What employers need to know about managing whistleblowing
08/23/2022
Even though UK whistleblowers receive legal protection if certain criteria surrounding their disclosure are met, many Employment Tribunal claims consist of unfair dismissal or discrimination matters stemming from whistleblowing.
In May 2022, an employer was ordered to pay compensation of almost £17,000 after an employee complained of "detriment at work for making a protected disclosure" was upheld. One of the reasons employers face claims following a team member blowing the whistle is because they do not fully understand whistleblowing protection law. And given that current UK whistleblowing laws have been called “inadequate” and described as “not meet most international standards”, it comes as little surprise that many whistleblowing disputes end up before the Employment Tribunal, resulting in stress, high costs, and reputational damage. It should be carefully noted that there is no financial cap on compensation in whistleblowing claims and no requirement for a minimum period of service before bringing a Tribunal claim.
To help you draft effective whistleblowing policies and conduct compliant internal investigations if whistleblowing occurs, we have outlined the relevant law below. Please note that this article does not constitute legal advice and if you are facing a whistleblowing incident you should instruct an experienced solicitor.
What are the laws that protect whistleblowers?
The main legislation protecting whistleblowers is the Public Interest Disclosure Act 1998 (PIDA). It protects employees on two levels:
a) If the reason or principle reason for an employee’s or employee shareholder’s dismissal is related to the making of a protected disclosure, that dismissal will be deemed automatically unfair, and
b) Workers are also protected from being subjected to any detriment because they have made a protected disclosure.
A disclosure qualifies as a protected disclosure if the worker making it holds the reasonable belief that it is made in the public interest and tends to show one or more of the types of wrongdoing or failure listed in section 43B(1)(a)-(f) of the Employment Relations Act 1996, namely:
a) that a criminal offence has been committed, is being committed or is likely to be committed,
b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which they are subject,
c) that a miscarriage of justice has occurred, is occurring or is likely to occur,
d) that the health or safety of any individual has been, is being or is likely to be endangered,
e) that the environment has been, is being or is likely to be damaged, or
f) that information tending to show any matter falling within any one of the preceding paragraphs has been, is being or is likely to be deliberately concealed.
For a disclosure to qualify as protected it must also be made to one of the categories of people listed in sections 43C to 43H of the Employment Relations Act 1996, namely:
a) an employer or other responsible person
b) a legal advisor
c) a Minister of the Crown
d) a person prescribed by the Secretary of State (for example a regulatory body such as the Information Commissioner’s Office.
e) a person not covered by the list above (for example a reporter) provided certain conditions are met.
As well as PIDA there may be a claim in tort in limited circumstances. In Rihan v Ernst and Young Global Ltd [2020] EWHC 901 (QB), a senior employee working for the defendant company in Dubai who could not rely on the statutory whistleblowing regime because he worked abroad succeeded in a tortious negligence claim that his firm had breached a duty to take reasonable steps to prevent him from suffering financial loss because it failed to perform an audit ethically and without professional misconduct. This particular case is rare and confined to its facts, however, the employee was awarded almost $11 million for past and future loss of earnings. The Court made clear that had the claimant been able to rely on the PIDA provisions regarding protected disclosure, the claim in tort would not have succeeded.
Do I have to have whistleblowing policies and procedures?
There is no legislative duty for employers to encourage whistleblowing or have written whistleblowing policies. However, the Guidance for Employers and Code of Practice published by BEIS in March 2015 suggests that the existence of a whistleblowing policy shows an employer's commitment to listening to workers' concerns and that it welcomes information being brought to the attention of management.
Companies with accounting periods commencing on or after 17 June 2016 and before 1 January 2019 must comply with the 2016 version of the UK Corporate Governance Code. The July 2018 version of the Code (2018 Code) and the revised Financial Reporting Council Guidance on Board Effectiveness are effective for financial periods beginning on or after 1 January 2019. Section C of the 2016 Code (Principle O in the 2018 Code) places several obligations on directors concerning "internal control" including provisions on whistleblowing.
Finally, in 2014, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) published their Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. It states that a robust system of internal control should be ingrained in an organisation’s culture, be able to swiftly respond to newly identified risks, and include procedures for reporting immediately to appropriate levels of management any significant control failings or weaknesses that are identified, together with details of corrective action being taken.
Wrapping up
Having a clear understanding of whistleblowing law will provide you, as an employer, with protection against Employment Tribunal claims. To discuss any points made in this article, please contact us.
