Tag Archive: whistleblowing

Whistleblowing ‘public interest’ test – EAT gives surprisingly wide interpretation

Reports of whistleblowing continue to have high profile with the UK’s media and it is one area which has seen a bustle of activity from the Government in recent times, from legislative reform, to the publication of guidance to assist both employers and workers. The aim has been to strengthen the whistleblowing framework, and in doing so, to reduce malpractice in organisations and to assist individuals to report malpractice without fear of reprisal.

As the law now stands, whistleblowers are protected against dismissal and detriment on the basis of making a qualifying ‘protected disclosure’. In June 2013, a number of important changes came into effect, changing the meaning of a protected disclosure.  The original test was that the disclosure had to tend to show, in the reasonable belief of the worker, a criminal offence; a failure to comply with a legal obligation;  a miscarriage of justice; danger to health and safety; damage to the environment; or that one of these matters has been deliberately concealed. The disclosure on these matters had to be made in a prescribed way and in good faith.

With effect from 25 June 2013, a ‘public interest’ test was introduced which now requires the worker to reasonably believe that their disclosure on one of the relevant matters is being made ‘in the public interest’. At the same time, as a counter-balance to the introduction of this test, the good faith test was removed. The purpose behind these changes was to reverse the findings of previous case law which had extended whistleblowing protection to workers seeking to make disclosures in their own personal interest. The reforms sparked some controversy with some workers’ organisations claiming that the public interest requirement placed too high a burden onto workers and that they may be deterred from seeking the protection of the legislation. There was also concern over the scope of the meaning of ‘public interest’.

The EAT has now had opportunity to consider the meaning of ‘public interest’ in two separate cases. Despite the widely held belief that the ‘public interest’ test would generally exclude claims relating to employees’ personal interests, both these cases suggest that the opposite is true and that, in fact, the introduction of the  ‘public interest’ test may have little impact in practice.

In the case of Chesterton Global Ltd (t/a Chestertons) v Nurmohamed the employee was dismissed after claiming that his employer was deliberately misstating £2-3 million of actual costs and liabilities through the entire office and department network, which affected the earnings of 100 senior managers, including himself.

The tribunal found that the employee had a reasonable belief that his disclosures were in the interest of 100 senior managers and that that was a sufficient group of the public to amount to being  a matter in the public interest. The tribunal said that ‘public interest’ could not mean that the matter was in the interest of the entirety of the public. It is only necessary for a section of the public to be affected.

The EAT upheld the tribunal’s findings and said that the test did not require the disclosure to be in the public interest per se, but only for the worker to have a reasonable belief that the  disclosure is made in the public interest. The EAT said that the sole purpose of the June 2013 changes was to reverse the effect of existing case law and that the public interest test was introduced to do no more than prevent a worker from making disclosures in relation to a  breach of his own contract of employment where the breach is of a personal nature and there are no wider public interest implications. The EAT therefore found that the employee had been automatically unfairly dismissed.

In the case of Underwood v Wincanton Plc, an employee alleged that he had been automatically unfairly dismissed following a written complaint he had made with three other lorry drivers. The complaint alleged that the distribution of overtime was being dealt with unfairly and in breach of their contracts of employment.  The employee claimed this was a protected disclosure. The employment tribunal initially struck out the claim on the basis it could not meet the ‘public interest’ test.

However, the EAT overturned this decision. Referring to the Nurmohamed case, the EAT said that what leaps out is firstly the importance of the matter being assessed in a factual context; secondly the fact that the EAT has held that the public interest requirement may be met by a relatively small group of persons, and thirdly, that those persons may constitute employees of the same employer who have the same interest in the matter as that raised by the claimant personally.  The EAT also noted the findings in Nurmohamed that the question for consideration is not whether the disclosure per se is in the public interest, but whether the worker making the disclosure has a reasonable belief that the disclosure is made in the public interest.  The EAT therefore remitted the claim back to the tribunal for determination along with the claimant’s other claims.

