Whistleblowing

The principles

In England and Wales, workers can disclose certain information and obtain protection in relation to that disclosure. In order to be protected, the disclosure must relate to a "qualifying disclosure" and the worker must follow a set procedure when making the disclosure.

A qualifying disclosure is a disclosure of information which, in the reasonable belief of the worker making the disclosure, is in the public interest and shows one or more of the following:

• a criminal offence;
• a failure to comply with a legal obligation;
• a miscarriage of justice;
• that the health or safety of an individual has been endangered;
• damage to the environment; or
• the concealment of information showing any of the above.

A worker who has made a protected disclosure must not be subject to a detriment or dismissed because they have made a protected disclosure. Compensation for dismissal in these circumstances is uncapped and no qualifying period of employment applies.

In the regulated sector, large financial institutions that are covered by the Senior Managers and Certification Regime (SMCR) have specific obligations to ensure adequate protection for whistleblowers - a person who discloses a “reportable concern”. Reportable concerns extend to a wider category of conduct than protected disclosures, including:

• protected disclosures (including breaches of the rules of the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA));
• breaches of the firm's policies and procedures; and
• behaviour that harms or is likely to harm the reputation or financial wellbeing of the firm.

For more information on the general employment protection for whistleblowers in the UK, see our article Whistleblowing in the UK

We have also produced a comprehensive toolkit for employers in relation to whistleblowing which includes a section on the rules that apply to those in the regulated sector.

Recent developments (general)

EU Directive:

• On 16 April 2019, the European Parliament approved an EU Directive intended to strengthen protection for whistleblowers who report on breaches of EU law, including areas such as financial services, product safety, transport safety, consumer protection, environmental protection and data protection. In addition it is intended to address the imbalance of whistleblower protection across the EU member states.

• The Directive would extend protection beyond employees to all persons who observe a violation of EU law in their work-related activities. This broad definition would include self-employed persons, freelancers, consultants, volunteers, unpaid trainees and even job applicants.

• The Directive includes provisions designed to protect whistleblowers from any retaliation in the workplace, such as unfair dismissal and demotion.

•  Companies in scope will be required to set up an internal reporting channel to ensure confidentiality for whistleblowers and will be subject to specific requirements in terms of the processing and management of whistleblower concerns.

NDAs:

• The UK government has been consulting on changes to ensure that employers use non-disclosure agreements only where legitimate and do not constrain or deter individuals from raising whistleblowing concerns. Whilst UK legislation already renders void any provision in an agreement which purports to remove a worker’s right to “blow the whistle”, the proposals include additional requirements to ensure that the impact of relevant confidentiality clauses are clear to individuals and that employers make clear in non-disclosure agreements what is not prevented from disclosure. The consultation closed on 29 April 2019 and new legislation and guidance is to be expected in October 2019 or April 2020.

APPG:

• In June 2019 the All Party Parliamentary Group (APPG) published its first report setting out a 10-Point Plan of recommendations for improvements to the current whistleblowing regime, including defining the term “whistleblower” in law, revising the legal definition of whistleblowing, introducing mandatory internal and external reporting mechanisms, reviewing compensation, establishing a regulatory enforcement body, and banning NDAs in whistleblowing cases. The APPG seeks, through these recommendations, to improve the effectiveness of UK whistleblowing legislation by simplifying the regulatory framework, aligning policy and procedure with actual practice, and clarifying the protections available to whistleblowers.

Financial Services sector requirements:

• In October 2015, the PRA and FCA introduced new rules on whistleblowing that now apply to large financial institutions covered by the SMCR. FCA solo-regulated firms will be subject to the extended SMCR on 9 December 2019 (further details are available on our SMCR Extension page. We also offer an SMCR Solution and SMCR Toolkit). Although these rules on whistleblowing are not directly applicable to financial services outside of the SMCR, they are considered by the FCA to be guidance for these firms.

Recent developments (case law)

• Tiplady v City of Bradford Metropolitan District Council (2019) tests the boundary of whistleblowing “within the employment field”. The CoA held there is no protection from detriment if the employee blows the whistle in their private or personal capacity and then suffers detriment. The Claimant was a householder who owned a property in the local Council area and was also an employee of the local Council. The Claimant lodged a grievance that the Council had been unreasonable in its dealing with issues near her property and later resigned, claiming automatic unfair dismissal for whistleblowing. The Court took the view that the detriments complained of concerned the Claimant in her capacity as a householder, not an employee, and so was not “within the employment field”. However, the Court emphasized that the “boundaries should not be drawn narrowly”, and the case does not provide definitive guidance.

• The Supreme Court decision in Royal Mail Group Ltd v Jhuti (2019) made clear that if a line-manager deliberately hides the real reason for an employee’s dismissal behind an invented reason which the decision-maker adopts, the reason for dismissal will be the hidden reason. Here, the decision-maker dismissed an employee in good faith on grounds of performance. She was not aware of the protected disclosure (whistleblowing) made to the employee's line manager as the line manager had not disclosed these. The Supreme Court held that the employer was liable for automatic unfair dismissal as the line-manager had deliberately hidden the fact of the disclosures and put the employee on a sham performance improvement plan. While generally there will be no automatic unfair dismissal where the decision-maker did not know about, and could not be motivated by the protected disclosures, if the decision-maker is deceived or given false evidence the Court will penetrate through the invented reasons.

