Ibekwe v London General Transport Services Ltd.

An employer may owe an implied contractual duty to take reasonable steps to inform an employee of a valuable pension option where the employee cannot reasonably be expected to know of it. The duty arises from the special nature of the employment relationship and seeks to ensure effective access to information about the benefit.

The employer must provide sufficient information to enable the employee to understand the available options when action is required. Whether the duty has been performed depends on the circumstances and its underlying policy, rather than a formulaic test. On the facts, the employer’s established communication method was reasonable.

The claimant, a bus driver, moved from the London Transport Executive’s pension scheme to his employer’s new pension scheme after a management and employee buy-out. He was dismissed for incapacity before exercising an option to transfer his accrued pension rights with a special enhancement. He claimed damages in contract and tort for failure to inform him of the option.

The Bow County Court dismissed the claim after deciding preliminary issues on duty, breach and causation. The Court of Appeal considered whether a Scally-type implied contractual term, or an equivalent duty of care, arose and whether the employer had taken reasonable steps to communicate the relevant information.

1. Appeal dismissed. The court accepted, for the purpose of the appeal, that the employer owed either an implied contractual duty or an equivalent duty of care to take reasonable steps to inform the claimant of the option to transfer accrued pension rights.
2. The duty derived from the special nature of the employment relationship. It did not require the employer to guarantee that information was actually received. The employer had to take reasonable steps to bring the relevant term or option to the employee’s attention.
3. The information supplied must be sufficient to enable the employee to understand the options available when he needed to act. The earlier communication explained the transfer option but stated that no action was then required and that further details would follow. The duty would not ordinarily be fulfilled until that further information, including the form needed to exercise the option, was sent.
4. Whether information had been brought to the employee’s attention was not determined by a formula. The question had to be answered in light of the purpose of securing effective access to information about benefits.
5. The trial judge had found that the employer’s practice of distributing information with payslips, supported by notices at garages, was reasonable. That conclusion could not be impugned, including on the alternative basis of a tortious duty.
6. The causation issue did not arise. The trial judge had made no finding that the employer caused the loss, and the respondent’s notice did not invite the Court of Appeal to determine causation on the ground advanced. The appeal was dismissed, with costs to be assessed.

• Court of Appeal (Civil Division): Appeal from the order of His Honour Judge Bradbury in the Bow County Court dated 5 December 2002. The appeal was dismissed.