Pensions under TUPE: Hagen -v- ICI Chemicals

A recent case highlights the need for employers to take care over what exactly they tell their staff about pensions on a TUPE transfer. In the recent case of Hagen v ICI Chemicals, 441 employees of ICI were concerned that when they were transferred to Kvaerner their pension benefits as ICI employees – which were better than elsewhere in the industry – would not transfer automatically under TUPE. However, they were reassured by ICI that the pension benefits provided by Kvaerner would be broadly similar to those provided by ICI.
 
After transferring to Kvaerner, the employees claimed that both ICI and the new employer had made incorrect representations on a number of issues, including the pension position. The High Court held that ICI had negligently misrepresented that the employees’ pension rights would be broadly similar after the transfer, when in fact some of the claimants were as much as 5% worse off after the transfer; the judge decided that "broadly similar" benefits should have been within 2% of the value of the ICI benefits.

The Court also held that liability for ICI’s misstatements did not transfer to Kvaerner. Since regulation 7 of TUPE excludes transfer of liability for pensions, the transfer of liability for any misrepresentation about pension rights was also excluded.
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