

In Sharan Griffin v Plymouth Hospital NHS Trust the tribunal used the simplified loss approach but the Court of Appeal agreed with the claimant that this was not a relevant determinant for the calculation of her final salary pension benefit and the substantial loss approach was more appropriate (resulting in a much larger award). The Court of Appeal noted that the claimant had a specialist skill and the NHS was her only realistic choice of employer.

Whilst this case may result in tribunals preferring the substantial loss approach when dealing with an NHS pension scheme member, and therefore making larger awards, NHS Trusts can still argue that percentage discount should be applied to address the likelihood that the employee would have left employment at some point before retirement age based on age, status, health and work record (withdrawal factors). In addition, the compensatory cap (currently the lower of either 52 weeks’ gross pay or £76,574) will still apply in unfair dismissal claims.

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