In recent months, the UK has seen a growing focus on the protection afforded to whistleblowers. This attention has emerged because of recurring question linking diverse scandals, such as phone hacking and those that have hit the health service and the banking sector: namely, would a different system to encourage and protect whistleblowers have mitigated or even avoided the problems that have emerged.
To further fuel the debate, the protection afforded to whistleblowers in the UK has been contrasted to position in the U.S., and especially the bounty provisions under the relatively new Dodd-Frank legislation. Although the program is still in its infancy and no major awards have yet been made, given the high value of fines levied by organisations like the U.S. Securities and Exchange Commission, the expectation is that this will lead to whistleblowers being awarded substantial bounties. This approach has raised the issue of whether it would be desirable and effective in the UK to encourage individuals to blow the whistle by offering them financial incentives to do so.
Whether coincidentally or otherwise, and in parallel with this growing public attention, the current law protecting whistleblowers is also being reviewed. In particular:
- the UK Government has included provisions amending the current legislation as part of the Enterprise and Regulatory Reform Bill (the “ERRB”); and
- the highly-regarded whistleblowing charity, Public Concern at Work (“PCaW”), has set up the Whistleblowing Commission, whose terms of reference is “to examine the existing arrangements for workplace whistleblowing and make recommendations for change”.
In this post, we review the imminent changes to whistleblowing law under the ERRB and the potential for further changes resulting from the Whistleblowing Commission.
Imminent changes under the ERRB
The ERRB contains a number of changes to existing whistleblowing legislation, which can be best viewed as changes within the existing UK framework rather a more radical change to the framework itself. Under the current framework (in very broad terms), a worker who is either subjected to detriment or dismissed because of having made a protected disclosure, is entitled to compensation (which is not capped).
The changes, which are expected to come into force later this month, are as follows.
The “public interest” requirement
Protection for whistleblowers was introduced under 1998 legislation called the Public Interest Disclosure Act. This name suggest that whistleblowing legislation was only intended to protect workers in relation to disclosures made in the “public interest”. However, as case law developed, it was held that despite the name of the legislation, there was no requirement for a disclosure to be in the public interest for it to be protected. The high water mark of this position was illustrated in Parkins v. Sodexho  IRLR 109, where the Employment Appeal Tribunal held that disclosing a breach of any legal obligation (including a mere breach of a contract of employment), even where such disclosure was not in the public interest, was capable of constituting a protected disclosure.
The broad scope of protected disclosures, especially in the context of the underlying “public interest” title of original statute, has attracted criticism. In response to this, the legislation is to be amended so that for a disclosure to be protected, it must be the reasonable belief of the worker that their disclosure is made in the public interest. On the surface, the narrowing of the scope of protection in this way is something that that businesses may welcome. However, the potential cost of narrowing the definition of a protected disclosure is the resulting uncertainty on the difficult issue of defining the public interest – the expectation is that this will only be resolved through litigation.
The “good faith requirement
In conjunction with the new “public interest” requirement, a further proposed amendment to UK whistleblowing legislation is to remove the current requirement that for a disclosure to be protected, it must be made in “good faith”. Under the new proposal, where a disclosure is not made in good faith, rather than the claim necessarily failing (as is the case now), there will be a power to reduce any compensation by up to 25%. On the surface this change is counterintuitive. There would appear to be good policy reasons for requiring disclosure to be made in good faith, especially in the light of decisions such as that of the Employment Appeal Tribunal in Bachnak v. Emerging Markets Partnership (Europe) Ltd (No 2) UKEAT/0288/05, in which it was held that a disclosure that is made predominantly to put pressure on an employer not to dismiss, or to strengthen the employee’s position in negotiations, is unlikely to be in good faith (and therefore not protected). The proposed change means that even where a disclosure is made to strengthen an employee’s position, an employee may still benefit from whistleblowing protection.
However, the rationale behind this change is that in the context of the new public interest requirement, having an additional requirement of good faith would serve as too great a deterrent against individuals making disclosures, and that moreover, given the new public interest requirement, a disclosure, even if made in bad faith, should not necessarily be unprotected if it is in the public interest.
