Following incidents such as the Clapham rail crash, the Zeebrugge ferry disaster and the scandals at the Bank of Credit and Commerce International (BCCI) and Baring Asset Management, it became clear that staff had been aware of the risks but had been too worried about what might happen to them to raise their concerns.
Public Interest Disclosure Act (PIDA) 1998
PIDA 1998 came into force on 2 July 1999, with the aim of targeting the above issues and of protecting individuals who make certain disclosures of information in the public interest (ie individuals who ‘blow the whistle’). PIDA 1998 inserted new ss43A-43L and s103A into the Employment Rights Act (ERA) 1996. These sections offer ostensible protection (from detriment and/or dismissal) for workers who report malpractices by their employers (or third parties).
The dismissal of an employee will be automatically unfair if the reason or principal reason for their dismissal is that they have made a protected disclosure. The protection, however, extends beyond employees to workers, protecting them from being subjected to any detriment on the grounds that they have made a protected disclosure.
There are no minimum service requirements to bring a claim for whistleblowing and compensation is uncapped. There is also the possibility of claiming interim relief. This has made whistleblowing claims attractive fodder for claimants.
To qualify for whistleblower protection a worker must make a ‘qualifying protected disclosure’, ie the disclosure has to be of a certain type, made in a certain way and, importantly, most disclosures must be made in good faith.
Has there been a qualifying protected disclosure?
Disclosure of information
Disclosure is a very broad term. A disclosure can be made orally and/or in writing. That said, a disclosure must be more than simply a statement of position. It must convey facts, even if those facts are already known to the recipient. In Cavendish Munro Professional Risks Management Ltd v Geduld[2009] the Employment Appeal Tribunal (EAT) held that a solicitor’s letter setting out Mr Geduld’s objections to the way he had been treated by his employer did not amount to a protected disclosure, but was simply a statement of the employee’s position designed to bring about a settlement. The EAT has also recently found, in Goode v Marks and Spencer plc [2010], that the expression of an opinion about an employer’s proposal to change a discretionary redundancy scheme did not amount to a qualifying protected disclosure. Cavendish and Goode should provide some reassurance for employers that not just any statement can form the basis for a whistleblowing claim.
Timing of the disclosure
It was previously assumed that disclosures needed to be made during the course of employment. However, it was held in Woodward v Abbey National plc [2006] that a worker who is subjected to a detriment by their former employer after the termination of employment (provided that the disclosure was made when they were still a worker) can bring a claim for detriment under the legislation. An example of such a detriment would be an employer providing a bad reference as a result of disclosures made by the worker during employment. In Woodward, it was acknowledged that some benefits accrue during the period of employment and some after, but there is no rational ground for distinguishing one from the other where they arise equally from the employee’s employment.
The EAT went further in the recent BP plc v Elstone & anor [2010]. In that case, the EAT allowed a worker (Mr Elstone) to pursue a whistleblowing case against his employer (BP), based on a qualifying protected disclosure that he made while working for a previous employer. The EAT accepted that a disclosure will not be protected unless it is made by a worker, ie an individual must be employed or engaged at the time of making a disclosure. However, the EAT acknowledged that the legislation does not specify that the employer at the time of the disclosure and the employer against whom the claim is made have to be the same.
Mr Elstone was summarily dismissed by Petrotechnics Ltd, a company that oversaw and evaluated safety processes for BP plc. The reason for dismissal was that Mr Elstone had informed senior BP employees about his safety concerns and Petrotechnics viewed this as disclosure of confidential information in breach of Mr Elstone’s contract of employment. Following his dismissal, Mr Elstone began to work as a consultant for BP. However, when he raised the possibility of further consultancy, BP refused. This was because Petrotechnics had informed BP that Mr Elstone had been dismissed for disclosing confidential information. Mr Elstone brought a tribunal claim against BP alleging that it had subjected him to a detriment on the basis that he had made a qualifying protected disclosure. At a pre-hearing review (affirmed by the EAT), it was held that, given Mr Elstone was a worker both at the time of the disclosure and at the time of the detriment, his whistleblowing claim against BP could proceed.
The decision highlights a loophole in relation to job applicants. Unlike anti-discrimination legislation, an applicant is not protected by the whistleblowing provisions, so an applicant who is denied employment because they have ‘blown the whistle’ while with a former employer will not have a claim.
Nature of the disclosure
A qualifying protected disclosure is one that, in the reasonable belief of the worker making it, tends to show one of the following types of malpractice (by the employer or a third party) has taken place or is likely to take place:
- criminal offences;
- breach of any legal obligation;
- miscarriages of justice;
- danger to the health and safety of an individual;
- damage to the environment; and/or
- the deliberate concealing of information about any of the above.
There is no express requirement that qualifying protected disclosures are made in the public interest. For example ‘breach of a legal obligation’ is very broad and, according to Parkins v Sodexho Ltd [2002], includes a breach of a worker’s own contract of employment (including implied terms, such as breach of trust and confidence). Parkins caused widespread concern to employers as it significantly widened the remit of the malpractices that were thought to form the basis of a qualifying protected disclosure.
Further, a worker does not have to prove that the facts or allegations that form the basis for disclosure are true, or that they are capable of amounting to one of the six listed categories of wrongdoing. As long as a worker subjectively believes that the failure has occurred or is likely to occur (and such belief is objectively reasonable), it doesn’t matter if the worker turns out to be wrong or if the disclosure doesn’t actually fall within one of the categories.
