Whistleblowing – new challenges for employers

Referee iStock 000006306507XSmall 146x219Ceri Widdett examines the potential impact on employers of proposed reforms to whistle-blowing legislation.

The Public Interest Disclosure Act (PIDA) 1998 amended the Employment Rights Act 1996 (ERA) and provided workers with protection against dismissal or detriment for making a “protected disclosure”. PIDA represents an exception to the worker’s duty of confidentiality.

Clause 15 of the Enterprise and Regulatory Reform Bill (ERRB) amends Part IVA of the ERA, which deals with public interest disclosures. The Bill is currently before the House of Lords at the Report Stage and proposes:

  • A requirement that the worker to prove that in his/her reasonable belief the protected disclosure was made “in the public interest”;
  • Removal of the requirement that a protected disclosure be made “in good faith”;
  • Giving the tribunal the power to reduce compensation where protected disclosures are not made in good faith;
  • Making employers liable for bullying or harassment of whistleblowers by co-workers. 

Disclosure made in the “public interest”

Clause 15 proposes to amend s 43B (1) of the ERA 1996 as follows:

“43B. (1) In this Part a "qualifying disclosure" means any disclosure of information which, in the reasonable belief of the worker making the disclosure is made in the public interest and tends to show one or more of the following-

(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 he is 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.”

Whilst there is no blanket ban on claims arising out of a breach of the terms of a worker’s contract of employment (for example the failure to pay holiday pay or a bonus) such claims will no longer be protected under the amendment unless the worker can also show that the disclosure is also in the public interests.

The amendment is designed to close the loophole created by the EAT decision in Parkins v Sodexho Ltd [2002] IRLR 109. In that case Mr Parkins had successfully claimed that a breach of his contract of employment was a breach of “any legal obligation” (s 43(B)(1)(b)) and therefore that his disclosure was protected. Following this decision there were concerns that City bankers were using PIDA to avoid the statutory cap in unfair dismissal claims by claiming that their pre-dismissal complaints about individual bonus payments were protected disclosures.

Public Concern at Work comments that any whistleblower would now be faced with the “difficult situation” of having to judge what is in the “public interest”. Furthermore, the amendment will lead to a “field day for lawyers” arguing whether a disclosure is in the public interest or not. It is likely that future litigation on this issue and the distinction/overlap between public and private interests can be expected.

The removal of the “good faith” requirement

Protection under PIDA only applies if the disclosure is made in “good faith”. In Street v Derbyshire UWC [2004] IRLR 687 it was held that an employee could fail the good faith test where the dominant or predominant motive for making the disclosure was unrelated to the public interest objectives of PIDA.

The Shipman Report proposed that the good faith test be removed from PIDA because of the fear that it deters workers from raising public concerns at work. However, the removal of the good faith requirement has caused concern for some employers who fear that workers will be encouraged to make claims for personal interest. This concern is dealt with, to some extent, by a proposed amendment to s 49(2A) of the ERA 1996 which provides that, in a claim for breach of s 43B and/or s 103A of the ERA, the employment tribunal may reduce the amount of compensation by up to 25% where it is proved that the complainant did not make the protected disclosure in good faith. Additionally, the employment tribunal has the power in any event to further reduce compensation where it is “just and equitable” to do so (s 123(1) of the ERA).

Vicarious liability

The gap in protection for whistleblowers against bullying and harassment by co-workers was highlighted in NHS Manchester v Fecitt [2011] EWCA Civ 1190. In that case three nurses from a walk-in clinic made protected disclosures about a fellow nurse’s false statements concerning his professional qualifications and clinical experience. As a result, the nurses were subject to bullying and harassment from fellow workers. The Court of Appeal found that s 47B of the ERA was clear and NHS Manchester could not be vicariously liable for bullying and harassment by co-workers. Elias LJ refused to fill in, what was described by Robin Allen QC as, a “lacuna”, stating that this was clearly a matter for Parliament. Parliament did take the matter up and the proposed amendment to PIDA will make employers vicariously liable for any bullying or harassment of whistleblowers by their co-workers, unless the employer took all reasonable steps to prevent it. This brings PIDA in line with existing provisions relating to vicarious liability in current discrimination legislation.

A missed opportunity?

There have been calls for a more extensive overhaul of whistleblowing protection following the recent string of scandals including North Staffs and Baby P.

One area of concern is the use of “gagging” clauses in compromise agreements. Section 43J of the ERA makes express reference to such clauses being void in relation to making protected disclosures. However, few workers are aware of this provision and some employers have continued to insist on such clauses.

Public Concern at Work suggests that lawyers be placed under an obligation to advise clients that such clauses are void. Lawyers are already under an obligation to advise clients as to the effect of any settlement agreement including any “gagging” clauses so this would add little, save that an express obligation in PIDA claims may ensure that this obligation is closely adhered to.

Public Concern at Work further sensibly suggest extending the current definition of “worker’ in whistleblowing cases to ensure that it includes all GPs, student nurses, doctors, health care professionals, volunteers, non-executive directors and job applicants.

Additionally, Public Concern at Work suggests extending the categories of wrongdoing to include gross waste, gross mismanagement and abuse of authority. Extending the scope of categories of wrongdoing to include those suggested by Public Concern at Work would increase litigation and costs. Such cases would inevitably involve examination of extensive documentation in order to establish the workers “reasonable belief” of the wrongdoing.

For the time being, those who feel that the amendments do not go far enough can find some solace in the fact that City Workers will no longer be able to use PIDA to challenge their bonuses. For those who fear the removal of the bad faith test, perhaps a little comfort can be found in s 49(2A) and s 123(1) of the ERA.

Ceri Widdett is a barrister at Exchange Chambers. She can be contacted byThis email address is being protected from spambots. You need JavaScript enabled to view it..