The outcome of these cases has demonstrated that the courts are likely to take a fairly broad approach to the meaning of ‘public interest’ – an approach which does not necessarily sit comfortably with the meaning anticipated by employers.  However, it is also clear each case will turn on its facts and that the interpretation of the ‘public interest’ test will be one of degree based on those facts.

It is worth noting that the Chesterton case is the subject of an appeal to the Court of Appeal.  In the meantime, employers will have to remember that it is the reasonable belief of the employee that matters, not whether the matter is actually in the public interest, and that a relatively small group of people may be found to constitute an interested public. On the flip side, however, it seems that the concerns of workers’ groups have been somewhat allayed.

Whistleblowing seems likely to remain in the spotlight into the future.  Employers should follow developments closely to ensure that they understand their rights and obligations and embrace the opportunity now to put into place comprehensive whistleblowing policies to protect the business and ensure that any allegations of malpractice are directed, and dealt with, in an appropriate manner.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/whistleblowing-public-interest-test-eat-gives-surprisingly-wide-interpretation/

December 2013’s review of the year

Sandra Wallace, Partner and Employment group head, highlights the most important legislative and case law developments from 2013 and identifies the key cases to watch out for in 2014.   Remember to use our On the horizon legislation tracker to keep up to date with the further changes to legislation which are expected in 2014 and beyond.

 

2013 LEGISLATION ROUND UP

Employment Tribunals

1 February Cap on a week’s pay for statutory awards increased from £430 to £450
  Unfair dismissal compensatory award increased from £72,300 to £74,200
25 June In political affiliation cases the two year unfair dismissal qualifying period no longer applies
29 July One year cap on unfair dismissal compensatory award introduced
  Protection of settlement negotiations from admissibility in unfair dismissal tribunal proceedings introduced
  Introduction of fees regime for employment tribunal claims and new tribunal rules
  Compromise agreements renamed ‘settlement agreements’
7 October New fee remission system in force for employment tribunal fees

Family friendly

8 March Parental leave increased from 13 to 18 weeks
7  April Statutory maternity, paternity and adoption pay rates increased from £135.45 to £136.78 per week

Whistleblowing

25 June Amendments to whistleblowing legislation to remove good faith requirement and introduce public interest test
1 November

Close of call for evidence on further whistleblowing reform

Redundancy

1 February Cap on a week’s pay for statutory redundancy payments increased from £430 to £450
6 April Period of required collective consultation for 100+ redundancies reduced from 90 to 45 days

Employment status

1 September Employee shareholder status introduced

Discrimination

25 June Obligation for the Government to make an order outlawing caste discrimination came into force
1 October Repeal of third party harassment provisions from Equality Act 2010

 

 

2013 CASE LAW ROUNDUP

 Redundancy

USDAW and others v WW Realisation 1 Ltd and others This case involves the redundancy consultation obligations arising out of the closure of Woolworths and Ethel Austin stores between 2008 and 2010.   The EAT ruled that the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. This potentially results in employers needing to collectively consult whenever they propose to make 20 or more redundancies in a 90 day period, regardless of where the employees are based.  This case is however being appealed to the Court of Appeal.

Working time

Neal v Freightliner Ltd

 

An Employment Tribunal held that a freight worker was entitled to have overtime payments and shift premiums included in the calculation of his holiday pay as they were intrinsically linked to the performance of the tasks he was required to carry out under his employment contract.  This case is being appealed to the EAT.

Employee competition

Coppage and anor v Safety Net Security Ltd The Court of Appeal upheld an order that a former company director pay at least £50,000 following a breach of his post-termination restrictive covenants which prohibited solicitation of any customers of his former employer for a period of six months following termination.
Vestergaard Frandsen SA v Bestnet Europe Ltd The Supreme Court held that a former sales manager was not liable for misuse of confidential information.  The manager had not acquired information while working for Vestergaard and had no implied knowledge of the misuse of information by her new employer.

Transfer of undertakings

Alemo-Herron and others v Parkwood Leisure Ltd

Considering the status of collective agreements following a TUPE transfer, the ECJ decided that under the Acquired Rights Directive it is impermissible for UK courts to adopt a “dynamic” rather than a “static” interpretation.  Where transferring employees’ contracts provide that their terms are to be determined in accordance with collective agreements, the transferee cannot be bound by terms which are collectively agreed after the transfer if it is unable to be involved in the negotiating process.

