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UK Coal facing High Court pensions claim

UK – Privatised mine operator UK Coal is facing a High Court claim over pension benefits in relation to Transfer of Undertakings (Protection of Employment) regulations that could cost it up to £30m (€43.6m).

“A claim has now been commenced in the High Court and will be heard at the end of this year/beginning of 2006,” the company said.

The claim would determine if it must provide early-retirement pension-related benefits on redundancy on the basis of service with UK Coal, salary at the date of redundancy and certain service-based enhancements.

It said the cost could be between zero and £30m - “depending on the outcome of the court proceedings and determination of the various legal issues”.

“This is dependent upon the exact nature of the eventual court ruling, the circumstances and age of individual employees at the date of redundancy and whether any cost falls to be met by third parties.” It said it was “vigorously defending” the claim.

The move follows an unrelated claim in relation to TUPE at the European Court of Justice, the firm said. The ECJ ruled in TUPE cases in 2002 and 2003.

When UK Coal was privatised in 1994, the transfer of employers was covered by the TUPE regulations.

It said that to date, early-retirement pension-related redundancy arrangements for transferred staff who become members of the Industry Wide Coal Staff Superannuation
Scheme “have been paid in accordance with arrangements in place at the time of privatisation”.

According to the company’s most recent annual report it contributes, in respect of those employees who transferred direct from British Coal Corporation, to two schemes providing benefits based on final pensionable pay.

They are the Industry-wide Staff Superannuation Scheme for non-industrial staff and the Mineworkers Pension Scheme for industrial employees.

It operates defined contribution schemes for workers who joined after privatisation in 1994.

The firm reported that its loss widened to £51.6m in 2004 from £1.2m.

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