Employer Not Required to Indemnify Employee Against Career-Long Loss of Earnings
The Court of Appeal has confirmed an employee will not be automatically entitled to an indemnity against all losses they might suffer, as a consequence of carrying out their employer's instructions.
What Were the Facts of the Case?
In the case of Benyatov v Credit Suisse, Mr Benyatov was a banker based in Romania. He was arrested in connection with a project he had been working on. Credit Suisse investigated the allegations and found no wrongdoing had taken place. It supported Mr Benyatov through the legal proceedings. However, Mr Benyatov was found guilty and as a result of his criminal conviction he can no longer practise his profession.
Mr Benyatov brought High Court proceedings against Credit Suisse in the UK courts. He alleged Credit Suisse had negligently breached a duty of care to avoid exposing Mr Benyatov to a risk of criminal convictions in the performance of his duties. He also claimed that Credit Suisse was under a duty to take reasonable care to protect him from the financial loss resulting from his criminal conviction, or alternatively to indemnify him for his loss.
Mr Benyatov claimed career-long loss of earnings amounting to around £66 million. The High Court dismissed the claim and Mr Benyatov appealed to the Court of Appeal.
What did the Court of Appeal Decide?
The Court of Appeal has dismissed Mr Benyatov's appeal. In respect of the negligence claim, it considered whether Credit Suisse had a duty of care in respect of the work Mr Benyatov had been asked to carry out. The Court of Appeal found that the criminal proceedings were not reasonably foreseeable. The Court of Appeal found that Credit Suisse could not therefore reasonably assume responsibility for the risk.
The Court of Appeal also considered the indemnity claim. The parties agreed there was an implied term in the contract of employment that Credit Suisse would provide an indemnity against some forms of harm suffered during his job. The question was whether the forms of harm covered by the indemnity extended to lost earnings caused due to the acts of a third party, and without fault on the part of Credit Suisse.
The Court of Appeal held that it would not be fair to apply the indemnity this widely. The nature of the employer/employee relationship and the different financial positions of the parties did not justify treating Credit Suisse as Mr Benyatov's insurer in respect of all harm suffered as a consequence of his work.
What Can Employers Learn From This Decision?
This case raises questions about the extent to which an employer could be liable where an employee has been exposed to risk in the course of their duties. Whilst the Court of Appeal dismissed Mr Benyatov's claim, it is possible to imply an indemnity into an employee's contract of employment in respect of the costs, claims and expenses they will incur in carrying out their duties. It will be for the courts to determine on a case-by-case basis the particular losses that will be included in the scope of any such indemnity.
