Malik v Bank of Credit and Commerce International SA
[1998] AC 20
Ratio Decidendi
There is an implied term of mutual trust and confidence in every employment contract. The employer must not, without reasonable and proper cause, conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee.
Facts
BCCI collapsed amid massive fraud. Former employees claimed their association with the disgraced bank had damaged their employment prospects ('stigma damages').
Judgment Summary
The House of Lords confirmed the implied term of mutual trust and confidence and held that, in principle, damages could be recovered for breach of it, including stigma damages for loss of reputation caused by the employer's conduct.
Key Quotes
"The employer shall not without reasonable and proper cause conduct itself in a manner calculated and likely to destroy or seriously damage the relationship of confidence and trust between employer and employee."
— Lord Steyn
Subsequent Treatment
The implied term of mutual trust and confidence is now the most important implied term in employment law.