• The case of Elysium Healthcare No 2 Ltd v Ogunlami (2019) concerned a healthcare worker who had raised concerns that their supervisor was taking patients’ food. Elysium appealed on the grounds that the concerns raised by a healthcare worker were not a qualifying disclosure. Elysium argued that the tribunal had not established that the care worker had a subjective belief that a legal obligation was being breached. The EAT rejected this appeal, holding that even though the care worker had not explicitly stated that it was a breach of a legal obligation, he considered the supervisor’s conduct to be morally wrong and even referred to it as a disciplinary matter and a safeguarding issue. A strict knowledge of legal obligations was not needed. The EAT noted that it is interested in the substance, not form, of a disclosure.

• In Okwu v Rise Community Action Ltd (2019), the EAT had to discern whether the public interest element of a complaint was satisfied. An employee was dismissed from a charity for poor performance. She had previously made complaints about how poor equipment provision contributed to these performance issues. She later argued these complaints were qualified disclosures. The EAT held that even though these complaints were made in defence of her poor performance, this did not mean that she could not reasonably believe them to be in the public interest. Public interest need not be the only motivation for making the complaint.

• The recent Court of Appeal decision in Foreign and Commonwealth Office and others v Bamieh (2019) held that an overseas whistleblower could not bring a claim against overseas co-workers in a British employment tribunal, overturning the EAT’s decision. Applying and adapting the “sufficiently British connection” test from Lawson v Serco, the Court ruled that it was not sufficient to assess the strength of connection between each individual respondent and Great Britain, but instead the court must establish whether the relationship between the co-workers has a sufficiently British connection. Despite sharing a common UK employer, the co-workers had not been seconded together, only worked with one another whilst overseas, and only came into contact by virtue of this. It was duly held that there was insufficient connection between this working relationship and British law.

• In the case of Ibrahim v HCA International Ltd (2019), the EAT held that “breach of legal duty”, in order to constitute a protected disclosure, can include tortious duties including defamation. Although it dismissed the appeal, the EAT agreed with the claimant that a complaint he made to HR, regarding false rumours about him in the workplace, could amount to a protected disclosure as defamation is a breach of a legal duty. The claimant’s case was unsuccessful, however, as the EAT found the disclosure was not in the public interest.

• In Saad v Southampton University Hospitals (2018), the EAT confirmed that the consideration of bad faith concerns the claimant’s honesty in their belief of the allegation(s), as opposed to their motive for making the allegation(s). In cases of victimisation, making false allegations are only protected disclosures when they are not made in bad faith. In this case, when facing the likelihood that he would fail the assessment required to qualify as a Consultant Surgeon, Mr Saad raised a grievance regarding a racially discriminatory remark made four years prior, which turned out to be false, although Mr Saad believed it to be true. The ET found that Mr Saad’s motive for making the false allegation was in bad faith (to postpone his performance assessment). The EAT allowed Mr Saad’s appeal on the basis that whilst his motive was in bad faith, his honesty in his belief of the allegation was not in bad faith.

• Some developments may result in more whistleblowing claims being brought against employers, co-workers and other individuals (including NEDs):

  • In the recent case of Kilraine v London Borough of Wandsworth (2018), the Court of Appeal clarified that there should be no rigid dichotomy between “information” and “allegations” as disclosed by an employee for the purpose of whistleblowing protection. Previous case law has established that a protected disclosure must involve information, and not simply voice a concern or raise an allegation. Kilraine v London Borough of Wandsworth clarified this position, stating that sometimes an allegation will also constitute information and amount to a qualifying disclosure, so long as it has sufficient factual content and is sufficiently precise. Therefore, there is no rigid binary of “information” and “allegation”. A recent application of this in Dray Simpson v Cantor Fitzgerald Europe (2019) confirmed the distinction, but found in this case that allegations which were lengthy, speculative, and unsubstantiated lacked the “sufficient factual content” to show a breach of a legal obligation.

  • In the recent case of Timis & anor v Osipov (2018), the Court of Appeal upheld the decision that individual co-workers can be personally liable on a joint and several basis with the employer for a whistleblower’s post-dismissal losses. In this case Mr Osipov was the CEO for IP Ltd and made protected disclosures. Mr Timis and Mr Sage, two non-executive directors, dismissed Mr Osipov. They were both held jointly and severally liable with IP Ltd for Mr Osipov’s losses by both the ET, EAT and subsequently the Court of Appeal.

Practical tips in an investigation

• Establish immediately whether the information raised by an individual could be a protected disclosure. If it is (or could potentially be), maintain good records of whistleblowers' details as well as the issues which they raise and ensure that all involved in the handling of the whistleblower are aware of obligations not to victimise the individual.

• Similarly, in the regulated sector, consider whether the issue raised by an individual falls within the wider definition of a “reportable concern”. If it does, ensure that appropriate procedures are followed and all involved are aware of obligations not to victimise. How that person is treated could be relevant to the fitness and propriety of the person handling the situation.

• In the regulated sector, if an allegation relates to a specific individual it could, of course, be relevant to that individual’s fitness and propriety.

• In light of Royal Mail Group v Jhuti, HR should ensure that the person deciding whether to terminate an employee’s employment has access to all the relevant information. This may include information about disclosures that an employee has raised with a line manager even if the allegations were withdrawn or not fully investigated. The decision-maker must probe appropriately to test the veracity and reliability of evidence produced to ensure they are not overlooking a whistleblowing disclosure.