HM Revenue and Customs agreed to pay a former employee £138,000 in compensation for the stress he experienced while working at the Government department, it was disclosed yesterday.
Stephen Mellor, aged 58, who worked as a senior manager in what was HM Customs & Excise VAT office in Droitwich, Worcestershire, fears he may never be able to work again because of the "mental harm" he experienced while working in the office.
Mr Mellor, from Malvern, Worcestershire, began to suffer from stress and depression in 1998 after he was put in charge of managing three additional offices to the one in Droitwich.
In 2001 he was forced to take several months off work, but when he returned to his job four months later his responsibilities were apparently increased from managing 90 staff to 220.
Fearing for his health - he was by now taking increasing doses of anti-depressants - he asked for compulsory early retirement.
His request was turned down and he was forced to stand down for health reasons after his manager said he was unable to offer him a less stressful position.
Finding he was unable to meet his financial obligations he began legal proceedings against the department at the county court.
Proceedings were due to begin in December last year but HM Customs and Excise offered the settlement the day before the case was due to start.
Mr Mellor's solicitor, Adam Wilson said: "The illness and symptoms which led to Mr Mellor leaving employment were caused by HM Customs and Excise and he has suffered significant financial loss as a result."