Payback for rough justice? Benyatov v Credit Suisse on employers’ financial responsibilities to employees

In Benyatov v Credit Suisse Securities [Europe] Limited [2022] EWHC 135, the High Court considered the rare and serious issue of an employee being convicted – apparently unfairly and improperly – for criminal offences while carrying out duties overseas. However, these unusual circumstances saw the Court reassert some important principles about employers’ responsibilities to employees generally.

The Claimant, Mr Benyatov, was a Managing Director for Credit Suisse (“the Bank”). In 2006, he was involved in Italian company Enel’s efforts to acquire a Romanian state-owned electrical company. Later that year, the Claimant faced criminal charges in Romania relating to the transaction, for which he was convicted and sentenced to 10 years’ imprisonment in 2013.

In the interim, the Bank’s own investigations concluded that the Claimant was a person of high integrity who had been charged essentially for political reasons. It supported the Claimant in responding to the criminal charges and continued to pay him until 2013, when he was made redundant.

The Claimant’s conviction was reduced on appeal.  He moved to the United States to avoid extradition and imprisonment in Romania, but was unable to secure employment and did not expect to be able to do so for the rest of his career.

The Claimant brought a High Court claim against the Bank, arguing that it had breached its obligations to protect him from criminal conviction in the performance in his duties. He sought damages of approximately £66 million to reflect career-long losses.

The Claimant first argued that the Bank had breached a duty of care. The Court acknowledged that the law has been reluctant to recognise duties for employers to protect employees from economic losses (as opposed to physical or property-related harm).  Employers are not generally their employees’ financial advisers or protectors.

However, the Claimant was not arguing for a general duty of protection from financial harm. Rather, he contended that the Bank was a large, well-resourced employer, sending its staff to high-risk countries to work on high-risk transactions. The Court recognised that, in principle, that scenario may give rise to a duty to protect the employee from their financial losses. Unfortunately for the Claimant, he had failed to demonstrate that the Bank should reasonably have foreseen the risk of what happened or done more to respond to it.

The Claimant’s alternative case was contract-based. Contracts of employment contain an implied term that employers will indemnify, or reimburse, employees for costs and expenses incurred in the scope of their duties; that may even include fines incurred by employees when unknowingly carrying out unlawful acts. Nevertheless, in the Court’s view, the term not extend to allow recovery of broader financial losses from, for example, being incarcerated.

The Court was partly concerned by the implications which this would have for the wider law. For example, if an individual was injured at work, they might instead be able to recover from their employer under an implied contractual indemnity, rather than needing to pursue a personal injury claim. This would represent a potentially seismic shift in the law. Instead, the Court in this case effectively limited the employer’s indemnity only to payments made or liabilities incurred by the employee in carrying out their duties. Such payments or liabilities may well include legal fees or other discrete expenses, but would not generally include loss of earnings.

While the circumstances before the Court were highly unusual, some of the Claimant’s arguments could potentially have had a substantial and far-reaching impact on employers’ responsibilities to their employees. Instead, although recognising that exceptions may be warranted in extreme circumstances, the Court took a more cautious route, and one which should reassure employers as to extent of their liabilities to employees.