The Employer’s Liability for Financial Advice

Originally published July 2004

Two recent Court of Appeal cases have examined the circumstances in which employers can incur liability for advice to employees. There are many situations in which employees are faced with a range of options: to retire early, perhaps on ill health grounds, or take redundancy and seek another job, or continue at work on sick pay… Tax, benefits, and pension implications all have to be considered. Is there a general duty on employers to provide advice in this context? If an employee makes a poor choice, can they sue the employer for failure to advise correctly?

In Crossley v Faithful & Gould, Mr Crossley was told by his psychiatrist that he was unlikely ever to be able to return to work. He knew the firm had permanent health insurance, and that he was eligible to claim. However, he did not realise that benefits were dependent upon him remaining an employee. Unprompted he decided to resign whereupon the insurance company paid him for a year, and then