A high level outline of employment protection for whistleblowers in the UK.
Whistleblowing has become increasingly important part of the employment law landscape, particularly in the financial services sector. This is in part due to the fact that there is increased emphasis on encouraging whistleblowing claims and in part due to the fact that compensation for whistleblowing claims is unlimited.
Expectations of companies on how to handle whistleblowing are increasing, with recent changes in regulation and market pressure. In the financial services sector, organisations subject to the new senior managers and certification regime were required to appoint a whistleblowing champion from 07 March 2016. One of the champion’s tasks was to oversee the introduction of new rules from 07 September 2016. From September 2017, UK branches of overseas banks (which are not largely subject to the rules) were also required to notify staff about their whistleblowing arrangements.
In April 2018, the European Commission proposed a new Whistleblowing Directive, which aims to create consistency across the EU by setting new minimum standards for employers and regulators with regard to whistleblower protection. The Legal Affairs Committee of the European Parliament has now approved the draft legislation.
In June 2018, the European Trade Secrets Directive came into force, which specifically provides that the measures to protect trade secrets set out in the Directive should not restrict whistleblowing activity.
What is whistleblower protection?
In the UK, workers can disclose certain information and obtain protection in relation to that disclosure. It is not the case that a worker may make any disclosure and claim protection.
The disclosure must relate to one of the subject matters defined as a "qualifying disclosure". In addition, the worker must follow a set procedure when making a disclosure. In general terms, most qualifying disclosures made to a worker's employer will be protected. Stricter regimes are set if the disclosure is made to someone other than the employer.
The intention of the law is to encourage workers to disclose their concerns within the organisations where they are employed and to avoid reckless and irresponsible disclosure. Therefore, unless the matter is exceptionally serious, the employer or an appropriate prescribed person must usually be informed of the matter before it is disclosed more widely, and the worker must act reasonably in making the wider disclosure.
Who is protected?
The protection applies to:
- agency workers
- workers not obliged to carry out work personally
- NHS practitioners, and
Special provisions apply to others such as Crown employees and police officers.
Which disclosures are covered?
In order to attract the protection of statute, the disclosure must be a "qualifying disclosure".
This means any disclosure of information which, in the reasonable belief of the worker making the disclosure, is in the public interest and tends to show one or more of the following:
- a criminal offence
- failure to comply with a legal obligation
- a miscarriage of justice
- the health or safety of an individual has been endangered
- damage to the environment, or
- concealment of information showing any of the above.
A disclosure of information is not a qualifying disclosure if:
- the person making the disclosure commits an offence by making it, or
- the disclosure would be in breach of the principle of legal professional privilege.
Disclosure of information
The term "disclosure" is not defined in the legislation, but has a wide application and can include disclosures made in writing or verbally.
There must be a disclosure of information. Until recently, it was held that a protected disclosure must contain information (the conveying of facts) and not simply voice a concern or raise an allegation (Cavendish Munro Professional Risks Management Ltd v Geduld). However, in a recent case, the court held that a statement that could be characterised as an allegation could also constitute information and amount to a qualifying disclosure, and must be assessed in the context it was made (Kilraine v London Borough of Wandsworth).
The public interest requirement
A disclosure (made on or after 25 June 2013) will only be a qualifying disclosure if the worker reasonably believes that the disclosure is "in the public interest".
There have been numerous recent cases which have considered the “public interest” test. Whilst it will be heavily fact dependent, the court has confirmed that a disclosure which is in the private interest of the worker can also be in the 'public interest' in circumstances where it also serves the (private) interests of other workers too (Chesterton Global Ltd v Nurmohamed). Concerns raised purely in self-interest are not protected (Parsons v Airplus International Ltd).
Procedure for making a disclosure
In order to qualify for protection, a worker must follow one of the set procedures in disclosing the "qualifying disclosure". Essentially, this means disclosing the information to:
- an employer or other responsible person
- a legal adviser
- a Minster of the Crown
- a prescribed person, or
- other cases.
