Breach of contract - tribunal success chances?

WoB

Hi

I have a situation at work where my employer has introduced the suspension of company pension contributions for staff (until a set date in the future). Now they've ticked all the legal boxes as far as having a consultation period (although in the end the initial more favourable proposals consulted on were dropped and replaced with a complete suspension with no pay back of missing funds etc.). Anyway, I objected to the proposal (it's supposed to help return the company to profitability, even though it was back in profit last month, 3 months after it's introduction) and returned a written objection to the requested change of contract letter I received.

The company went ahead with the proposal and the company pension contributions were stopped for everyone (despite not agreeing to the change). From everything I've read/been advised this represents a breach of contract. I raised a grievance and have been through a hearing and subsequent appeal about this but of course the company are sticking to set lines that they think it's not a serious breach of contact as they needed to do it due to economic climate etc. (seems like a lot are jumping on this bandwagon now!).

Now, the information I've gathered seems to suggest they should have actually ended my current contract and offered a new one under the new terms, if they were doing this by the book. I'm at the point now where it's up to me to take it further. I am definitely look at the tribunal route and have been putting together some information to help me complete the documents etc. but I'd just like your thoughts on how something like this would be looked at by a tribunal. What sort of things will they look at other than the technicalities of what the company has done?

I do have some other points about things my employer has said during my hearings which I think would stand me in good stead at a tribunal - eg. if the pension is reintroduced it will be at a lower rate - the company state the value is not fundamental (I beg to differ!), the company state it's a temporary change (whereas I see it as permant given the rate change), etc.

Anyway, hope you can offer some advice on this and whether you think there is a good case here or not.

Thanks for reading!
WoB

Ewarwoowar2

The crucial question in your case is: does your contract of employment state that you are entitled to the pension contributions?

Breach of contract cases are very black and white:

1. What is the relevant term of the contract; and
2. Has the employer breached it?

If the contract states that the pension contribution is at the discretion of your employer or the employer may vary the pension terms or something similar, they most likely haven't breached your contract.

So my advice would be (as a solicitor who has advised companies and employees on this sort of thing), read your contract of employment very carefully.

In addition, if:

1. you do have a contractual right to the pension contribution;
2. the company can no longer afford to make the contributions; and
3. you refuse to allow the company to suspend the payments (i.e. refuse to agree to the amend to your contract)

the company may have a fair reason to dismiss you. So be careful what you wish for.

ohreally

Is "was" the scheme a final salary one and were contributions made by both parties. During the consultation, how many beneficiaries objected?

Can i assume there is no trade union involvement from lack of reference to their legal dept?

WoB

Ewarwoowar2 wrote: »

The crucial question in your case is: does your contract of employment state that you are entitled to the pension contributions?

Breach of contract cases are very black and white:

1. What is the relevant term of the contract; and
2. Has the employer breached it?

If the contract states that the pension contribution is at the discretion of your employer or the employer may vary the pension terms or something similar, they most likely haven't breached your contract.

So my advice would be (as a solicitor who has advised companies and employees on this sort of thing), read your contract of employment very carefully.

In addition, if:

1. you do have a contractual right to the pension contribution;
2. the company can no longer afford to make the contributions; and
3. you refuse to allow the company to suspend the payments (i.e. refuse to agree to the amend to your contract)

the company may have a fair reason to dismiss you. So be careful what you wish for.

Hi. Many thanks for the response and advice. Yes, I need to double check the actual wording of my contract (I can't locate it at present) but I believe the wording is quite vague in that although it states the company will pay a contribution towards the employee's pension it does not state an actual percentage (which does seem a bit odd!). I do however have the offer of employment letter still, which does state these details. Surely when a company pays a set amount/percentage into an individual's pension fund each month (and indeed arranges the pension fund) it is an implied agreement? I know that if I do nothing about this contract change it will become an implied acceptance over time, so I'd hoped the same would apply here (perhaps naively!)?

On your other points (point 2 specifically), the company are claiming they need to do this to return the company to profitability. The nature of our business (it's revenue comes from charging staff out to clients) means that it should be quite a simple balancing act of weighing up revenue earning staff against other expenditure and making necessary cuts elsewhere. Of course this is all my opinion and perhaps something a tribunal would not be interested in? How would a tribunal assess if they believfe a company really needs to put something like this into action? Purely by their say so? Surely the fact the company returned a healthy enough profit last month is enough to show the company are not in the dire straits it seems to be suggesting?

