Paulette Warrington of Elborne Mitchell examines the guidance in the new Code of Practice on Whistleblowing Arrangements and provides recommendations for employers to deal with protected disclosures by workers.

Does your organisation have a policy for responding to complaints from whistleblowers? A new code makes it advisable. Protection for workers blowing the whistle on their employers has been a part of employment law for almost a decade. Whistleblowing essentially involves the disclosure of wrongdoing. A new Code of Practice on Whistleblowing Arrangements published (jointly by Public Concern at Work and the British Standards Institution) in August is aimed at providing guidance to employers across the board, for more effective handling of instances of whistleblowing. This article considers the key provisions of the law in this area and the recent recommended actions, and provides practical guidance for employers dealing with protected disclosures that employees make to them or an external body.

In the UK, the Public Interest Disclosure Act 1998 (PIDA), which was incorporated into the Employment Rights Act 1996, serves to protect workers from dismissal or any other detriment occurring as a result of them blowing the whistle on malpractice in their place of work. The PIDA also encourages the disclosure of information through appropriate channels rather than, say, through the media. In order to benefit from protection, a worker must make a "protected disclosure", which is defined by reference to the content of the information being disclosed and also the way in which the disclosure is made.

A worker will be protected where s/he makes a disclosure and can show a reasonable belief that the malpractice disclosed occurred, or is likely to occur. The categories of malpractice referred to in the legislation are extremely wide and include criminal offences, breaches of any legal obligation, miscarriages of justice, danger to health and safety, environmental damage and the deliberate concealment of information about such matters. The disclosure does not have to be in the public interest, and may simply concern a breach of an employee's own contract of employment. This has led to abuse by disaffected City workers, who utilise the legislation cynically by strategically deploying protected disclosures on the termination of employment and to 'up the ante' in employment litigation.

The manner in which a worker makes his or her disclosure is also relevant, as is the category of people to whom the information is imparted. Most disclosures are, as you might expect, made to employers. However, a disclosure may fall within the scope of the PIDA if made to legal advisers, government ministers and prescribed persons such as the FSA or the Health and Safety Executive. The conditions applying to the disclosure vary depending on to whom it is made, and the requirement of good faith is a requirement in respect of most categories of disclosure – including that made to an employer.

Dealing with whistleblowing can be a costly affair for employers in the event that an employee successfully claims that the dismissal is attributable to the disclosure. Where a worker can show they were dismissed or suffered detriment as a result of a disclosure (falling within the scope of the PIDA) they may be entitled to uncapped compensation.

So, employers are encouraged to deal with a whistleblower's concerns properly. This may involve carrying out an investigation, perhaps using an independent party in the most serious cases, such as lawyers or accountants. The whistleblower should also be kept informed of the progress of this inquiry, as appropriate. Confidentiality should be preserved as far as possible to protect the whistleblower. Employers should also consider the discloseability of notes and documents in any future proceedings, and may wish to preserve privilege: it may be worthwhile instructing lawyers to give guidance on this difficult aspect.

Other practical steps include protecting the whistleblower from stress, and considering whether insurers should be notified. There may also be obligations on directors and other senior personnel to make disclosures themselves, for example to the FSA, if wrongdoing is in fact uncovered (and, again, directors may need to seek advice in this regard). It should also be borne in mind that certain activities may mean potential corporate liability if directors acquiesced in that conduct.

The new Code of Practice recommends the implementation of good whistleblowing arrangements and that employers should 'lead by example' by involving management in promoting the acceptability of raising whistleblowing concerns.

Whilst there is no statutory requirement for employers to have a whistleblowing policy, it is expected in the public sector: listed companies are obliged to have such policies in place under the Combined Code on Corporate Governance. There are a number of advantages of having such a policy: encouraging employees to raise matters internally, rather than risking reputational damage because of the employee going to the regulator or the media; reducing the risk of malpractice remaining undiscovered; assisting employers in defending claims brought by vexatious workers.

So, what should a whistleblowing policy include? Policies should encourage employees to be open and create an environment in which they feel comfortable about raising concerns. The Code of Practice recommends that policies should illustrate the distinction between grievances and whistleblowing, give employees opportunity to raise a whistleblowing concern other than to line management, provide access to an independent helpline and explain how concerns may be safely raised outside the employer's business – for example, with the FSA.

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.