Chesterton Global Limited and Neal Verman v Mohamed Nurmohamed [2017] EWCA Civ 979

Why care?

An employee reasonably believed that disclosures about his employer’s manipulation of profit and loss accounts was in the public interest, despite his personal motivation, held the Court of Appeal, agreeing with the original Employment Tribunal.

Since 2013, a disclosure is only protected if it is made “in the public interest”. This was intended to prevent workers from raising personally motivated gripes about their own employment contract as whistleblowing claims, as happened in Parkins v Sodexho (2002).

The case

In 2011, a new group of investors invested in Chestertons, a chain of estate agents. The Claimant was manager of Chestertons’ Mayfair office. Changes were made to the way commission was calculated for sales employees so that it was based on profit rather than revenue. The Claimant objected to the new commission scheme, but agreed to sign up to it with some modifications in February 2013. He looked closely at the accounts over the next few months and identified discrepancies which suggested that the profit levels had been artificially suppressed in order to reduce the levels of commission payable. The Claimant described this to the director of Chestertons’ London area, Ms Farley, as ‘‘manipulating the accounts to the benefit of the shareholders’‘.

The Claimant told Ms Farley that this alleged manipulation affected the earnings of over 100 senior managers and he believed Chestertons was deliberately misstating between £2 and £3 million of actual costs and liabilities. The Claimant was dismissed and the Employment Tribunal had to decide whether the Claimant had made protected disclosures, and if so, whether these protected disclosures were the principal reason for his dismissal.

The Tribunal found that the Claimant had made three protected disclosures and these were the reason for his dismissal. The Tribunal did not comment on whether the actual substance of the protected disclosures was correct. This is unnecessary for the purpose of such claims, which requires only that the worker reasonably believes that the relevant failure has occurred, or is likely to do so, it does not matter if the belief later turns out to be wrong.

The focus of the appeal was the Tribunal’s conclusion that there was a disclosure of information that was, in the reasonable belief of the Claimant, in the public interest. The Tribunal had found that the Claimant had in mind, at the time, that his disclosure was in the interest of 100 senior managers who were subject to the new policy on commission, and that this group of 100 senior managers was a ‘‘sufficient group of the public to amount to a matter being in the public interest’‘.

The issue before the Court of Appeal was ‘‘whether a disclosure which is in the private interest of the worker making it becomes in the public interest simply because it serves the (private) interests of other workers as well’‘.

It was argued for Chestertons that a disclosure must serve interests outside the workplace to qualify as being in the public interest. In other words, a disclosure affecting thousands of workers could not be in the public interest simply because thousands of workers were affected.

Counsel representing the whistleblowing charity Public Concern at Work (who intervened in this case) advocated a ‘‘bright-line rule enabling workers and those advising them to know with reasonable certainty when a disclosure would be protected’‘. The classification of a disclosure as in the public interest if it affected anyone else other than the worker was recommended.

Counsel for the Claimant argued that four factors should be considered when deciding if a disclosure was in the public interest:

  • the numbers in the group whose interests the disclosure served
  • the nature of the interests and the extent to which they are affected by the wrongdoing disclosed (a disclosure of wrongdoing directly affecting a very important interest is more likely to be in the public interest than a disclosure of trivial wrongdoing affecting the same number of people)
  • the nature of the wrongdoing disclosed (disclosure of deliberate wrongdoing is more likely to be in the public interest than the disclosure of inadvertent wrongdoing affecting the same number of people)
  • the identity of the alleged wrongdoer (the larger or more prominent the wrongdoer, the more likely the public interest will be engaged)

The Court of Appeal held that neither an overly mechanical approach depending purely on whether more than one person’s interest was served, nor a requirement that the disclosure relates to the interest of those outside the workplace itself was correct. Instead, a tribunal should consider the four factors above to determine whether any disclosure was in the public interest.

What to take away

The case provides useful guidance on the factors to be considered, although whether a disclosure is in the ‘‘public interest’‘ will vary on a case by case basis.

We may see workers encouraged to bring claims which are seemingly rooted in their own personal interests, but the aggravating features of Chestertons’ alleged deliberate wrongdoing and large scale manipulation (if proved) should be noted as significant in this decision. The hurdle for bringing a claim remains quite low as workers only need to have a reasonable belief that a disclosure is in the public interest and there is no requirement for disclosures to be made in good faith. Larger employers should be particularly aware of exposure here: the greater the number of employees and customers, the easier it may to be argue a disclosure is in the public interest.

If there is any doubt as to whether a disclosure is in the public interest, employers should ensure that workers are not subjected to any detrimental or retaliatory action following the making of such disclosures. Detailed reasoning by an employer should be given to clearly break the chain of causation between the making of the disclosure and any subsequent action taken by the employer. One thing which is certain is that we are likely to see many more cases focusing on whether the “public interest” has been served.