Crystal Palace FC Ltd v Kavanagh & Ors

In a case which arose out of the dismissal of employees of the company which owned Crystal Palace football club when it went into administration, the Court of Appeal held that the employees were dismissed by the administrator shortly before the business was sold for a valid “economic, technical or organisational reason”. The administrators needed to reduce the wage bill in order to continue running the business and avoid liquidation.

Discrimination

Lockwood v Department of Work and Pensions

The Court of Appeal held that a severance scheme, which paid higher payments to older employees on the basis that they needed more of a cushion than younger employees, was objectively justified.

Cox v Essex County Fire and Rescue Service

In this disability discrimination case, the EAT decided that although the employee had advised that he was suffering from bipolar disorder, the absence of a definite diagnosis meant that the employer did not know, and could not have reasonably been expected to know, that the employee was disabled.

Croft Vest Ltd & Ors v Butcher

The EAT held that an employer who refused to pay for an employee with work-related stress and depression to have private psychiatric counselling and cognitive behavioural therapy breached its duty to make reasonable adjustments.

KEY CASES FOR 2014

 Redundancy

USDAW v Ethel Austin Ltd (in administration) and another case

 

The Court of Appeal will consider whether the words “at one establishment” in the UK’s collective redundancy legislation should be disregarded for the purposes of any collective redundancy involving 20 or more employees. (NB. this is the Woolworths case  – see above for EAT decision).
Lyttle and others v Bluebird UK Bidco 2 Ltd In an application from a Northern Ireland employment tribunal to the ECJ, clarification is sought as to the meaning in the UK’s collective redundancy legislation of the term “establishment” and whether the duty to collectively consult is triggered when 20 or more employees are dismissed at a particular establishment or across the whole of the employer’s business.

Working time

Lock v British Gas Trading Limited and others The ECJ will consider whether the holiday pay of a worker, who receives basic pay and sales-related commission, should be more than just basic pay, even though during holiday periods they are not undertaking work that would entitle them to commission.
Neal v Freightliner Following the Employment Tribunal in 2013 (see above), the EAT will consider if holiday pay must be calculated in a way which takes account of pay for voluntary overtime.

Discrimination

Z v A Government Department & the Board of Management of a Community School;    CD v ST There are currently two cases before the ECJ which will consider whether an mother who has a child via a surrogacy arrangement has pregnancy and maternity rights under EU law.
FOA on behalf of Karsten Kaltoft v Billund Kommune The ECJ will consider whether discrimination on grounds of obesity is prohibited by EU discrimination law.

Gallop v Newport City Council

 

Judgment is awaited in this case in which the Court of Appeal has considered if an employer’s lack of knowledge prevents the duty to make reasonable adjustments arising where the employer relied on advice from an occupational health adviser that an employee was not disabled for discrimination purposes.

Mba v Mayor and Burgesses of the London Borough of Merton

Judgment is awaited in this case in which the Court of Appeal has considered whether or not an employer’s requirement that all care workers work some Sunday shifts indirectly discriminated against a Christian residential care worker who strongly believed that Sunday should be a day of rest.

Employment law reforms

R (on the application of UNISON) v Lord Chancellor

 

Judgment is awaited in this case in which the High Court heard an application by UNISON claiming that the introduction of employment tribunal fees is in breach of EU law and contrary to the principle of access to justice.    A similar application to the Scottish Court of Session has been stayed pending the outcome of the High Court case.

R (on the application of Compromise Agreements Ltd) v Secretary of State for Business, Innovation and Skills

An application has been made for judicial review of the statutory cap of one year’s salary in unfair dismissal cases. The application is based on the premise that older people are more likely to be out of work for more than a year and therefore would be eligible to more than a year’s compensation were it not for the new cap.

Permanent link to this article: http://www.dlapiperbeaware.co.uk/december-2013s-review-of-the-year/

Changes to whistleblowing law: In the public interest?

