The UK government is beginning a review of whistleblowing law. Nicola Sharp of Rahman Ravelli outlines the current legal protections - and possible future ones - for those who report workplace wrongdoing.
The government has launched a review of the whistleblowing framework. It aims to assess how effective the current regime is when it comes to enabling workers to speak up about wrongdoing and protecting them when they do.
The review will be led by the Department for Business and Trade, will seek views and evidence from whistleblowers, key charities, employers and regulators. The evidence gathering stage of the review will conclude in Autumn 2023, with any resulting reports and reform recommendations to Parliament not expected until late 2024.
It will cover issues including:
- Who is covered by whistleblowing protections.
- The availability of information and guidance regarding whistleblowing (from both the government and employers).
- How employers and prescribed persons respond to whistleblowing disclosures, including best practice.
Whistleblowing is defined by the UK government as when a worker makes a disclosure of information which they reasonably believe shows wrongdoing or someone covering up wrongdoing. Workers who blow the whistle are entitled to protections, which were introduced through the Public Interest Disclosure Act 1998 (PIDA). Successive governments have taken steps to strengthen whistleblowing policy and practice.
For agencies who investigate and prosecute corruption, fraud and other types of economic crime, whistleblowing is a crucial source of evidence. But whistleblowing is also an important source of information on matters such as unsafe working conditions and other types of wrongdoing or workplace shortcomings. The information provided by whistleblowers can often only be known or accessed by those who are involved in the inner workings of a company.
The Public Interest Disclosure Act 1998
The UK was ahead of many countries in introducing legislation to protect whistleblowers. PIDA, which was an amendment to the Employment Rights Act 1996, came into force on 2 July 1999. It applies to traditional employees as well as agency workers, contractors, homeworkers, certain NHS practitioners, nurses and midwives in training, trainees, police officers and crown employees. It also applies to workers who have been dismissed or forced to resign from their employment due to mistreatment. Certain categories of worker are not covered by PIDA, including those who are completely self-employed, trustees, volunteers and non-executive directors.
To be eligible for protection under PIDA, a person has to make a protected disclosure. There are three key elements to such a disclosure:
- The person must provide information about something that they “reasonably believe” shows a category of wrongdoing set out in the law. The information in their disclosure does not have to be true but the whistleblower must be able to show they had a reasonable basis for reporting it. Whistleblowers who maliciously or deliberately report a matter that they know to be untrue are not covered by whistleblowing protection.
- The person must reasonably believe that the concern is in the public interest – that it affects people other than themselves – and is not just a personal grievance that could be dealt with in another way.
- The concern must be raised in accordance with the law – either internally to their employer or externally to an outside body, such as a regulator.
Under PIDA, a worker can file a legal claim from the first day of their employment. This differs from other employment laws that require at least two years’ service with the company that is the subject of the disclosure. A person can take a case to an employment tribunal if they believe they have been treated unfairly because they have blown the whistle.
Before PIDA became law, staff who made disclosures about their workplace were vulnerable to retaliation (even dismissal) by their employers. The Act had been introduced following a number of financial scandals and health and safety incidents that could have been prevented if employees had felt confident enough to raise the concerns that they had.
The EU Whistleblowing Directive
Post-Brexit, the UK is no longer obliged to implement the European Union Whistleblowing Directive, which came into force in December 2019. But the Directive is still relevant for organisations that have operations in the EU.
While much of it is contained in UK law, there are some differences:
- The EU Directive requires organisations with 50 or more employees in the private sector to establish internal whistleblowing channels. There is no such requirement in the UK, apart from for some firms in the financial sector.
- The EU has made it compulsory to keep records of whistleblowing reports. The UK has not, although most companies are likely to do this.
- The EU Directive contains a timeline that must be followed regarding the acknowledgement of receipt of a report and providing feedback on it. This is not the case in the UK.
- The EU focuses on whether a whistleblower had “reasonable grounds” for their disclosure (an objective test), whereas in the UK, the focus is on the subjective belief of the whistle-blower as to whether they had reasonable grounds to make a disclosure.
- Protection under the EU Directive relate to reports of breaches of EU law falling within certain sectors, while PIDA focuses on categories of wrongdoing that are not limited to sectors.
The government’s announcement of a review into whistleblowing follows criticism of PIDA. The Act has been criticised for not making employers devise and implement a policy for disclosures and for not preventing organisations blacklisting people who have blown the whistle in their previous jobs. It has also been accused of being too complicated, out of date and not protecting the likes of the self-employed and volunteers.
In June 2022, Baroness Kramer introduced a private members bill to the House of Lords, known as the Protection for Whistleblowing Bill. The main purpose of the Bill, which had its second reading in the House of Lords last December, is to increase the protection for whistleblowers in the UK.
It aims to do this by:
- Putting sanctions in place for wrongdoers.
- Making it easier for concerned employees, contractors or stakeholders to raise a concern.
- Ensuring reports are addressed promptly.
- Encouraging employees to speak up by offering confidentiality and varied options for reporting.
- Creating an independent Office of the Whistleblower to oversee the process of whistleblowing by setting minimum standards for whistleblowing policies and enforcing compliance with those standards. The role and operation of an Office for Whistleblowers will need careful consideration but there is international precedent from which the UK could draw inspiration. For example, the US Securities and Exchange Commission’s Office of the Whistleblower.
If it becomes law, the Bill will repeal PIDA and create offences relating to the treatment of whistleblowers and the handling of cases.
Over recent years, whistleblowing has emerged from the shadows of employment law to become a highly topical and complex issue. This sea change was predominantly driven by a number of high-profile scandals which garnered international attention as a result of whistleblowers. For example, the ‘MeToo’ movement which uncovered widespread allegations of sexual assault across industry sectors, predominantly in the entertainment industry, and the Volkswagen diesel emissions fraud, which resulted in the car manufacturer paying over $33 billion to avoid criminal charges and settle a number of lawsuits in the United States.
As an employment law and compliance issue, whistleblowing will only continue to grow in line with increasing ESG expectations on businesses.
The introduction of the Economic Crime (Transparency and Enforcement) Act 2022 (and the anticipated implementation of the Economic Crime and Corporate Transparency Bill) has increased the legal burden on companies in relation to the detection and prevention of economic crime. It has also placed a heavy burden on companies regarding the need to devise and implement a raft of internal policies and procedures intended to mitigate the risk of corporate financial crime. Whistleblowers, as company insiders, have long been recognised by law enforcement authorities as a critical source of evidence in tackling corruption, fraud and other financial crime. As such, a comprehensive and robust whistleblowing policy and procedure must now be an integral part of each company’s corporate compliance programme. This can also be used to defend a company against allegations of compliance failure and/or criminal misconduct.
Although the legal framework around whistleblowing has been on the legal corporate compliance radar for some years, the UK’s current regime is currently both opaque, unenforced and trailing behind other countries who have already introduced penalties for employers who fail to comply with whistleblowing legislation. However, if Parliament elects to legislate in reliance on any recommendations of the Department for Business and Trade, there will inevitably be and uplift in the number of whistleblowing reports and claims. It is therefore prudent for companies to start to prepare for reform and get ahead of the curve by reviewing and/or implementing whistleblowing policies and procedures and introducing internal training to managers on how best to navigate and escalate whistleblower issues.
Given the deficient state of the UK’s current framework, we may start to see companies adopt the provisions of the EU Directive pending any clear legislative steer from Parliament.