Good faith requirement
Qualifying protected disclosures must generally be made in good faith. A disclosure made for predominantly personal (rather than public) interest may fail this test. However, the burden of showing bad faith will be on the employer.
‘Good faith’ does not mean truth, but it has been described as ‘acting with honest motives’. Where the predominant purpose of the disclosure is not righting the wrongs alleged, it is unlikely that the disclosure will have been made in good faith. However, there are often mixed motives at play and an ulterior motive may only negate good faith if it is the predominant motive.
Reason for dismissal
Even if an employee makes a qualifying protected disclosure, they will not be entitled to protection from the legislation if that disclosure is not the reason or principal reason for the dismissal (or detriment). Undoubtedly, it could prove difficult for an employer to fairly dismiss an employee who has made a qualifying protected disclosure. It is therefore essential that the employer can demonstrate that there was a reason other than the qualifying protected disclosure for its treatment of the employee (see ‘Right not to be dismissed’ on p34).
Appropriate person to disclose to
A worker must make the disclosure to the appropriate person. Normally, this will be the employer, but the legislation does provide for disclosure, in certain circumstances, to responsible third parties, industry regulators, legal advisers, government ministers and even wider disclosure (eg to the media or police) where the disclosure is ‘exceptionally serious’. Varying conditions apply to the disclosure depending on the person that it is made to and, notably, more stringent conditions apply where wider disclosure is made.
protection
Once it has been established that a qualifying protected disclosure has been made, PIDA 1998 creates two levels of protection for whistleblowers. These are set out below.
Right not to be subjected to a detriment
Workers have the right not to be subjected to a detriment on the grounds that they have made a qualifying protected disclosure. Whether a detriment is ‘on the grounds of’ a qualifying protected disclosure involves an analysis of the mental processes of the employer. It is insufficient to show that ‘but for’ the disclosure, the employer’s act or omission would not have taken place. There must be a causative link between the qualifying protected disclosure having been made and the employer’s conduct. The detriment must be more than just related to the disclosure.
In detriment cases, the employee or worker must show that they have made a qualifying protected disclosure and that there has been detrimental treatment. However, the employer has the burden of proving the reason for the treatment. If an employer cannot prove an admissible reason for the treatment then the tribunal is likely to conclude that it is because of the qualifying protected disclosure.
A claim for a detriment must be presented to the tribunal within three months of the act or the failure to act to which the complaint relates, or where the complaint relates to a series of acts or failures, within three months of the last of them.
Right not to be dismissed
Employees will have a claim for automatic unfair dismissal under s103A of ERA 1996 if the reason or principal reason for the dismissal is that they have made a qualifying protected disclosure. Again, the tribunal should consider the decision-making processes of the employer or relevant manager. If multiple disclosures are made, the tribunal should consider whether, cumulatively, they were the principal reason for dismissal (El-Megrisi v Azad University (IR) in Oxford [2009]).
As stated above, there are no minimum service requirements and there is no upper limit on compensation.
The employee must bring the claim within three months of the effective date of termination. In dismissal cases, an employee must demonstrate that they have made a qualifying protected disclosure and that they have been dismissed (or are otherwise entitled to bring an unfair dismissal claim).
But who has the burden of proving the reason for dismissal?
Where an employee has one year’s service
In Kuzel v Roche Products Ltd [2008], the court held that the general provisions of s98(1) of ERA 1996 apply to claims for automatic unfair dismissal by reason of whistleblowing. These provisions require the employer to show that the reason or principal reason for the dismissal was a potentially fair one. The employee can put forward an alternative reason, such as the making of a qualifying protected disclosure, provided there is some evidence to support it, but that does not mean that the burden of proof lies with the employee.
If the employer fails to establish a potentially fair reason for dismissal and the employee has raised a prima facie case that the reason is the qualifying protected disclosure, the tribunal is entitled to infer that the qualifying protected disclosure is the true reason for the dismissal. However, it then remains open for the employer to convince the tribunal otherwise. This means that the employer can still beat the claim for automatic unfair dismissal. The dismissal may, of course, be held to be an ordinary unfair dismissal (but will then be subject to the cap on compensation).
Where the employee has less than one year’s service
Where an employee has insufficient service to claim ordinary unfair dismissal, the burden of proof that the dismissal is for an ‘inadmissible reason’ lies with the employee.
Whistleblowing in the current economic climate
It is well known that whistleblowing claims are used by employees to get round the cap on compensation for ordinary unfair dismissal and the normal one year service requirement. In recent years, there has also been an increase in the use of whistleblowing claims as a tool by workers in the City to obtain increases in the amounts of their bonuses. Banks are reporting that an increasing amount of workers are alleging that they have raised concerns regarding compliance with the Financial Service Authority (FSA) requirements and, as a result of raising those concerns, that they have received lower bonuses and thus suffered a detriment. The fact that FSA regulations are extremely far-reaching leaves banks particularly exposed, however, other employers are likely to experience similar issues.
Whistleblowing claims are expensive both to bring and defend. However, would-be claimants are spurred on by the potential unlimited compensation and the hope that employers will not wish for such allegations to be aired in an employment tribunal, and will thus settle claims out of court. This may be even more likely in light of the new power of tribunals to pass whistleblowing claims to regulators. Employers can reduce the risk of claims by having clear processes and policies in place, not only in relation to whistleblowing, but also in relation to remuneration, conduct and capability. It will be far harder for workers to allege that they have been subjected to a detriment if an employer has treated them in accordance with its own procedures.
By Åsa Waring, legal director, and Susannah Kintish, solicitor, Mishcon de Reya.
E-mail: asa.waring@mishcon.com;