Alan Chalmers, Partner in our Sheffield office, comments:

Recent news stories concerning the NHS and the financial services industry have highlighted how challenging the issues associated with whistleblowing can be for an organisation. On the one hand, employers need to know if there are illegal, improper or dangerous practices going on, in order to manage risk and avoid litigation or even criminal liability. On the other hand, the disclosure of information about wrongdoing within an organisation to the public in general may hinder internal investigation, damage the reputation of the organisation and affect staff morale.

The law seeks to achieve a balance between these competing interests by providing protection for whistleblowers but only in limited circumstances. Under the current public interest disclosure legislation, it is unlawful for an employer to subject one of its workers to a detriment or to dismiss an employee on the ground that they have made a ‘protected disclosure’. This means a disclosure which in the reasonable belief of the worker, tends to show a criminal offence, breach of any legal obligation, miscarriage of justice, danger to health and safety of any individual, damage to the environment or a deliberate cover-up of any of these.

Whistleblowing claims can be attractive to employees as they are not subject to any length of service criteria, there is no cap on compensation, and there is also potential for negative publicity to put pressure on employers to agree a settlement. As a result, the law has increasingly been used in circumstances which were not foreseen when the legislation came into force. For example, claims have been brought by employees seeking to rely on disclosures of alleged breaches of their own employment contracts.

It is difficult to see the element of ‘public interest’ in many such claims. The Government has now decided to amend the ERA in order to limit the potential for them. However, it is far from clear that the proposed amendment achieves what it set out to. The Government in fact now proposes additional changes which, taken together with recent case law, may cause significant headaches for employers.

The first amendment proposed by the Government is to impose a requirement that, in order to be protected, the disclosure must be ‘in the public interest’. There is concern that this unnecessarily limits the scope of protection in relation to more serious types of disclosure (by imposing an additional requirement), but does not necessarily eliminate the ‘self-interest’ claims of employees alleging breach of their own contracts. This is likely to be a particular concern for employers in the financial services sector. Tribunals may have considerable sympathy with employees claiming that it was in the public interest to blow the whistle on alleged improper operation of the bonus system by a bank, even if it was their own interest affected.

Other proposed amendments to the draft Enterprise and Regulatory Reform Bill will widen the scope of the whistleblowing legislation. At present, most disclosures must be made in good faith. This reduces the likelihood of employees making unfounded allegations motivated by a grudge against the employer or the prospect of financial reward. The Government is proposing to remove the ‘good faith’ requirement. This may well lead to an increase in allegations being made post-termination in order to put pressure on employers to make a financial settlement.

Finally, the Government is also proposing to make employers vicariously liable for the acts of its employees towards whistleblowers. At present, the whistleblower is only protected from being subjected to a detriment by the employer. If colleagues subject the employee to harassment or give them the cold shoulder, the employee has no redress under whistleblowing law. The amendment proposed by the Government would bring whistleblowing protection in line with discrimination; the employer will be liable for the actions of its employees, but will have a statutory defence against claims if it can show it took all reasonable steps to prevent the whistleblower from being subjected to a detriment. If enacted, this will make it essential that employers have a robust formal whistleblowing policy, and train employees and managers on how the policy works.

Recent decisions of the EAT have also raised the prospect of more claims. In a recent case, Onyango v Adrian Berkeley t/a Berkeley Solicitors the EAT held that Mr Onyango was entitled to rely on a letter before claim and report to a regulator as being protected disclosures even though they were made after his employment had terminated. Where the employment relationship has terminated in difficult circumstances, and the parties are already in dispute, this gives considerable scope to the ex-employee to make allegations of wrongdoing in order to put pressure on the employer.

There are considerable problems with whistleblowing protection in its current form. However, it remains to be seen whether the proposed amendments will achieve the appropriate balance between protection for genuine whistleblowers and deterrence of ‘nuisance’ claims aimed purely at increasing the money paid to a departing employee.

alan.chalmers@dlapiper.com
+44 114 283 3259
 

 

 

Permanent link to this article: http://www.dlapiperbeaware.co.uk/changes-to-whistleblowing-law-in-the-public-interest/