Since the introduction of Tribunal fees in July 2013, statistics show that roughly 1,400 protected disclosure, or 'whistleblowing', claims are brought each year. From a business perspective, the time and financial cost involved in dealing with complaints involving alleged wrongdoing internally, and the added reputational risk involved when defending whistleblowing claims, can be high.
Dealing with complaints which allege any form of legal wrongdoing is not straightforward. They will require a detailed and sometimes lengthy investigation, which will take up a large amount of management time and resources, and involve in-house legal and HR.
For workers or employees, and particularly for those earning in excess of the unfair dismissal compensation limit (£80,541 from 6 April 2017), a whistleblowing claim is one route to uncapped compensation in the Employment Tribunal.
At our workshop on 22 March 2017, we explored how to respond to concerns raised by staff, including those raised at the same time as they are subject to performance or disciplinary issues, referring also to our recent experience of whistleblowing claims.
The practical issues you need to know about
So how should employers deal with complaints which may amount to a protected disclosure?
- Is it a qualifying disclosure?The wording of the complaint, the surrounding circumstances, even related correspondence, can all be factors in determining whether a complaint amounts a qualifying disclosure for the purposes of the whistleblowing legislation.
- How should you deal with complaints raised as a defensive measure by individuals who believe that they may be at risk of disciplinary or other action.Employers are understandably concerned at the difficulty of making disciplinary, performance management, or even redundancy decisions in relation to staff who have recently submitted a complaint which may amount to a protected disclosure.
- How much information is the individual complainant entitled to about the outcome of the investigation into their complaint, particularly when their complaint is about something which does not affect them directly, such as something happening in another part of the business or related to a third party?
- What happens if you uphold a whistleblowing complaint? Where individuals have their complaints upheld there is a common (sometimes shared) misconception that those individuals are almost untouchable from a management perspective.
- What if you do decide to dismiss?Unlike many other types of claims, employees have the option to lodge a claim immediately with the Employment Tribunal applying for interim relief, requiring their employer to continue their contract of employment (and pay) indefinitely until the claim has been determined.Whilst such applications are rare, responding within a matter of days to an interim relief application can be costly and time consuming, with the possibility that you may end up paying an employee for 12 months or more whilst his or her claim works its way through the Tribunal system.
- What has been the impact of the removal of the good faith requirement (at least until the compensation stage), and the introduction of the requirement that in order to be protected disclosures must be in the public interest?The cases that have addressed the question of what might be considered to be in the public interest have been generous in their interpretation, so that a complaint affecting more than one worker or employee could be covered.However, this is a question that the Court of Appeal will consider at the end of this year.
Allegations of serious wrongdoing, particularly those that find their way into the public arena, have the potential to do serious damage to the reputation of a business.That reputational risk is emphasised by the fact that:
- Employment Tribunals can send details of whistleblowing claims direct to the relevant regulator if the claimant consents by ticking the box on the ET1; and
- From 1 April 2017, prescribed persons (regulators, government departments, and other public bodies to whom disclosures can lawfully be made by private sector workers) will be required to report annually on disclosures that they receive.Reports must contain: the number of qualifying disclosures made in the relevant 12 month period; how many were subject to further action by the prescribed person; and a summary of any action taken.At present regulators need not report any details that might identify the individual who made the disclosure or the employer, but the reports will be available online.
Developments in financial services
As if the whistleblowing legislation was not already sufficiently complex, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have both taken steps to seek to address concern that individuals working for financial services institutions are reluctant to speak out about bad practices for fear of retaliation.
Since 7 September 2016 deposit takers with assets above £250m and certain insurance and reinsurance firms have been required to appoint a whistleblowing champion (a director or senior manager, in most cases likely to be a non-executive director) to act as an independent person to whom staff can go with their complaints. The whistleblowing champion also has primary responsibility for ensuring the integrity and independence of the firm's policies, and to protect individuals from retaliation. They should be sufficiently independent from the firm, and have access to independent legal advice, in order to carry out his or her responsibilities. As part of this, the FCA has introduced a new category of "reportable concerns" which, for internal purposes only, extends the categories of disclosures that should be dealt with under a regulated firm's whistleblowing policy to breaches of the firm's internal rules, policies and procedures, and any behaviour that harms or is likely to harm the reputation or financial well-being of the firm.
So-called 'gagging clauses' in settlement agreements preventing departing employees from making protected disclosures have been banned. Reports must be made to the FCA of any case in which a claimant wins a protected disclosure claim. The FCA is clear that any evidence that a firm has acted to the detriment of a whistleblower may call into question the fitness and propriety of the firm and/or its staff.