University of Nottingham v Eyett and the pensions Ombudsman [1999] IRLR 87

It is well established that if an important employment right is available to an employee and he or she will not know about it unless the employer reveals it, then it is a breach of contract for the employer to keep quiet.

It is also clear that if an employer chooses to advise an employee about his or her employment contract, then the employer may be liable to pay damages to the employee if the advice turns out to be negligently given (provided that the employee can show some loss sustained as a result). The question in this case was whether the employer's obligations go further: must the employee be told if he or she is about to exercise an option which will clearly be against his or her best interests?

Mr Eyett was approaching his sixtieth birthday, and was looking at the possibility of retiring early. He could do so at the age of 60, if the university for which he worked consented (and in this case, it did so). When should he go?

Very sensibly, he got an estimate of his pension benefits, assuming that he retired on 31 July 1994, the end of the month in which his birthday fell. In accordance with the rules of the scheme, the university based its estimate on his basic salary in the previous three years, using the salary paid at 1 August in 1991, 1992 and 1993. Mr Eyett thought that the pension was sufficient for his needs, and duly retired on 31 July.

If he had chosen to go on 31 August, his pension would have been based on his pay on 31 August 1992, 1993 and 1994 - one year further forward. He lost about £80 per annum as a result. Should the university have warned him?

No, said the Court. The university had a blanket policy of not giving advice, but it had given Mr Eyett the standard scheme booklet, from which he could have worked out his pension rights for himself. It might have been different if the university had deliberately misled him, and possibly if it had accidentally done so. But saying nothing was Mr Eyett's problem, not the university's. There was no obligation on the employer to catch him if he was about to slip up.

The important lesson is that if you have an important choice to make, be sure to check all the consequences. Read your contract, and if in doubt, ask. If the employer refuses to give any advice, find someone who will.