In 2020/2021, approximately 3,000 whistleblowing claims were issued in the Employment Tribunal. Although this is far lower than for example the number of ordinary unfair dismissal claims, whistleblowing claims are more complex, and losing a claim can have a significant financial and reputational impact. Here we look at what whistleblowing is and what defending such a claim could entail for employers.
- What does the term “whistleblowing” mean?
Whistleblowers are protected by the Public Interest Disclosure Act 1998 (PIDA) which amended the Employment Rights Act 1996 (“ERA”). This legislation protects workers who report certain kinds of wrongdoing by their employers from being victimised or dismissed. The subject matter of the disclosure, the motivation, and beliefs of the worker as well as the person to whom they make a disclosure, are all important factors when determining if the worker is protected.
- What are the possible claims?
The dismissal of an employee will be automatically unfair if the reason, or principal reason, for their dismissal is that they have made what is known as a "protected disclosure". They do not need to have any minimum length of service to bring this claim, unlike ordinary unfair dismissal which requires employees to have two years’ continuous service.
While only an “employee” can bring an unfair dismissal claim, a ”worker” can claim for detriment on the ground that they have made a protected disclosure. A detriment can be any disadvantage such as the loss of a promotion, being ignored or shunned, or being excluded from training, social events etc. The usual definition of worker under the ERA 1996 is also extended for these purposes to include individuals who would not otherwise be covered, such as agency workers or those undertaking work experience as part of a training course.
- What is a protected disclosure?
Deciding whether a disclosure is protected can be very complicated and ultimately only an employment tribunal can make that decision. Whether a whistleblower qualifies for protection depends on whether they have made a qualifying disclosure. There has to be an actual disclosure of information rather than simply gathering evidence or threatening to make a disclosure. In addition, the subject matter of the disclosure must relate to one of six types of "relevant failure", i.e.:
- a criminal offence, for example, fraud or money laundering
- someone’s health and safety is in danger
- risk or actual damage to the environment
- a miscarriage of justice
- the company is in breach of any legal obligation
- a deliberate concealing of information about wrongdoing
The worker also has to have a reasonable belief that the information tends to show one of the relevant failures above and that the concern is in the public interest i.e. it must have an impact that is wider than just one employee’s personal circumstances.
The disclosure must also “qualify” as a protected disclosure which broadly depends on whom the disclosure is made to. The simplest form of disclosure is to an employer, a protected disclosure may be made to other prescribed or external persons such as the police or media but only if certain conditions are met.
- If we operate in financial services is there anything more that we should be aware of?
Yes, there are particular rules in place regarding whistleblowing in the financial services sector set out in the FCA Handbook and the PRA Rulebook. Under PIDA, if a whistleblower makes a report to a prescribed person such as the FCA, they will potentially qualify for the same employment rights as if they had made a report to their employer. If they do qualify, reporting to their employer directly is not required. You may also need to appoint a “whistleblowing champion” who is responsible for the firm’s policies and procedures on whistleblowing.
- Does the manner in which the employee blows the whistle matter?
In the recent case of Kong v Gulf International Bank (UK) Limited , the Court of Appeal looked at whether an employee was dismissed for making a protected disclosure (i.e. for “blowing the whistle”), or for the unacceptable manner in which she did so. The court agreed that the employee had been dismissed because she made explicit and unnecessary criticisms of her line manager and that her dismissal for conduct reasons was in fact unrelated to her protected disclosures.
The critical question to be determined in these kinds of cases is what motivated a particular decision-maker, i.e. what reason did they have for dismissing or adversely treating the complainant? As the court noted in this case, this can be a very difficult exercise because human motivation is complex and subtle distinctions about why someone acted the way they did have to be considered to see whether the reason for the dismissal can genuinely be separated from the making of the protected disclosures. Nevertheless, this case is encouraging for employers who should always ensure that the reasons for dismissal are properly documented.
- How much compensation can a whistleblower claim?
There is no cap on the level of compensation that can be awarded if a whistleblowing claim is successful. Compensation may include past and future loss of earnings as well as injury to feelings and is uncapped. If a tribunal decides that a claimant will not be able to find employment within their sector as a result of the stigma of bringing their claim, and if they are a high earner, then compensation reflecting “career loss” can be very high indeed. In 2022, a claimant was awarded in excess of £1.6 million for lost earnings, bonuses, and pensions.
Bear in mind also that in whistleblowing claims, an employment tribunal can grant the employee “interim relief”. This is an order for the continuation of their employment (i.e. they must receive their salary and contractual benefits) pending the final determination of their claim. You can find more information about this in our recent newsletter on interim relief here.
How 3CS can help
Whistleblowing claims are complex, time-consuming, and can result in reputational damage as well as a considerable financial loss if they are not vigorously defended from the very outset. We have extensive, specialist experience with defending whistleblowing claims and resisting interim relief applications and are ready to assist and advise your business. Please get in touch with your usual 3CS contact for further information.