While the country’s High Court said in a flagship ruling in 2014 that the IT giant IBM had undermined the trust of its employees by making changes to its pension fund, the Court of Appeal overturned that judgement this summer. The court explained that restructuring the defined benefit (DB) pension scheme was not a breach of what is known in the UK as “duty of good faith”, whereby an employer is not to make decisions without conscious regard for the interests of employees. The unexpected decision from the Court of Appeal greatly reduces pressure on companies, which must nonetheless remain vigilant in the way they communicate.
Did the company act arbitrarily, or even perversely, towards its employees? It is precisely this question that the Court of Appeal addressed, in order to decide whether IBM had crossed a line by proposing a new retirement plan that is far less beneficial to its employees. The case is a complex one, with the UK arm of the American IT giant having made multiple changes to its pension scheme between 2004 and 2009, before finally unveiling ‘Project Waltz’.
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