I am fully aware of the possible consequences of my actions but I am at the point now (as are many staff at the company) where I've had enough of the way we're being treated.

Anyway, thanks agin for your help/advice - much appreciated.

Cheers
WoB

WoB

ohreally wrote: »

Is "was" the scheme a final salary one and were contributions made by both parties. During the consultation, how many beneficiaries objected?

Can i assume there is no trade union involvement from lack of reference to their legal dept?

Hi there. No, it's not a final salary scheme. Contributions are made by the company for all employee's. The individuals themselves can also contribute but this is optional and not compulsory. The private pension is managed via a Pension Broker arranged by the company.

The consultation process involved the company first of all setting up a company council to deal with this specifically. The council acted on employee's behalf (without any approval from any individuals). A lot of staff objected during presentations of the plan and to the company council representatives. Initial discussion between management and the council had suggestions from the council to pay the funds back to employee's if the profits returned to a certain level + a lot of other things to make the suspension more palatable to staff. This agreement then was veto'd by directors and a new proposal presented to all staff (with no consultation with council/staff - or at least no 2-way discussions) which basically stated pension contributions would cease and be re-introduced at a later date at a lower percentage. I have chosen to increase my own personal contributions to cover the missing funds.

Their is no trade union representation - well, individual staff may be represented - but not as a whole.

Cheers
WoB

Ewarwoowar2

WoB wrote: »

Hi. Many thanks for the response and advice. Yes, I need to double check the actual wording of my contract (I can't locate it at present) but I believe the wording is quite vague in that although it states the company will pay a contribution towards the employee's pension it does not state an actual percentage (which does seem a bit odd!). I do however have the offer of employment letter still, which does state these details. Surely when a company pays a set amount/percentage into an individual's pension fund each month (and indeed arranges the pension fund) it is an implied agreement? I know that if I do nothing about this contract change it will become an implied acceptance over time, so I'd hoped the same would apply here (perhaps naively!)?

You need to get hold of your contract of employment and see what you've agreed to regarding your pension before you make any sort of claim.

getmore4less

My last contract had benifits including pension at the discretion of the company.

definately check the contract/staff handbooks

WoB

I have checked my contract and it states (under Pension): "The company will pay an amount equivalent to 5% of your basic salary from time to time into a personal pension scheme for your benefit".

Now obviously the wording 'from time to time' is a bit ambiguous. But again, surely the historical nature of having paid this every month during the many years service, shows that 'time to time' = 'monthly' in this case?

WoB

Sorry - just bumping this for any of the evening viewers to maybe respond to my latest info. Cheers!

rupee99

Any unilateral change to any contract is a breach of contract.

Without going into the detail of your claim you have the opportunity to accept it, to do this you do not have to sign a new contract but simply carry on working under the new conditions. Or, if you reject it, lodge an objection, this can be a formal grievance or just a letter.

If your employer does not accept your objection you can then resign and attempt to claim constructive dismissal. In assessing whether you were "constructively dismissed" the Tribunal will look at several factors, firstly did the employer follow correct procedures, from what you said it did, secondly how fundamental to your contract was the breach, then what alternatives did the company have and did it consider them.

As pension schemes are being closed or having their terms altered all of the time I doubt you are in a greatly different position to thousands of others who have not pursued the constructive dismissal/Employment Tribunal route. Given that at least a few would have considered it and received advice not to, I would have thought your chances of success would have to be considered similarly remote.

DisgruntledToo

My employer has recently decided to change the final salary pension arrangements. They have effectively frozen pensionable pay at 2010 salaries. They have gone through the necessary consultation and now decided to make the change. They have offered alternatives but all are significantly inferior to the scheme I am / was on.

The rules of the pension scheme are pretty clear to me and says that the employer cannot make changes that in effect make employees worse off than they were before the change - this was set-up intentionally some time ago to protect the pension fund from potential asset strippers.

I recognise the company needs to be able to make whatever changes it needs and I'm not seeking to challenge their rights but I do believe they have introduced a change to my contract that I would like to reject and agree termination or challenge for constructive dismissal.

If I did go to tribunal would the decision be based on purely legal interpretation of the terms of my employment or would political considerations carry any weight e.g. previously in privileged position and many similarly suffering?