Whistleblowing: How to Fight and Win Under the New Law

WHISTLEBLOWING: HOW TO FIGHT AND WIN UNDER THE NEW LAW

Private Baldrick:I have a plan, sir.

Captain Blackadder: Really, Baldrick? A cunning and subtle one?

Private Baldrick: Yes, sir.

Captain Blackadder: As cunning as a fox who's just been appointed Professor of Cunning at Oxford University?

“some knaves try to use the whistleblowing law for their own ends and that some lawyers like to test its boundaries” [1]

INTRODUCTION

The whistleblowing provisions of the Employment Rights Act 1996 are immensely technical. They are full of pitfalls for the unwary and are challenging even for the experienced litigator. The Enterprise and Regulatory Reform Act 2013 made significant amendments to the law layering complexity on complexity. These amendments remain new in that they have not yet been thoroughly worked out in case law.

The key to fighting and winning is to anticipate, understand and prepare for each of the very many elements of the cause of action.

The black letter law is in this paper and the editorial in the talk. In the talk I am going to suggest interpretations, counsel practical solutions and chart an approach to the new law.

WHISTLEBLOWING: the Background

Whistleblowing, I'd predict, will continue to be a cause of action of choice in the next five years. There is no doubt that it is topical: Public Concern At Work has published its research 1000 Voices; Silence in the City and recently its Whistleblowing Commission reported. The PRA and FCA are in the process of considering whether to impose a requirement on certain financial sector institutions to have a demanding internal whistleblowing mechanism. This is in response to the Parliamentary Commission on Banking Standards’ observation that a striking feature of the PPI scandal was that there was apparently no whistleblowing whatsoever.[2] Jeremy Hunt has been tilting at the windmill of gagging clauses, Bradley and then Chelsea Manning and Julian Assange have been disclosing all that they can. Meanwhile in the British financial sector whistleblowing claims are the must have accessory to any claim involving dismissal. The imposition of the compensation cap of 52 weeks’ pay or £74,200 makes whistleblowing a yet more attractive option. And why not? Some might say, it all comes under the unfair dismissal issue and trial fee so one might as well.

Whistleblowing claims have expanded rapidly. PCAW report that between 1999/2000 and 2006/2007 the annual number of Public Interest Disclosure claims grew from 165 to 1,356. Information from the Employment Tribunal Service and the Department for Business, Innovation & Skills indicates that from 2008-2012 there were 8,461 Public Interest Disclosure claims made. The current indications are that the volume of whistleblowing claims remains robust despite the introduction of tribunal fees which have otherwise decimated claim numbers. In 2013/4, PCAW report that there were 2,212 PIDA claims lodged before the employment tribunals.

THE LEGISLATION

The Public Interest Disclosure Act 1998 (“PIDA”) amended the Employment Rights Act 1996 (“ERA” or “the Act”) creating a new Part IVA in which the legislation is now to be found. It has further been amended by the Enterprise and Regulatory Reform Act 2013 since 25 June 2013, and the new law applies to disclosures made after that date. Ipropose to deal with the Act in the following parts:
Scope
Definition of Qualifying Disclosure
Disclosure
Reasonable Belief
Public Interest
Tends to show a breach
Likely to occur
Privilege
The three tiers of protection
Vicarious Liability
Causation
Burden of Proof
Remedy
Gagging Clauses

- - Scope - -

Arguably the most important factor about the scope of the legislation is that no qualifying period is required.

The right to protection under the legislation applies to employees as defined by s.230(1) where the person works under a contract of employment. It also covers the definition of workers which we, as employment lawyers, are familiar with as a result of s.230(3) of the ERA which provides that

In this Act 'worker' (except in the phrases 'shop worker' and 'betting worker') means an individual who has entered into or works under (or, where the employment has ceased, worked under)—

(a)a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker's contract shall be construed accordingly.

This covers those who may not have a relationship of sufficient control or mutuality to be classed as employees but are, nevertheless, covered by additional rights such as Working Time or as in this case, PIDA.

