Early retirement benefits

Case 6: The facts

In 1994 the Redwood College of Health Studies transferred over to the South Bank University.

Staff were offered a new contract, whose terms they did not have to accept. However, they were told that they would not be able to remain in the NHS pension scheme and were given three options, all of which meant they would have a different pension provision.

Their employers did this knowing that benefits related to old age, like pension rights, are specifically excluded from TUPE protection.

Some time later there were redundancies, and employees were offered early retirement but without the benefits that would have been available to them under the NHS scheme.

The ruling

The ECJ ruled in favour of the transferred workers. Those transferred with TUPE protection must get the same early retirement benefits as they would have had prior to the transfer.

Furthermore, even if they agree to accept lower benefits in return for early retirement, this will be invalid and the employer will still be legally obliged to pay the full benefits.

The court made it clear that, while workers can agree to changes to their contracts after a transfer, they cannot do so if the changes have only been brought about as a result of the transfer - for example, to harmonise their conditions with those of existing staff.

Martin and others v South Bank University [2004] IRLR 74