The precise procedure which must be followed depends upon the person to whom the individual is making the disclosure.
Disclosure to employer or other responsible person
A qualifying disclosure is made if the worker makes the disclosure:
- to his/her employer, or
- where the worker reasonably believes that the relevant failure relates solely or mainly to:
- the conduct of a person other than his/her employer, or
- any other matter for which a person other than his/her employer has legal responsibility,
to that other person.
An example of a person other than the employer to whom the worker may disclose is the employer's client where the worker might be engaged (such as a company being audited).
Where an organisation has a whistleblowing procedure which authorises raising the concern with someone other than the employer (for example authorising a disclosure to a health and safety representative, a union official, its parent company, a retired non-executive director, its lawyers or external auditors, or to a commercial reporting hotline) a disclosure to that person will be treated as if it were a disclosure to the employer.
Disclosure to Minister of the Crown
A qualifying disclosure is made if the disclosure is made to a Minister of the Crown and the worker's employer is an individual or body appointed under any enactment by a Minister of the Crown.
This protects people in government appointed organisations, such as non-departmental public bodies, if the worker makes a disclosure to the sponsor department rather than their legal employer.
Disclosure to prescribed person
A qualifying disclosure is made if the worker makes the disclosure to a “prescribed” person and reasonably believes that:
• the failure falls within any description of matters in respect of which that person is so prescribed, and
• the information disclosed, and any allegation contained in it, are substantially true.
Prescribed persons are regulators and other bodies to whom a worker can make a protected disclosure instead of, or in addition to, their employer.
The Prescribed Persons (Reports on Disclosures of Information) Regulations 2017 (SI 507/2017) came into force on 01 April 2017, which imposed a new duty on all prescribed persons to produce an annual report on whistleblowing disclosures made to them by workers.
Disclosure in other cases
A qualifying disclosure is made if a worker makes a disclosure of information that the worker reasonably believes to be substantially true, the disclosure is not made for the purposes of personal gain and:
- when the worker makes the disclosure, he/she reasonably believes he/she will be subjected to a detriment by his/her employer if he/she makes a disclosure to his/her employer or to a prescribed person
- if there is no prescribed person in relation to the relevant failure, the worker reasonably believes that it is likely that evidence relating to the relevant failure will be concealed or destroyed if he/she makes a disclosure to his/her employer
- the worker has previously made a disclosure of substantially the same information to his/her employer or a prescribed person, and
- in all the circumstances of the case, it must be reasonable for the worker to make the disclosure.
Disclosure of exceptionally serious failure
A qualifying disclosure is made if:
- the worker reasonably believes that the information disclosed, and any allegation contained in it, are substantially true
- the worker does not make the disclosure for purposes of personal gain
- the relevant failure is of an exceptionally serious nature, and
- in all the circumstances of the case, it is reasonable for the worker to make the disclosure.
In deciding whether it is reasonable for the worker to make the disclosure, the identity of the person to whom the disclosure is made will, in particular, be taken into consideration.
In certain circumstances, an individual can be paid for making the disclosure and still be protected.
A person is protected if making a disclosure to a specified regulatory body even if they do so for the purposes of personal gain. However, there is no protection when making a wider “public” disclosure if it is for personal gain.
Payment can be made for disclosures if this is provided for in any enactment and both the Office of Fair Trading and the HMRC have discretion to provide rewards for information.
A worker who has made a protected disclosure must not have action taken against them on the ground that he/she has made a protected disclosure. This means that:
- The worker must not to be subjected to any detriment by any act, or any deliberate failure to act.
- It is automatically unfair to dismiss an employee if the reason (or the principal reason) for the dismissal is that the employee made a protected disclosure. No qualifying period of employment applies to such claims.
- In a redundancy situation, it is automatically unfair to select an employee for dismissal because he/she has made a protected disclosure. Again, no qualifying period of employment applies.
- It is unlawful to dismiss an employee who is taking part in an unofficial strike or other unofficial industrial action because he/she has made a protected disclosure.
It will be unlawful for a worker to be victimised by a fellow worker for having made a qualifying disclosure.