A trap for the unwary exists in s.43K extension of the meaning of ‘worker’ and indeed, in some of the courts’ decisions under it. Section 43K(1)(a) provides that s.230 is extended to cover a person who

works or worked for a person in circumstances in which—

he is or was introduced or supplied to do that work by a third person, and

the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them,

This is the agency extension which, it can be seen, clearly extends the protection of PIDA to an agency worker assigned to the end user. Further, s. 43K(1)(b) extends the definition to homeworkers or others not under control who can substitute another for their labour. The intent of the legislation is to be inclusive in whom it covers so that protection is as wide as possible:

contracts or contracted with a person, for the purposes of that person's business, for the execution of work to be done in a place not under the control or management of that person and would fall within section 230(3)(b) if for 'personally' in that provision there were substituted'(whether personally or otherwise)

Further, under s.43K the following are also covered
Non-employees undergoing training or work experience as part of a training course, otherwise than at an educational establishment (s43K(1)(d));
Self-employed doctors, dentists, ophthalmologists and pharmacists in the National Health Service. In such cases, the employer is treated as being the relevant Primary Care Trust or Health Board (s43K(1) and (2) ERA);
Police officers (s43KA ERA).

s.20 ERRA 2013 also extended the coverage of the legislation, broadly speaking to all who work in the NHS.

The courts have not been slow to embrace, in the right cases, the universality of the right. In Croke v Hydro Aluminium Worcester [2007] ICR 1303 (EAT) Mr Croke provided his labour through his own service company via an agency. This is not uncommon in the professional service sector and Mr Croke was a consultant engineer who used this device as it was tax efficient. The agency provided the services of the company to the end user, Hydro Aluminium. His service company’s engagement was terminated by Hydro after Mr Croke had committed a protected act. The Employment Appeal Tribunal (“EAT”) reversed the conclusion of the Employment Tribunal (“ET”) that he did not fall within s.43K.

In Keppel Seghers UK Ltd v M Hinds [2014] IRLR 754 the EAT extended protection to a consultant on a construction project. A purposive interpretation was adopted in order to include and not deny protection. Again the claimant was the sole shareholder and director of the company which provided the services which was provided via an agency to the contractor. This did not prevent the ET finding that the claimant was the contractor’s worker. The ET were correct to look at the practical issues of control, the working hours and shift arrangements which showed that the contractor substantially determined the terms of the engagement.

Woodward v Abbey National [2006] EWCA Civ 822; [2006] ICR 1436; [2006] IRLR 677 confirms that a worker is protected after he ceases working for his employer should he then be subjected to a detriment. The Court of Appeal held that the reasoning in House of Lords decision of Rhys-Harper v Relaxion Group Plc [2003] UKHL 33; [2003] I.C.R. 867; [2003] I.R.L.R. 484, which held that ex-employees are protected by the discrimination statutes, had to be applied consistently and, therefore, it extended the protection of employees making public interest disclosures. In apparently “extending” PIDA protection the court noted the policy importance of protecting those who blew the whistle.

In Elstone v BP [2010] ICR 879; [2010] IRLR 558 (EAT) the EAT confirmed that a worker is protected if the disclosure occurred whilst employed by (or a worker for) a previous employer. In that case Mr Elstone claimed that because of a disclosure made to his previous employer, he was suffering a detriment at BP (his then current employer).

Recently the EAT has confirmed in Onyango v Berkeley Solicitors [2013] IRLR 338 that employees are protected even if the disclosure occurs after the employment relationship has ended. The EAT in essence found that the reasoning in Woodward in relation to post-employment detriment should also apply in relation to post-employment disclosure and had no trouble with any s.230 arguments as it stated “Worker and employer are defined in s 230 ERA as those who are or have ceased to be in a contractual relationship of service or core services (we paraphrase)”.

In short it is now clear that it does not matter when the disclosure occurred (whether pre, during or post employment) as long as one falls within the wide definition of “worker” or “employee” at the time of the disclosure (which includes those who previously held that status). Equally, so long it occurs after the disclosure, it is possible to be subjected to pre and post employment detriment.

The latest development in defining the scope of the legislation is the Supreme Court’s decision inBates van Winkelhof v Clyde & Co LLP [2014] UKSC 32 that (contrary to the view of the Court of Appeal) members of LLPs are protected. Lady Hale, giving the leading judgment, held that the claimant member was covered by the definition of “worker” in s. 230(3)(b) ERA 1996, and further that s. 4(4) of the Limited Liability Partnerships Act 2000 did not operate so as to exclude her from protection. There is also some consideration in the judgments of whether equity partners can be “employees”, and an indication, certainly in Lady Hale’s judgment, that the matter may be open for further consideration.

- - The Qualifying Disclosure - -

Section 43B has given rise to the most litigation. The amendments promise yet more. The section has been amended so that disclosures will not be protected unless they are reasonably believed to have been made in the public interest.

