Earlier this year the European Court of Human Rights held that protection for whistleblowers was a human right under Article 10 of the European Convention on Human Rights, which protects freedom of expression. Issues relating to whistleblowing are seldom far from the headlines and, if mishandled, can attract significant adverse publicity for employers, not to mention the potential sums that can be awarded to a whistleblower. In this Law Watch we provide an overview of the protection available to whistleblowing employees and some practical tips for employers.
What does the law say?
The issue is important from an employment perspective because the Public Interest Disclosure Act 1998 (“PIDA”) inserted the following protection into the Employment Rights Act 1996:
- The right not to be subject to a detriment for having made a “protected disclosure;” and
- A dismissal for having made a “protected disclosure” will be automatically unfair.
There are a number of requirements to be satisfied before a disclosure is “protected.” The employee must disclose information (which can be done orally as well as in writing) which he has a reasonable belief tends to show one of six “relevant failures.” The relevant failures are:
- Criminal offences
- Breach of a legal obligation
- Miscarriages of justice
- Danger to health and safety
- Danger to the environment, and
- Deliberate concealing of information about any of the above.
There are further requirements for the disclosure to be “protected” depending on the person to whom it is made. A disclosure made internally (i.e. to the employer) is protected provided it is made in good faith. However, to gain protection for a disclosure made to a regulator such as the FSA, the employee must also show that the disclosure was not made for personal gain.
So, for example, if an employee complains to their manager that a particular piece of equipment in the workplace is in a dangerous condition, this will generally be a protected disclosure if it is made in good faith.
Why is the issue so important for employers?
As can be seen from the example above, many day-to-day workplace complaints can be protected disclosures. In particular, if an employee complains about bullying by a manager or being overloaded with work, both of these can be argued as breaches of the contract of employment and so fall within the “breach of a legal obligation” category. The effect of this is to bring all but the most spurious grievances within the scope of whistleblowing protection.
The concept of “detriment” is quite widely defined. In a number of cases, merely revealing the whistleblowing employee’s identity to others has amounted to a detriment.
Further, unfair dismissal claims in the Employment Tribunals involving whistleblowing allegations are more troublesome for employers than ‘normal’ unfair dismissal cases for a number of reasons:
- A dismissed employee can apply for what is known as “interim relief” when they submit their unfair dismissal claim, provided that claim is submitted within seven days of termination. This is essentially an order that they be reinstated on full salary and benefits until the final determination of their claim, including any appeal. The Employment Tribunals aim to resolve straightforward unfair dismissal claims within 26 weeks but in reality many take much longer. This is particularly so in whistleblowing cases, which tend to be factually complex.
If the employee subsequently loses their case at the final hearing, there is no obligation to reimburse the employer the salary paid during the period of reinstatement.
To succeed in an application for interim relief an employee must show only that it is “likely” that their whistleblowing claim will succeed at the full trial. The test is therefore not a difficult one for employees to meet, particularly given the draconian nature of the interim relief order.
To date applications for interim relief have been rare. However, it is a powerful tool available to dismissed employees, particularly as a way of encouraging employers to settle Employment Tribunal claims more quickly, and for a higher amount. Given the present state of the job market, it seems likely that use of interim relief applications by employees will increase in the future.
- There is no qualifying service requirement; in cases not involving whistleblowing an employee needs one year’s service (to be increased to two years from April 2012, subject to legislation) to bring a claim.
- The cap on the compensatory award of £68,400 does not apply. This is particularly an issue in cases brought by high earners, or active members of a defined benefit pension scheme where they are unlikely to obtain similar pension benefits elsewhere. A 2010 report by the whistleblowing charity Public Concern at Work put the average award in whistleblowing cases at £113,677.
- In addition to compensation for financial loss an Employment Tribunal can also make an award for injury to feelings. These are theoretically uncapped, although case law has applied a practical limit of £30,000 and awards ought to be in the region of £6,000 to £18,000 in all bar the most serious cases.
Finally, protection against detriment for having made a protected disclosure applies not only to employees but also to “workers” which is defined more widely and includes any person who has contracted to do work personally, unless the person is genuinely self-employed.
What practical steps can employers take to protect their position?
Review the organisation’s whistleblowing policy to ensure it is robust and accessible. The main purpose of the policy is to encourage workers to raise concerns internally and provide a mechanism by which to do so. Remember that a whistleblower will often need to raise concerns about their own manager or department. The policy should also detail how concerns will be investigated and dealt with, and the protection from reprisals that will be available for whistleblowers.
It is worth noting that the Corporate Governance Code requires that listed companies have written whistleblowing arrangements or explain why they do not.
- Ensure the policy is drawn to workers’ attention through induction and other training, and keep a written record of having done so. Proving a clear means of blowing the whistle internally ought to aid in reducing external disclosures which may bring unwanted media and regulator attention. In particular, for external disclosures other than to a regulator to be protected, the employee must show it was reasonable in the circumstances to make the disclosure externally. It is very unlikely that an external disclosure will be protected where the employee is aware of the internal channels and has no good reason not to use them.
- Consider inter-play with other policies. Most organisations will have developed policies relating to the Bribery Act 2010 (if you do not have such a policy, please let us know and we can help you prepare one). Encouraging employees to raise concerns about wrongdoing is one way that organisations can comply with their obligation to prevent bribery.
- Keep a clear audit trail of disclosures made and actions taken. An Employment Tribunal will often attach greater weight to contemporaneous documents than later witness testimony.
- Consider how to treat whistleblowers who do not wish their identity to be more widely known within the organisation. The desire to remain anonymous must be balanced against the right of any employee accused of wrongdoing to test the evidence against them in a disciplinary hearing.
- Be prepared for adverse publicity associated with a whistleblowing claim in the Employment Tribunals. It may be wise to engage with the organisation’s communications team and consider the merits of preparing proactive and/or reactive press statements. Often, press reports will focus on the allegations against employers and never report the final outcome of the case if the employer successfully defends it.
- Be prepared to be contacted by a regulator. When a whistleblowing claim is submitted to the Employment Tribunals the claimant can indicate that they would like details of their complaint to be passed to the relevant regulator.
In his recent speech on reforming employment relations, Vince Cable addressed the issue identified above, that complaints about alleged breaches of the employment contract could be protected disclosures. The Government’s view is that this is not the intended purpose of PIDA and it intends to reverse this position, which has been brought about by developments in case law. However, this issue did not form part of the Government’s “Resolving Workplace Disputes” consultation and we are yet to see any draft legislation.
Further, in the recent case of NHS Manchester v Fecitt the Court of Appeal has recently clarified two points relating to whistleblowing cases:
- Where a worker who has made a protected disclosure has been subject to a detriment, the employer must show that the protected disclosure did not “materially influence” its decision about how to treat the worker. In Fecitt this meant that the employer could redeploy whistleblowing employees to resolve a dysfunctional workplace situation which had arisen as a result of their protected disclosures, without falling foul of the whistleblowing legislation.
- An employer cannot be vicariously liable under the legislation if a whistleblowing employee is victimised by their peers (rather than the employer) for having made a protected disclosure.
These developments may narrow the scope of claims under PIDA slightly, but do nothing to diminish the need for employers to protect their position as we suggest above.