High Court rules IBM in breach of its duty of good faith to employees in closing defined benefit plans

IBM UK Holdings Ltd and IBM UK Ltd v Dalgleish and others

The High Court has ruled that IBM UK acted in breach of its duty of good faith to the members of its defined benefit pension plans in closing the defined benefit plans to future accrual and imposing a new restrictive early retirement policy. It also found that IBM provided misleading information to members during the consultation process which preceded the closure.

A further remedies hearing will follow in due course.

Michael Tennet QC, Ben Faulkner and Bobby Friedman of Wilberforce Chambers together with Nicholas Stallworthy QC, instructed by David Young of DLA Piper LLP, successfully argued for the representative beneficiaries of the defined benefit plans that changes introduced by IBM in what was known as “Project Waltz” were a breach of the duty of good faith in the light of reasonable expectations engendered in the members by IBM’s previous conduct.
Mr Justice Warren also held that IBM was in breach of its duty of good faith to members in respect of the consultation held over the Project Waltz proposals.

Edward Sawyer of Wilberforce Chambers (led by Andrew Spink QC) appeared for the neutral Trustee, and Paul Newman QC  of Wilberforce Chambers appeared (with others) for IBM.