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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50160
Experience:  Qualified Employment Solicitor
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My employer has just closed our Defined Benefit Pension

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My employer has just closed our Defined Benefit Pension scheme (having completed consultation with our National BIG group, employee reps) and reissued contracts to that effect. If we agree to changes of contract (I.e. Earning no future benefits in DB scheme) then they are offering low level transition payments of 6% salary year 1, 3% year 2, and 1.5% year 3. If we do not accept the new contract then we have been told one option business may take is to terminate our existing contracts and rehire on new terms. Reason business is giving for changing contract and stopping DB scheme is "some other substantial reason" saying puts profitability of company in jeopardy. Guess the question is would we have a case for serious breach of contract?
Employer is Marks & Spencer.

Hello, my name is***** am a qualified lawyer and I will be assisting you with your question today.

How long have you worked there for?

Customer: replied 1 year ago.
Just over 29 years in management position

OK, thank you for your response. I will review the relevant information and laws and will get back to you at the earliest opportunity. There is no need to wait here as you will receive an email when I have responded. Also, please do not responded to this message as it will just push your question to the back of the queue and you may experience unnecessary delays. Thank you.

Many thanks for your patience. There are a few ways in which an employer may try and make changes to an employee’s contract of employment. These are by:

· Receiving the employee’s express consent to the changes.

· Forcefully introducing the changes (called 'unilateral change of contract').

· Giving the employee notice to terminate their current contract and then offer them immediate re-engagement under a new contract that contains the new terms.

In this case they are potentially looking at the final option where they would terminate your employment under the SOSR argument and then re-engage you immediately under the new contracts.

As long as the employer has a sound business reason for dismissing an employee who refuses to accept a change in terms, it should be able to establish SOSR and make it a fair dismissal.

A dismissal following a failure to agree to a change in terms will almost always be unfair where the employer has failed to follow a procedure of any kind or consulted with employees over the proposed changes, even where the business is faced with financial problems which means that time is of the essence. So if there are sound financial reasons for the changes, there has been a reasonable procedure to try and agree to the changes and consultations but agreement has not been reached, it is possible to eventually force the changes through.

This is your basic legal position. I have more detailed advice for you in terms of the options you have on taking this further should you choose to do so anyway, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, there is no extra cost and leaving a rating will not close the question and we can continue this discussion. Thank you

Ben Jones and other Employment Law Specialists are ready to help you
Customer: replied 1 year ago.
Thanks so far, but I guess what I am keen on understanding is the chance of success of taking the company to court over serious breach of contract, hoping for a fairer "compensation" award than the %ges I mentioned. The company have followed due consultation process with our employee reps, and argued that the DB scheme was impacting business profitability, although individual members have not been given any company financial detail, but now it comes down to do individuals agree or dis agree to changes.
If I dis agree does that mean we could take to court if at a later date company profits grow substantially so it could be argued the decision to close DB scheme did not need to be taken? Or is it something they can just push through anyway so I would just be best advised reluctantly accepting?
For info, the scheme was closed to new recruits in 2001, so there are now just 11,000 currently active members, which seems to be falling by approx 1500 per year, so company know this expense is for a limited period.

You have to remember that the decision to close the scheme does not depend on future performance, rather on current. So you cannot say that if profits substantially increase in the future, the scheme should not have been closed in the past – the decision would have been made based on how the company was performing financially at the time the decision was made. This is not the first time such changes have been implemented by companies – many employers had very good pension schemes but things are not how they used to be, especially considering the difficult financial position over the last decade and changes are possible and have been successfully implemented. It would be difficult to challenge for a fairer percentage – what is fair, what is it measured against and who decides that? The courts cannot tell the employer what they should be paying their employees so the change in percentages will have to come down to negotiations between you and the employer, hopefully through the unions

Customer: replied 1 year ago.
I understand that, my point is could I be in a position to prove that the business did not have to make this decision as business profits (and last actuarial report) suggests business in good health. If you download M&S investor relations app off App Store you can see details of business health from last financial accounts and that they are a cash generative business. Be good to get a view from you if you get a chance to look? Or as I say, can they just push this through anyway? I am pretty well read up on the process, I'm wanting a steer in terms of if I have a case with a reasonable chance of success or not?
Customer: replied 1 year ago.
BTW, we don't have a union. We have employee representatives with whom the business have consulted on proposed changes before now pushing through.

You could try and argue that the business status did not justify it but a business does not have to turn a loss to be able to do this. In a complex corporate entity such as this one there could be all sorts of other variables which may prompt a cost cutting exercise, such as this one. It could also be projected profits, even if they do not materialise in the end. If they have a genuine and reasonable reason for doing this then they could go ahead with it. The only way would be to mount a court challenge against them and it could be a difficult one

Customer: replied 1 year ago.
based on what you know, do you think an employment lawyer would take up this case, and what sort of chance do you think we would stand? I'm asking as there is pressure to sign (or not!) the new contract in the next 2 weeks. If not signed as accepting by then, it will be viewed that I have disagreed and will not be signing to say I accept new contract.

I am sure there would be a lawyer who would take this up but I cannot give you chances of success as you need a formal case analysis for that, which we cannot just do online with just a few paragraphs of information. What you need to be doing is approaching solicitors in person to see if they are willing to consider taking this one and they would be able to give you a better idea of whether they can go ahead with it and what your chances are. We are just a Q&A service so we cannot go that far unfortunately