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14th June 2012

High Court clarifies treatment of early retirement benefits

The recent case of Proctor & Gamble v Svenska Cellulosa Aktiebolaget has helped to clarify the treatment of early retirement benefits under the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE").

In 2007 Procter & Gamble (“P&G”) sold its tissue towel business to Svenska Cellulosa Aktiebolaget ("SCA"). The employees transferred to SCA had been members of P&G’s occupational pension scheme. SCA did not want to inherit any pension liabilities in relation to the transferred employees and a disagreement arose over the extent of the pension liabilities which would automatically transfer to SCA under TUPE.

It was held that pension benefits paid to the former P&G pension scheme members on or after normal retirement date ("NRD") remained the responsibility of P&G following the transfer of those individuals to SCA. The right to be considered for early retirement benefits and enhanced early retirement benefits did not relate to benefits for old age, and so transferred to SCA under TUPE.

For further information, please contact Christopher Nuttall on christophernuttall@hewitsons.com or on 01604 463134.

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