The EAT has decided that, to be liable for a detriment under whistleblowing legislation, a person who subjects a worker to a detriment must personally be motivated by the protected disclosure.

The facts

Under whistleblowing legislation, workers have the right not to be subjected to detriment by their employer or another worker for having made a protected disclosure. Workers can bring detriment claims against their employer and directly against the co-workers, who can be personally liable for detriment claims.

Dr Malik was employed as a senior research analyst by Cenkos Securities PLC, a specialist securities firm.

In 2014, Dr Malik was the subject of a disciplinary investigation into concerns that his dealings with a corporate client of the firm had put him in a position of conflict of interest, his wife being a shareholder of the client. Dr Malik was given a written warning for this, although the decision maker later said that this was probably not the right decision, and too lenient.

In 2015, another situation involving a potential conflict of interest arose, where it came to the attention of Cenkos that Dr Malik held shares in a company, and he had not disclosed this, in breach of FCA requirements and the firm's rules. Following some initial investigation led by the Head of Compliance, Mr Cooper, Dr Malik was suspended, a decision again made by Mr Cooper. After some correspondence between Cenkos and Dr Malik's solicitors, Dr Malik resigned, alleging that he had been subject to intolerable treatment amounting to a fundamental breach of contract. The resignation letter also suggested that he had been constructively dismissed on the basis that the sole or principal reason for his constructive dismissal was that he had made various protected disclosures.

Dr Malik brought claims of constructive unfair dismissal, automatic unfair dismissal and detriment on whistleblowing grounds, and victimisation on racial and/or religious grounds. He lost all these claims, and appealed to the EAT on wide-ranging grounds. This alert only covers the appeal relating to the causation element of the whistleblowing detriment claim. Importantly in relation to this, the tribunal had held that Mr Cooper's decisions had nothing to do with Dr Malik's disclosures.

Dr Malik argued that the tribunal had failed to consider whether there was a "chain of command" such that any decisions made by Mr Cooper were materially influenced by protected disclosures. On a "chain of command" argument, although Mr Cooper had nothing to do with the protected disclosures, he might have been influenced by someone further down the chain of command who was unduly motivated by the fact that Dr Malik had made protected disclosures. Dr Malik argued that the tribunal should have considered this.

The EAT followed case law relevant to discrimination cases (please see here for an alert on this). It held that, in cases of detriment, where an individual would be liable, it would be unjust for a decision maker to be liable in circumstances where the decision maker personally was innocent of any discriminatory motivation, even if the decision maker was acting on information tainted by another's discriminatory motivation. Accordingly, as the tribunal had made clear findings of fact that Mr Cooper was the decision maker, and had nothing to do with the protected disclosures, Mr Cooper could not be liable for subjecting Dr Malik to a detriment for making protected disclosures.

What does this mean for employers?

Employers should note that a "chain of command" argument might succeed in relation to claims of dismissal for having made a protected disclosure, in contrast to detriment claims – for example, where facts are manipulated by someone with responsibility for a disciplinary investigation or cases where facts are manipulated by someone near the top of the employer's hierarchy.

Employers facing claims of whistleblowing detriment may wish to argue that the decision maker had no knowledge of a protected disclosure. Accordingly, if employees facing disciplinary action have made disclosures which might be protected by whistleblowing legislation, or have made allegations of discrimination, employers who have the resources to do so should appoint decision makers who have no knowledge of the protected disclosures/discrimination allegations. This will therefore allow employers to run a defence that the decision maker cannot be liable for any detriment, dismissal or discrimination.

The case law in this area also makes it more likely that individuals, as well as the employer, are named as respondents in whistleblowing cases.

Malik v Cenkos Securities UKEAT/0100/17