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Legal Updates

Stigma Damages

28 July 2010 #Employment

Compensation for personal loss of reputation is generally excluded from unfair dismissal compensation.  However, following the much publicised case of Bank of Credit and Commerce International SA (BCCI) an exception arose which gave rise to the principle that is termed as ‘Stigma Damages`.    

In spite of this, the circumstances within which the principle applies are reasonably narrow.  This can be demonstrated in a recent case of Brown v Careham Hall.  In this case, an employee was dismissed for gross misconduct while she was working out her notice period following her resignation.  The employee was dismissed following an allegation that she had mistreated a care home resident and was referred to the relevant authorities under the Protection of Vulnerable Adults rules (POVA).  The employee subsequently made a claim for unfair dismissal alleging the employer`s failure to follow the statutory disciplinary procedures and a claim for wrongful dismissal/breach of contract. 

In the meantime, the employee was also dismissed from her new employment for failure to disclose that she was under investigation by her previous employers.

The employee claimed that compensation for her unfair dismissal should also include compensation for losses as a result of being dismissed from her new job.  She alleged that she had been dismissed from her new employment as a result of unfounded accusations made against her and her employers receiving an inaccurate reference. 

The Tribunal awarded compensation for both aspects of the employee`s claims.  However, in assessing the compensatory award, the Tribunal did not accept that the award should include compensation for losses resulting from the employee`s dismissal from her new job.  The reasoning for this was that if the employee had been suspended instead of dismissed in her previous job, her previous employers would still have reported her to the relevant authorities under POVA and would still have given an unfavourable reference. 

Therefore any loss that she sustained was not because of the unfair dismissal but because of the unfavourable reference and being referred under the POVA.  And as a result stigma damages were not recoverable.

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
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