UK: Whistleblowing In The Press - What Your Business Can Learn From Recent Developments

Summary and implications

Currently, not a day seems to go by without reports of whistleblowing in the press. Whether the alleged "culprit" is the NHS, a law firm, a sovereign state, or a financial institution, prudent employers need to take note of recent judicial and legislative developments in this area. And, this is not the end: more developments are in the pipeline. A number of proposals on whistleblowing are gaining momentum, including the possibility of incentivising workers to blow the whistle with financial benefits and further expansion of the categories of protected individuals. The government is expected to publish the outcome of its recent consultation shortly.

What do recent developments mean for businesses and employers?

  • The Supreme Court confirmed last month that members of an LLP, such as equity partners, will be "workers" and are therefore entitled to protection under the whistleblowing provisions and other employment protection legislation (such as part-time worker, pension auto-enrolment and working time rights, as well as from protections against unlawful deductions). This means that LLPs whose members are workers must not subject to a detriment partners who make protected disclosure.
  • Disclosures – a number of distinct communications, made to different persons, may amount to qualifying disclosures.
  • Whereas you must not dismiss or subject to a detriment an employee because s/he made a protected disclosure, where the manner in which the employee pursues the disclosure is highly unreasonable or hostile, dismissal may well be lawful, subject to the usual considerations of fairness.

The upshot of these decisions (coupled with legislative changes from last year) is that employers ought to be proactive in dealing effectively with whistleblowers. Below, we make a number of practical suggestions to help this process.

LLP Members can be "workers" protected under whistleblowing legislation

The case of Clyde & Co v Bates van Winkelhof hit the headlines last month, when the Supreme Court held that the claimant, an LLP's member, was a worker. The member's work arrangements were such that she met the requirements of the statutory definition of a worker. In brief, as an "equity" partner in Clyde & Co, Ms Bates van Winkelhof was unable to market her services to anyone other than the LLP and played an integral part within the business. The fact that she was not in a subordinate position vis a vis the LLP, was held to be irrelevant.

Whether every partner in every LLP will be a "worker" will depend on the nature of the specific LLP arrangements. However, it is fair to say that the Clyde & Co's LLP arrangements were not unique or unusual and, as many LLPs are likely to have similar arrangements, their partners are also likely to be workers.

The upshot is that individual LLP members ought not to be subjected to a detriment because they blow the whistle. Workers do not have unfair dismissal rights, however. As a side note to whistleblowing, bear in mind that workers enjoy a number of other rights, including to paid statutory holiday, not to be subjected to a detriment based on part-time status and to pension auto-enrolment.

Concerns raised in separate documents, over a number of days and to different individuals can be taken together to amount to a qualifying disclosure.

Recent decisions confirm that concerns which, on their own, may not amount to a qualifying disclosure can, when taken together, amount to such a disclosure. This is the case even if the communications were made to different individuals or departments (Norbrook Laboratories (GB) Ltd v Shaw).

The facts of the Shaw case provide a useful example. The background to the case is the winter of 2010 in which the UK saw severe snow conditions. The claimant was a manager in the sales team. Members of his teams were concerned that they might not be paid if they were unable to get to a sales meeting due to the snow. The claimant sent two separate emails at the end of November to a health and safety manager. In the first email, the claimant merely made an enquiry about risk assessment and how to advise his team to proceed. In the second email, sent to the same health and safety manager, the claimant sought guidance and expressed various concerns about the dangerous driving conditions. A third email, sent to a HR manager about a week later, contained various statements of concerns on the same issue. Did the claimant make a qualifying disclosure? "Yes", said the ET and EAT.

The EAT made it clear that an early statement which does not amount to a qualifying disclosure by itself may nonetheless be embedded in another statement and the two, taken together, may amount to a qualifying disclosure. In reaching this conclusion the EAT made it clear that:

  • it is immaterial that the statements are made to different individuals;
  • it does not matter if the statement merely conveys obvious facts (e.g. driving in the snow can be difficult); and
  • it is irrelevant that the background to the disclosure falls outside the whistleblowing regime (e.g. it relates to financial concerns).

This decision can have significant implications for organisations. It has always been difficult to ascertain when information falls within the whistleblowing regime. But this decision makes the task much harder – especially for line managers who are unlikely to be familiar with the ins and outs of the regime.

What to do?

  1. Talk to and train your managers: make sure they are alive to the issue of whistleblowing. There is no escaping the need to provide training on this area of law.
  2. Consider establishing a whistleblowing hotline or having trained whistleblowing champions – who will be designated as first point of contact. While you cannot force employees and workers to blow the whistle to a particular person, the availability of designated individuals will encourage many staff members to contact them in the first place. Following the Enron case, it was reported that whistleblower Sharon Watkins stated that Enron's lack of response to her concerns ultimately led her to seek help from the media.
  3. Establish, in advance, clear lines of responsibility, e.g. HR and managers may be directed to refer all reports of financial irregularities to an audit or compliance officer.
  4. Ideally, consider promoting a corporate culture that encourages workers to raise valid concerns. Make it clear that you regard valid concerns as opportunities for improvement, not a source for resentment or hostility. By maintaining such a culture, claims can be avoided as workers will be more comfortable in raising concerns informally and resolving matters within the organisation.
  5. On receiving a communication which may amount to whistleblowing, err on the side of caution. Act quickly. And, maintain a confidential recordkeeping system that enables you to review the subsequent employment history and treatment of the whistleblower. You will want to use this to prove that the organisation did not subject the whistleblower to any detriment.

Where the manner in which a worker pursues a whistleblowing is wholly unreasonable, dismissal may be justified and fair

The EAT delivered some good news to employers in the case of Panayiotou v (1) Chief Constable Paul Kernaghan; (2) Police and Crime Commissioner for Hampshire. In brief, the EAT confirmed that an employer was able to dismiss an employee, after the latter made a string of whistleblowing disclosures, where the decision to dismiss was motivated by the manner in which the employee pursued its action, rather than the fact that he made a protected disclosure. After making the disclosures, which were fully investigated and dealt with by the employer, the employee had become completely unmanageable. He was dissatisfied with the employer's handling of his complaints and had begun a campaign which was designed to achieve resolutions in the manner which he believed to be suitable. In the particular case, said the EAT, "the employee would have exhausted the patience of any employer".

The decision is important and useful for employers. However, it has to be approached with common sense. An employer seeking to dismiss because of the "manner of disclosure" will need to ensure (in advance) that it has strong evidence to back up its actions and decision. This is particularly important bearing in mind that compensation for unfair dismissal on whistleblowing grounds is uncapped.

June 2013 – legislative changes to the whistleblowing regime

A number of important changes were made on 25 June 2013 to the legislative regime which protects workers who blow the whistle. These include the following:

  1. The introduction of a requirement that disclosures must be made in a worker's reasonable belief that the disclosure was in the public interest. This is designed to reduce claims that are based purely on breach of individuals' contractual rights, where the breach has no public interest element. The imposition of vicarious liability duties on employers where a co-worker subjects a whistleblower to a detriment. Employers will have a defence if they can show that they took reasonable steps to prevent such action taking place, e.g. through implementing and enforcing suitable and robust whistleblowing policies.
  2. Removal of the requirement for disclosures to be made in good faith, alongside the introduction of power for tribunals to reduce any compensation made to a worker by up to 25 per cent where the disclosure is held not to have been made in good faith.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Michal Stein
 
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