26 March 2024

Loss of pension

By Roos van Zaltbommel

It is common for an employer and employee to terminate an employment contract by entering into a settlement agreement.

This settlement agreement contains agreements on how the termination of the employment contract will be arranged. For example, how many days’ holiday will be paid, whether the non-compete clause will be upheld and the payment of severance pay. The settlement agreement usually includes a ‘full and final discharge’ provision.

This blog discusses a judgement of the Arnhem-Leeuwarden Court of Appeal that answers the question of whether a claim for compensation for loss of pension also falls under full and final discharge.

Full and final discharge

As mentioned, full and final discharge is usually included in the settlement agreement. It is therefore a standard provision, but what does it mean in practice? Full and final discharge means that employer and employee have nothing more to claim from each other after the execution of the settlement agreement. As a result, the parties cannot pursue a claim after the execution of the settlement agreement.

Judgment of the Arnhem-Leeuwarden Court of Appeal, 18 April 2023

It does sometimes happen that discussions arise between parties as to what constitutes full and final discharge. In the judgement of the Arnhem-Leeuwarden Court of Appeal of 18 April 2023, the court ruled on the issue of whether a claim for compensation for the loss of pension suffered by the claimant fell under full and final discharge.

In this case, the claimant had been employed by the legal predecessor of Capgemini from 1985 to 2010. The claimant’s pension was regulated by a pension agreement in force between the claimant and Capgemini. In 2010, the employment contract was terminated by entering into a settlement agreement and the agreement included a full and final discharge provision. In the proceedings before the court, the claimant argued that Capgemini failed to properly comply with the agreements under the pension scheme and that they suffered loss of pension as a result. The claimant claimed compensation for this loss.

The proceedings raised the issue, among other things, of whether the claim for compensation for the loss of pension falls under full and final discharge. According to Capgemini, this is the case and compensation for the loss of pension cannot therefore be claimed.

What did the court decide?

The court held that the claim of the claimant for their loss of pension was not covered by full and final discharge. According to the court, the interpretation of a settlement agreement is not only about the wording of the agreement. It is also about what meaning the parties were mutually entitled to attribute to each other’s indications of intent in the given circumstances and what they could reasonably expect from each other.

The court considered it significant that pension entitlements were not discussed during the negotiations to terminate the employment contract. It concluded that the parties did not consider pension entitlements and that these entitlements were not addressed in the settlement agreement.

In addition, the court considered that the case involved the compensation of damages. At the time the settlement agreement was concluded, the loss-causing events had not yet occurred. According to the court, the claimant was not required to be aware that they might suffer loss of pension in the future and that they would have to factor this into the negotiations on the settlement agreement.

Conclusion

Based on this judgement of the court, it can be concluded that the fact that a full and final discharge provision is included in a settlement agreement does not automatically mean that compensation for loss of pension cannot be claimed.

More information

Do you suspect you have suffered pension losses and want to discuss your options for claiming these losses? Please contact Prof. Hans van Meerten (lawyer in the above case) or one of our other pension law lawyers.

Roos van Zaltbommel

Roos van Zaltbommel

Lawyer

Roos van Zaltbommel works as a lawyer in the Employment & Pensions section.

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