Have you got a whistleblowing policy? It may not be at the top of your agenda to give employees a forum for airing their perceptions of problems within your organisation – but having a policy could save you a whole lot of trouble in the long run.
In this edition of Employment Matters, we consider the whistleblowing legislation, explain why having a whistleblowing policy is important, and outline what should be included in such a policy.
Origins of whistleblowing legislation in the UK
Legislation to protect whistleblowers was born out of a number of disasters, human and financial, including the Piper Alfa oil platform explosion, Zeebrugge ferry disaster, Clapham Common rail disaster, Mirror Group pension scandal and the Barings Bank collapse.
There was a view amongst lawmakers that employees may be aware of failures that, if remedied, could prevent such disasters in future. However, there was a concern that they may not speak up for fear of losing their job or being victimised, or that they may raise their concerns, but with the wrong people in the wrong way, with the result being that the wrongdoing would go unchallenged.
Consequently the Public Interest Disclosure Act 1998 was enacted and came into force in July 1999 to protect employees who highlight failings within their organisations.
This amended the Employment Rights Act 1996 (“ERA”), and it is through the ERA that whistleblowers can obtain statutory protection.
There are three key components to the law on whistleblowing:
- An employee will not be in breach of their contract if they make a “protected disclosure”, and any term in their contract seeking to prevent such a disclosure is void;
- It is automatically unfair to dismiss an employee for making a protected disclosure; and
- It is unlawful to subject a worker to detriment (i.e. victimise them) for making a protected disclosure.
When will a whistleblower gain protection?
In order for a worker to be protected, they must make a disclosure about a type of wrongdoing listed in the ERA in the manner prescribed by the legislation. Only then will their disclosure become a “protected disclosure”.
The disclosure must be of particular facts which identify the failing; general allegations of wrongdoing, such as a vague reference to a failure to comply with health and safety
What wrongdoing is covered?
To be protected, an employee must have made a disclosure of information which falls into one (or more) of the six categories of wrongdoing or failure listed in the ERA. These are disclosures which show that:
- a criminal offence has been committed, is being committed or is likely to be committed;
- a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject;
- a miscarriage of justice has occurred, is occurring or is likely to occur;
- the health and safety of any individual has been, is being or is likely to be endangered;
- the environment has been, is being or is likely to be damaged;
- the information tending to show any of above has been, or is likely to be deliberately concealed.
These categories appear to narrow the remit of the whistleblowing legislation. However, employment tribunals have interpreted the provisions widely to include not only wrongs that it is in the wider public interest to disclose, but also private grievances. So for example, if an employee is sacked after informing their employer that they have been discriminated against, this could potentially qualify as a protected disclosure, affording the employee the protection of the whistleblowing provisions within the ERA.
In addition, the tribunals have interpreted the legislation so that a worker will be protected if they disclose the failure or wrongdoing of someone other than their employer. For example, in Hibbins v Hesters Way Neighbourhood Project (2008), a teacher who was disciplined by her employer after informing the police about a student who was suspected of a sexual assault came within the protection of the ERA.
However, there are limits. Under one of the six categories of wrongdoing listed above, a worker must show that a person has failed, is failing or is likely to fail to comply with a legal obligation to which he is subject. It has been held by a tribunal that in order to be “likely”, it must be probable, or more probable than not, that the employer will fail to comply with the relevant legal obligation.
Manner of disclosure
In order to obtain protection, not only must the worker’s disclosure satisfy the requirements outlined above, but the worker must make the disclosure in the manner prescribed by the ERA.
Disclosures must be made in good faith to be protected. This requires an assessment of the worker’s motives. If the worker raises an issue because they hold a personal grudge, they will not benefit from the protection provided by the legislation. In Street v Derbyshire Unemployed Workers’ Centre (2004), a worker’s disclosures of alleged wrongdoing by a senior manager did not qualify her for protection as she was motivated by a grudge.
To whom should the disclosure be made?
The aim of the legislation is to try to ensure that workers can raise issues with their employer without fear of persecution, in order that the employer can remedy the wrongdoing before it escalates and leads to a catastrophic failing.
The ERA provides that workers should make disclosures to:
- Their employer. Who, within an organisation, could be regarded as any particular worker’s employer? The ERA is silent on this, but it is thought that a disclosure made to any person senior to the worker in question should be regarded as being made to their employer.
- In certain circumstances, someone outside the worker’s organisation will be regarded as their employer. This will arise where the worker follows a procedure authorised by the employer. For example, the health and safety officer may be authorised by a health and safety policy to report certain matters to the appropriate authorities. In this case the worker is deemed to be reporting to the employer.
