How much could a whistleblowing claim really cost your business?

The case of Small v Shrewsbury and Telford Hospitals NHS Trust involved a 56-year old worker who was temporarily supplied to the Trust (via an employment agency) in May 2012 on the understanding that this might lead to full-time employment. This engagement was terminated only 2 months later after he made a protected disclosure.

The worker succeeded in his Employment Tribunal claim for “detriment” because of a protected disclosure (the detriment being the termination of his engagement).  The Tribunal then had to consider how much compensation to award him at a remedies hearing.

The worker claimed for loss of earnings up to his retirement date (10 years later) on the basis that he would have been offered permanent employment with the Trust if he had not made a protected disclosure. He also provided evidence of numerous applications he had made for work in the same field, which had been unsuccessful, and he argued that his job search had been detrimentally impacted by his dismissal and the absence of a reference from the Trust.

The Tribunal initially awarded compensation of £54,126, including £33,976 for loss of earnings on the basis that the worker would have been retained by the Trust until November 2013. No further loss of earnings was awarded after November 2013.

The Tribunal also suggested that the worker’s termination had been “career-ending”, on the basis that his career was dependent on the outcome of his last job and the lack of a reference made it difficult to find another job.

The worker appealed to the EAT on the basis that he should have been awarded loss of earnings for longer (beyond the date the engagement would otherwise have ended) and that he should also be compensated for the “stigma” he now suffered in the job market following a dismissal for whistleblowing (a principle arising from an earlier Court of Appeal case called Chagger v Abbey National plc).

The EAT dismissed the appeal, as the worker had not raised those arguments before the Tribunal.  The EAT also did not accept that the Tribunal should have considered those arguments of their own volition. The worker appealed again.

The Court of Appeal allowed the appeal, finding that the Tribunal should have considered awarding the worker more long-term losses and/or “stigma” compensation (based on Chagger). Although the worker had not advanced a specific “stigma” claim at the original Tribunal hearing, there was sufficient evidence before the Tribunal which should have caused them to consider this, including the worker’s evidence regarding his long-term losses, and the Tribunal’s acceptance that the termination of his engagement was potentially “career-ending”.

What does this mean for you or your business?

Even before this case, whistleblowing claims were high-risk and costly for businesses, as:

• Any “worker” can bring a “detriment” claim because of a protected disclosure, for which they can claim injury to feelings and financial losses resulting from the detriment;
  
  
• An employee can bring an automatic unfair dismissal claim because of a protected disclosure without any minimum length of service;
  
  
• Compensation for a whistleblowing unfair dismissal is uncapped; and
  
  
• The PR consequences of such a claim can be very damaging.

This recent case suggests that a Tribunal should consider awarding stigma damages under Chagger, even if a claimant does not specifically claim such losses, if there is enough evidence to suggest that the detriment or dismissal suffered has caused the worker/employee a stigma. This is likely to make whistleblowing cases even more expensive for employers.

What should you be doing now?

• Review your Whistleblowing Policy and ensure that it is up to date and comprehensive.
  
  
• Ensure that your Disciplinary Policy links in to the Whistleblowing Policy. For example, both policies should make clear that workers/employees must not be subjected to any detriment/dismissal because they have made a protected disclosure, and that breaching this will be a disciplinary matter.
  
  
• Ensure that all managers are trained on and fully understand what to do in the event that a worker or employee blows the whistle, as the consequences of getting this wrong are becoming even more costly.

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.