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Malik v BCCI

[1997] ICR 606

Case summary last updated at 18/02/2020 19:15 by the Oxbridge Notes in-house law team.

Judgement for the case Malik v BCCI

Ps worked for BCCI which was a fraudulent bank. They sued for compensation claiming that (following redundancy) they couldn’t get work due to the stigma of having worked at D’s bank. They argued that their contracts contained an implied term of ‘mutual trust and confidence’ and that D breached this term by running a fraudulent company. HL accepted this claim for breach of contract (NB NOT a claim for unfair dismissal). 

Lord Steyn: Unless excluded, the term of mutual trust and confidence is implied by law into all contracts of employment. It demands that the employer does 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’. He says this implied term has arisen in response to the changing nature of employment law (i.e. model of master and servant has become obsolete and instead the law now expects employers to look after the physical, financial and psychological welfare of employees). He rejected the argument that employees must know about the breach while still employed to sue on it: Rather, the term is about protecting the nature of the employment relationship, regardless of whether one party is unaware that the nature has changed. 

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