- Responsible third parties. For example, if the worker believes the responsibility for the relevant failure lies solely or mainly with a third party, such as a client, a worker can make the disclosure to them and benefit from protection.
- Certain prescribed persons such as HMRC, the Health and Safety Executive and the Financial Services Authority. In these circumstances, the worker must reasonably believe that the subject matter of the disclosure properly falls within the remit of that authority and worker must reasonably believe that the allegation is substantially true.
- A government minister, if the worker works for a government agency or quango.
- A legal advisor.
A worker can make a disclosure to anyone other than their employer and those identified in the specific categories above and still qualify for the whistleblower protection provided by the ERA:
- If they reasonably believe that they will be victimised by their employer if they tell their employer or a prescribed person;
- Where there is no prescribed person to tell and the worker reasonably believes that evidence will be concealed or destroyed if they tell their employer; or
- Where the worker has already told their employer or a prescribed person.
However, in addition to satisfying the above, in order to disclose to someone other than those listed above and still qualify for protection:
- The worker must believe that the information is true, and their belief must be reasonable.
- They must act in good faith and not for the purposes of personal gain. The issue here is not whether they make a personal gain, but whether their purpose was to make a gain. It is permissible to make personal gain from disclosing a wrong, provided that was not the purpose of making the disclosure. So if a worker sells their story to the News of the World for £10,000, they may have difficulty showing that their purpose was to ensure the wrongdoing ceased, rather than to ensure that they received a substantial payment. However, payment made under any enactment is not personal gain. This means, for example, that if a whistleblower receives a reward from HMRC for exposing their employer’s tax fraud, this would not be treated as personal gain.
- It must be reasonable to disclose the information to someone other than those in the categories of person listed above in all the circumstances of the case.
Exceptionally serious failures
Where the failure by the employer is exceptionally serious, the worker will be protected if they make a disclosure to a third party without having to show that they believed that they would be victimised or that evidence would be destroyed if they reported it to their employer.
This lowers the threshold of qualification for workers to obtain the protection of the ERA where the failure is so serious it is of overriding public interest that it is disclosed. However, the worker must still act in good faith, believe that the allegation is true, act not for the purposes of personal gain and it must be reasonable to make the disclosure.
What claims can be brought?
An employee may claim unfair dismissal if they believe that they have been dismissed because they have made a protected disclosure. A worker may also claim that an employer has subjected them to a detriment (i.e. victimised them) because they had made a protected disclosure. The usual upper limit for damages in unfair dismissal cases does not apply, and damages can be substantial, such as in Lingard v HM Prison Service where the award was almost £500,000.
In addition, subjecting a worker to a detriment for making a protected disclosure is a form of discrimination and so the tribunal may make an award for injury to feelings. A particularly onerous remedy that may be available to an employee who brings an unfair dismissal claim on the basis that they were sacked for whistleblowing is interim relief. If the employee meets the stringent application criteria and can show that they are likely to succeed at the full hearing, they may obtain an order for interim relief.
This stops the dismissal taking effect before the full hearing, meaning that the employee is re-employed (and therefore paid) until final disposal of the unfair dismissal claim. Their pay may not be reimbursed to the employer even if the employee is ultimately unsuccessful.
So must you have a whistleblowing policy?
There is no general obligation contained in the ERA that an employer must have a whistleblowing policy. However, it is advisable to have such a policy because it will:
- lead to workers raising concerns, and awareness of a problem enables an employer to take early action and avoid more serious problems later.
- help to avoid the possibility of damage to reputation arising from employees making external disclosures, as it will set a clear procedure enabling workers to raise their concerns internally.
- make it harder for a worker who discloses a failing to a third party and is then dismissed, or subjected to a detriment, and who then brings a claim against their employer, to show that it was reasonable to disclose the failure to an external party as it will be clear that they could and should have disclosed the failure to their employer; and
- help to minimise the risk of litigation as it is less likely that a whistleblower will be dismissed, as it will be clear to everyone within the organisation that whistleblowing is encouraged, and that treating a worker differently, or dismissing them because they have raised concerns, is unacceptable.
In addition, the government expects public bodies to have written policies, and listed companies must have a policy (or explain why they do not) according to the Combined Code on Corporate Governance.
What should the policy include?
- Convey the importance of identifying and remedying wrongdoing;
- Encourage reporting;
- Remind workers of the standards expected of them;
- Ensure workers know to whom they should report;
- Outline procedures for investigating disclosures;
- Explain the sanctions imposed on those who make malicious allegations; and
- Explain the sanctions imposed on those who victimise whistleblowers.