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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.

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