Whistle-blower protection extended
The recent Court of Appeal case of Chesterton Global Limited v Nurmohamed has increased whistle-blower protection, by widening the test of what is in the public interest. The Court of Appeal have confirmed that a disclosure, which is in the private interest of the worker making it, may actually pass the “public interest” test required in law if it also serves the private interests of other workers.
The test will be a very fact specific one, but it’s a further headache for employers looking to try to differentiate grievances from genuine whistleblowing allegations. It also undoes some of the change introduced by the 2013 changes which removed the requirement for a disclosure to be in “good faith” but did introduce a new requirement that the disclosure had to be in the “public interest”
Mr Nurmohamed was, along with about 100 colleagues, paid commission at work. He believed his employer was exaggerating expenses to depress profits and thus reduce commission payments, in total by about £2-3million. That was an allegation capable of being a protected disclosure, if he fell within the provision that he had to reasonably believe it was in the public interest. The issue for the Court of Appeal was whether a disclosure about a commission structure affecting only a small group of salesman something which could reasonably be believed to be in the 'public interest'?
The Court of Appeal held that it could be in the public interest. Just because a disclosure is in the worker's private interests does not prevent it also being in the public interest. It will be heavily fact-dependent, but the Court adopted four criteria as a starting point for considering those facts as follows:-
- the numbers in the group whose interests the disclosure served;
- the nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed - a disclosure of wrongdoing directly affecting a very important interest is more likely to be in the public interest than a disclosure of trivial wrongdoing affecting the same number of people, and all the more so if the effect is marginal or indirect;
- the nature of the wrongdoing disclosed - disclosure of deliberate wrongdoing is more likely to be in the public interest than the disclosure of inadvertent wrongdoing affecting the same number of people;
- the identity of the alleged wrongdoer - "the larger of more prominent the wrongdoer (in terms of the size of its relevant community, i.e. staff, suppliers and clients), the more obviously should a disclosure about its activities engage the public interest"
Adopting that approach, the Court of Appeal agreed that the Tribunal's conclusion was correct. It had not based its decision entirely on the numbers of employees affected by Chestertons' alleged manipulation of the accounts. It had also taken into account the fact that the alleged manipulation was deliberate and that it involved the mis-statement of the accounts by between £2m-£3m. It found that disclosure of such wrongdoing, by a well-known national estate agent, was plainly capable of being regarded as in the public interest.
The Court did sound a note of caution that tribunals should be slow to find that matters affecting just people within a workforce are a 'public interest' disclosure, albeit often the larger the workforce, the more often there will be other factors present which might be enough to push a disclosure over into the public interest.
Where are we now?
Whistleblowing is gaining a new momentum. It is inextricably linked with policies and attitudes on bribery, corruption and ethics in the workplace and wider social views, plus high profile issues such as the fallout from the VW emissions scandal which highlighted a serious ethical issue within a well-known and trusted business, bring it to the forefront of employees’ minds. Also, individuals are finding new and innovative ways to bring issues before the Courts; of note is the claim brought by Dr Chris Day against the Lewisham and Greenwich Hospital. Dr Day was seriously concerned about understaffing in the hospital and complained to the hospital and to the London Deanery. He claims that after raising his concerns he suffered a detriment and sought to bring a claim leading to a technical legal issue as to whether he could properly bring an allegation of whistleblowing. Dr Day’s case failed at the initial stages but he progressed to the Court of Appeal having raised funds to do so by way of crowd funding. Dr Day set out his cause as seeking a change to the law so as the careers of junior doctors would be protected by whistleblowing law. His crowdfunding page went on to raise over £140,000, and he succeeded at the Court of Appeal, with the case being remitted.
What hasn’t changed it that for whistle-blowers to be protected they have to make a protected disclosure. That means that the individual making the disclosure has to believe that disclosure is in the public interest and shows one or more of the following:
(a) a criminal offence has been committed, or is likely to be committed
(b) a person has failed to comply with a legal obligation
(c) a miscarriage of justice has occurred
(d) the health and safety of any individual has been or is likely to be endangered
(e) the environment has been or is likely to be endangered; or
(f) matters falling within a - e have been deliberately concealed.
The law encourages the individual to make the qualifying disclosure to his employer or another responsible person. The list of third parties is limited so as to encourage internal disclosure and direct allegations to those who can properly deal with them.
A “worker” can bring a claim, which has wide ranging legal implications. It is not just limited to employees. Workers can also claim years after the disclosure was made and they have left employment, if they believe that the disclosure led to, for instance, a poor reference or an adverse reputation on the job market.
Whistleblowing claims are easy to allege but difficult to win, however the reputational fallout means it is in every organisation’s interest to try to avoid them. This decision by the Court of Appeal means there is much more likely to be an increased number of claims as employees can more readily establish that an employment issue is actually a “disclosure”. It is also likely to lead to greater time and cost being spent in the preliminary stages of case to establish the “public interest test”. Even if the employee is unsuccessful, the costs are incurred and the publicity damaging.
Larger employers in particular would do well to review their policies given the comments of the court of appeal. It will be harder for a larger business to argue against the “public interest” argument than before. Also, prior to 2013 a disclosure had to be in good faith but that requirement was removed when the “public interest” requirement was introduced. That trade off has been eroded by this decision. Employees are the eyes and ears of an organisation and when employees are encouraged to speak up it provides organisations with the opportunity to deal with issues and nip them in the bud. People are the first line of defence, but often whistleblowing within organisations is poorly handled or poorly understood.
Whistleblowing claims are attractive to Claimants given their high value and lack of service requirement. Some will be genuine, but given the removal of ET fees and the lack of a need to act in “good faith”, we are likely to see resurgence in this type of claim which employers need to be equipped to deal with.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.