On 1 January 2017 the Financial Services Rule Book 2016 (the "Rule Book") comes into operation. With this will be the requirement on all Isle of Man licence holders to establish, implement and maintain an effective whistleblowing policy to encourage the reporting of any improper or unlawful behaviour.
Protected Disclosures in Employment
Under Part IV of the Employment Act 2006 ("EA 2006"), employees and workers are given a number of rights and protections if they decide to 'blow the whistle'. This means that employees and workers who raise legitimate concerns about malpractice in accordance with the EA 2006 and who, as a result, find themselves subject to detriment from their employer can claim compensation for unfair dismissal. Compensation claimed in these circumstances can exceed the statutory limit of £56,000.
It has long been advisable for employers to have in place a whistleblowing policy setting out procedures by which staff can confidentially report concerns about illegal, unethical or otherwise unacceptable conduct. With the changes to the Rule Book this will no longer be a matter of best practice, but a positive obligation for businesses within the regulated sector.
Preparing an Effective Whistleblowing Policy
There is no one size fits all whistleblowing policy; policies will vary depending on the size and nature of the organisation. With this in mind, a business would be well advised to consider the following points when introducing or updating its whistleblowing policy:
- Employers should review any existing policies and procedures to determine if (and to what extent) any required standards of conduct have already been made clear to the workforce and identify the systems in place for handling matters when things go wrong and whether the same remain fit for purpose.
- A whistleblowing policy should be non-contractual in nature; it should also "stand alone" and should not be confused or integrated with any grievance policy.
- There is no point having a policy in place if staff do not know about it or feel able to make a disclosure internally and thus blow the whistle to someone other than the employer, i.e. the media. Communicating commitment from the top will assist with "buy in".
- A precedent policy is but a useful
starting point. Whilst there is no requirement for businesses to
consult with staff on the arrangements to be adopted, to do so can
raise awareness generally as to the importance of an internal
whistleblowing policy and provide valuable insight which can be
incorporated into the draft, to include:
- Identifying the risks within the business;
- Factors which might deter employees from raising whistleblowing concerns; and
- The role of management under the policy.
- Who should handle disclosures? The most practical starting point is to encourage staff to raise concerns with their line manager; however an alternative must also be available.
- Training should be provided to all staff on how disclosures should be raised and how they will be acted upon. Additional training should be provided to those with whistleblowing responsibilities, such as key managers and the board so that they can determine the appropriate action to take upon a disclosure being made.
- Does your organisational culture encourage whistleblowing as a safe alternative to silence? If not, consider why. The whistleblowing policy should set out the legal protection available to whistle-blowers, with the company affirming that any detriment towards an individual who raises a disclosure will not be tolerated (and tie this into the company disciplinary procedure).
- Likewise, the policy should make it clear that malicious false allegations will be grounds for disciplinary action. Ensuring the policy is properly drafted will avoid abuse of the process or dilution of the policy itself.
- Review and update the policy on a regular basis to ensure it continues to meet the needs of the business and any regulatory requirements. Staff re-training should be conducted from time to time to help encourage adherence to the policy and best practice.
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.