A person who subjects a whistleblower to a detriment must personally be motivated by the protected disclosure in order for a detriment claim to succeed. Another person's knowledge and motivation cannot be imputed (Malik v Cenkos Securities Plc).
It is not possible to agree with individuals (in advance) that they will not make a protected disclosure.
Any term of any agreement between a worker and his/her employer (whether a worker's contract or not) is void in so far as it purports to preclude the worker from making a protected disclosure.
Interim relief can be awarded if an employee claims that their dismissal is automatically unfair.
If an individual has been subject to a detriment, the tribunal can award such compensation as it believes is just and equitable.
In dismissal cases, the tribunal can order that an employee be reinstated or reengaged. For workers who are not employees, compensation is the only remedy. Compensation in dismissal cases is unlimited.
Higher additional award
If an employer fails to comply with a reinstatement or reengagement order, the tribunal may make a higher additional award of between 26 and 52 weeks’ pay (capped). This will not be payable if the employer can prove that it was not practicable to comply with the order.
There is no legal requirement for an organisation to have a whistleblowing policy although under the Corporate Governance Code listed companies must have whistleblowing policies in place, or explain why they do not.
The Bribery Act 2010 encourages organisations to have in place “adequate procedures” as a defence to corporate liability provisions and whistleblowing policies are recommended in the government guidance which accompanies the Bribery Act recommends that employers have a policy.
The rules which came into force in September 2016 and affect organisations in the financial institutions sector, require affected firms to have written policy. Further detail on those rules is available here.
Employers should consider whether it is appropriate to introduce a procedure for employees to disclose information which would amount to a protected disclosure. There are a number of reasons why such a procedure may be desirable, including:
- If a company has a defined procedure which an employee should follow, this reduces the risk of an employee making a protected disclosure without it coming to the attention of a person with responsibility to act on the disclosure. For example, an employee might make a disclosure in an appraisal or on a company network which the employer does not have the opportunity to deal with.
- If the disclosure procedure makes provision for the disclosure to be made outside the employee's normal line management structure, this will help to ensure that the fact that an employee has made a disclosure does not become a factor in a redundancy selection procedure by way of the subjective application of an objective criteria.
Review contractual confidentiality clauses
Contractual confidentiality clauses should be reviewed in order to ensure that they do not purport to preclude the worker from making a protected disclosure. If a confidentiality clause has this effect the entire clause will be void.
A suggested solution might be to make specific provision, for example:
"Clause [ ] above does not preclude an employee from making a protected disclosure in accordance with the provisions set out in the Employment Rights Act 1996 [which should be made in accordance with the Disclosure Procedure set out in the employee handbook]."
Review redundancy selection criteria
Redundancy selection criteria should, in any event, be objective criteria. However, if an employer has agreed selection criteria these should be reviewed to ensure that he/she is objective. For example a criterion such as "commitment to the company" could be influenced by subjective evaluation based on an employee having made a protected disclosure.
Review grievance procedures
If an employer chooses not to introduce a disclosure procedure it would be well advised to ensure that its grievance procedure makes provision for an employee to raise an issue with someone other than their immediate superior in the event that it is that person about whom their complaint relates. Irrespective of the whistleblowing provisions, it is advisable in all cases for a grievance procedure to make such provisions.
Capture potential disclosures
Again, if an employer chooses not to implement a disclosure procedure the employer should put in place provisions to ensure that any potential disclosure is captured in order to allow the employer to act upon that disclosure. Instances in which such disclosure might be made include appraisals, employee representative forums and other mechanisms for employee communications. Systems for capturing potential disclosures and acting upon them should be considered.
Managers should be trained to ensure that managers to whom disclosures may be made are aware of the protection available to workers under the Act.
The European Commission has proposed a draft directive to strengthen whistleblower protection across the European Union. In November 2018, the Legal Affairs Committee of the European Parliament approved the draft legislation.
It remains subject to review and approval by the European Parliament and the European Council.
Please see our elexica article for a high level overview.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.