New definition of worker
The scope of those protected by the legislation is to be expanded. At present, the protection is afforded to “workers” a category larger than employees, which includes agency workers, non-employees undergoing training or work experience and homeworkers. However, the changes to this definition will largely apply to contractors in various parts of the National Health Service who would not otherwise be “workers”, and seems to be a direct response to structural changes within the UK’s National Health Service. It is noteworthy that despite the broad definition of worker, a recent Court of Appeal decision, Clyde & Co LLP v. Bates Van Winkelhof  EWCA Civ 1207, held that a partner in a law firm was not a worker within the meaning of the legislation and therefore not protected by whistleblowing legislation. There are currently no proposals to change this.
Vicarious liability for whistleblowing
Under current legislation (and as confirmed by the Court of Appeal decision in NHS Manchester v Fecitt  EWCA Civ 1190), there is no provision making it unlawful for employees to subject a colleague to acts of detriment. Because vicarious liability can only arise where an employee has done an unlawful act, the consequence of this is that an employer cannot currently be vicariously liable for whistleblowing where its employees subject a colleague to acts of detriment. To rectify this gap, the ERRB has introduced provisions mirroring those on vicarious liability in UK anti-discrimination legislation, whereby individual workers or agents will become personally liable for subjecting whistleblowing colleagues to acts of detriment and employers will be vicariously liable for any such wrongdoing. Employers will have a defense to a claim for vicarious liability where they can show they have taken all reasonable steps to prevent the treatment complained about.
In order to deal with this change, if not already doing so, employers will need to adopt and properly implement whistleblowing policies and training to prevent whistleblowing.
Extending whistleblowing protection to job applicants – not included in the ERRB
One additional change to the current legislation that was considered but not included within the ERRB was the extension of whistleblowing protection to job applicants. However, the change was not rejected out of hand, with the UK Government indicating that it will consider extending protection to job applicants in the future if it is satisfied of the need to do so.
The Whistleblowing Commission
While the ERRB has sought to amend the existing structure for protecting whistleblowers, the Whistleblowing Commission is intended to provide a broader review of whistleblowing, including whether the existing structures are appropriate and in need of reform.
Indeed, the potentially far-reaching scope of the review is illustrated by PCaW’s explanation as to why it set up the commission, which, amongst other things, states “From our experience working with individuals and organisations, it is not enough to solely consider the individual’s situation and for whistleblowing to be embedded in our culture and for a sense that it is safe to speak up early and loudly, we need to understand what more can be done by Government, employers and regulators”. However, this potentially far-reaching scope should also be placed in the context of the PCaW’s acknowledgement that “internationally the UK is viewed as a best practice example for providing legislative protection to workers… [providing] …comprehensive protection for employees and workers of all sectors who raise concerns about wrongdoing or malpractice internally, externally to regulators, police, MPs and even to the media”.
In terms of timing, the consultation period was only launched at the end of March 2013 (and will close on 21 June 2013). A report is expected towards the end of this year. Although it is difficult to speculate what the final report will look like, what appears clear from the terms of reference, the rationale and the areas of interest, is that the Commission is prepared to look at whistleblowing afresh. This is illustrated by the five areas in respect of which it is interested in gathering evidence, which are:
- Attitudes to Whistleblowing – from individuals, organisations and wider society;
- Law And Policy - whether is it adequate and effective;
- Regulators – whether they should they be doing more;
- Rewards – how whistleblowing can be incentivised; and
- Tribunals – whether they are protecting whistleblowers and society at large.
These areas show the specific issues that the Commissions expects to grapple with. They encompass challenging questions such as such as: whether existing employment laws provide whistleblowers with sufficient protection and encouragement; whether the adverse consequences of high-profile scandals could be avoided or mitigated by changing the structure for protecting and encouraging whistleblowing; whether there is a need for additional regulatory measures (including industry-specific measures) to supplement current legislation; and whether the UK should follow the U.S. an encourage whistleblowing through financial or other incentives.
The final report will be awaited with much interest, both as to its recommendations, and perhaps more significantly, what will subsequently be done with them. In particular, given the changes to whistleblowing about to the enacted, and despite indications from the Government that it will conduct a wider review of whistleblowing legislation in due course, it remains to be seen whether there will be any appetite for further changes to whistleblowing law, regardless of the rationale for them and their potential importance, especially in the context of the expressed intent of the current Government to reduce red tape.