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Banking

Shaking off the stigma

No one expects to spend their whole career with one employer, but the ability to move from one job to another with relative ease is taken for granted. But what if your career suffers because you've been made the target of defamatory rumours, or because your company is found to be engaged in disreputable behaviour? A decision in the British House of Lords last month could help, as it now entitles employees to sue for damages called stigma compensation.

The case was brought successfully by two former employees of the Bank for Credit and Commerce International (BCCI) who were made redundant in 1991 when the bank collapsed. Needless to say, with a stint at BCCI on their record, City institutions were not exactly eager to recruit them. Even though the two had no connection to any wrongdoing, their careers in the financial sector lay in tatters.

The former employees claimed damages caused by the bank's breach of an implied "obligation of trust and confidence". BCCI, they argued, had an implied undertaking not to engage in criminal activity that would wreck the reputations and careers of their staff.

According to an analysis of the decision by London law firm Eversheds, employers should ensure that they act with caution when making detrimental allegations against a former staff member, to avoid the risk of damages.

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