International Petroleum Ltd and others v Osipov and others UKEAT/0229/16

Why care?

Whistleblowing workers are protected from a detriment, and employees from dismissal, because they have made a protected disclosure. In this case, the Employment Appeal Tribunal (EAT) held that an employee could bring a detriment claim for the decision to dismiss against two individual non-executive directors of the employer, and that all three should be jointly and severally liable for post-dismissal losses.

Section 47B of the Employment Rights Act (ERA) gives the right not to be subjected to a detriment by the employer, the worker’s colleagues, or agents of the employer. The employer is vicariously liable for the action of a co-worker unless the employer can show it took reasonable steps to prevent it.

Section 103A ERA says employees only have the right to claim automatically unfair dismissal if they are dismissed for the sole or principal reason that they have made a protected disclosure.

An employee cannot bring a claim for detriment where the detriment is a dismissal, and must bring a dismissal claim instead. However, a worker (who does not have the right to claim unfair dismissal) can bring a claim for the detriment of termination.

The case

The Claimant became CEO of IPL (an oil and gas exploration company doing work in Niger) in June 2014, but within days discovered serious wrongdoing by senior employees. He made a number of protected disclosures about corporate governance and compliance with local law. After doing so, he was excluded from a major part of his role, not given relevant information, and told not to travel to Niger. Finally, four months later, he was summarily dismissed by Mr Sage, a non-executive director, who had been told to do so by Mr Timis, another non-executive director and a shareholder in the company.

The Employment Tribunal found that Mr Timis and Mr Sage, as non-executive directors of IPL, were workers. The Claimant had suffered detriments by IPL, Mr Timis and Mr Sage, including his exclusion from foreign travel and business dealings, and the instruction or advice to dismiss him, because he had made protected disclosures. IPL had also automatically unfairly dismissed him because of his protected disclosures. In total, the tribunal awarded £1,745,000 compensation against all three respondents on a joint and several basis.

The Respondents appealed, arguing that where the detriment done by Mr Timis and Mr Sage amounted to dismissal, the claim could only be pursued as a dismissal against the employer, and not as a detriment against individual workers.

The EAT (Simler J, the President of the EAT) rejected this. A 2005 case (Melia v Magna KanseiLimited) had held that detriment claims against an employer and dismissal claims were mutually exclusive, and that once the detriment amounted to a dismissal, it could be brought only as a dismissal claim. However, that case was heard before individual claims against co-workers were possible (s47B was amended in 2013), so did not consider these circumstances at all.

The EAT disagreed that Parliament had intended to draw a distinction between the pre-dismissal detriment regime and dismissals. The purpose of the provision was to protect individuals from victimisation, and the legislation (which at s47B gives worker protection against the acts or omissions of fellow workers) should be read, “so far as it can properly be construed, to provide protection rather than deny it.”

The EAT pointed out that S47B includes the words, “This section does not apply where… the detriment in question amounts to dismissal (within the meaning of [s103A])”. Since s103A dismissal claims can only be brought against employers, this could not prevent claims against individuals.

Dismissal claims under s103A ERA can only be brought by employees, not workers, whilst s47B protects workers (and allows workers to pursue dismissal-related claims against individuals). There was no reason why workers should be able to claim against individuals for detriments which were dismissal-related, whilst employees were not. There was no reason why all three Respondents, including the two non-executive directors, should not be liable for losses flowing directly from his dismissal and the detriments to which he had been subjected.

What to take away?

This is believed to be the first case in which an individual has been held liable for dismissal-related claims brought under s47B as a detriment claim. Like discrimination claims, detriment claims can also include an amount for injury to feelings.

In this case, IPL was almost insolvent, but by claiming against Mr Timis and Mr Sage, the Claimant had an effective remedy for his losses. Simler J called it “an unusual case” – but it is an attractive argument for employees seeking a remedy. Like discrimination claims, it might also put an extra layer of pressure on individual respondents for settlement purposes.