(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—

i. Any Disclosure of Information

The word disclosure is not defined within the Act. The Act clearly aims for an all embracing definition, defining a disclosure as “any disclosure”. The one interpretative provision as to a disclosure is contained in s.43L(3) which provides that

Any reference in this Part to the disclosure of information shall have effect, in relation to any case where the person receiving the information is already aware of it, as a reference to bringing the information to his attention.

A number of issues arise which have not yet been considered by the courts. For instance a disclosure, one interpretation at least,implies that one person is revealing something to the other. This section means that a disclosure of information can be protected even where the person being told the information already knows of it.

In Everett Financial Management Ltd v Murrell UKEAT/552/02 (unreported) the Claimant asserted that a petition which he had signed was a qualifying disclosure. The petition was in the following terms:

Further to a meeting held on 25-07-00 regarding the conduct of the Everett Group Business, a number of concerns were raised. We request written assurance from yourselves as Directors of the Everett Group of Companies that the Everett Group and ourselves are not engaged in any activity that is unlawful, could be construed as unlawful, in contravention of any SIB Principle/Regulation or could jeopardise our individual personal registration. As registered and regulated financial advisors we feel this is a legitimate and reasonable request and look forward to a response at your earliest convenience.

The Barristers arguing the case, one of whom is a High Court Judge and the other who has been appointed to the Court of Appeal, agreed that if the provider of information knew that the recipient already knew the information then there could not be a disclosure of information.

The EAT rejected part of the employer’s appeal on the basis that the ET had not made findings as to what was actually known by the employer before the receipt of the petition. This can be taken as an implied acceptance by the EAT that the agreed position from Counsel was correct.

My view is that the agreed position taken in Everett by Nicholas Underhill QC and Brian Langstaff QC (as they then were) was probably wrong. It appears that s.43L was not argued before the EAT and that the language of that section is all embracing applying as it does to “any case” where the receiver was aware of the information. Further it is said by some that the policy reasons favour a wide interpretation in order to protect those making disclosures. However the good news for employers is that Everett stands as tangential obiter authority and, perhaps more importantly at the moment, Langstaff J is President of the EAT. In addition of course one should remember that one of the forms of disclosure that is covered by the Act is concealment which may address the policy concerns of those who argue that an all embracing definition of disclosure should be preferred.

Section 43L was considered in Cavendish Munro Professional Risks Management Limited v Geduld [2010] ICR 325; [2010] IRLR 38 (EAT) (“Cavendish”), in which the EAT (Slade J) held that the very existence of s.43L indicated that in order for there to be a “disclosure” there must be more than a mere “communication”.

Cavendish consideredthe question “What is the difference between making a complaint and blowing the whistle?” In that case there was a dispute between directors of a company and the claimant, an ex-director. The claimant’s solicitors wrote a letter to the other directors in which they suggested that a shareholders’ agreement which had been backdated was invalid and caused unfair prejudice to their client: in other words that he was an oppressed minority shareholder.

The EAT (Slade J) held that this did not constitute a protected disclosure, for two reasons. First, there was a distinction between “information” and an “allegation” for the purposes of the Act. For example, a communication of “information” about the state of a hospital would be “The wards have not been cleaned for two weeks. Yesterday, sharps were left lying around.” Contrasted with that would be “you are not complying with Health and Safety requirements”, which would convey an allegation but not information. Whilst it is debatable whether this sort of distinction is in accordance with the aims of the Act, it is nonetheless of assistance to employers defending claims.

The second reason that some commentators argue is found in the judgment is rather more problematic. The EAT held that, even if the solicitors’ letter did disclose “information”, it did not amount to a “disclosure” for the purposes of the Act. The EAT noted that “disclosure” must mean more than mere “communication”, otherwise s.43L(3) would have been unnecessary. The reasoning of that part of the judgment is somewhat opaque, and in light of s.43L(3) it is difficult to envisage circumstances in which information is communicated to an employer but that does not amount to a disclosure of information for the purposes of the Act.

The same judge, in the more recent case of Smith v London Metropolitan University [2011] IRLR 884 (EAT) reiterated the point that there needs to be “disclosure” of information. In Smith the grievances made were therefore held not to be a protected disclosure as they did not amount to disclosure of information as defined by Cavendish. In another case of Goode v Marks & Spencer UKEAT/0442/09, the case of Cavendish was applied and the EAT stated that disclosing information was distinguishable from a statement of position, the making of an allegation, or the mere expression of a state of mind.

Two recent cases suggest that this defence is of less utility than before. Tribunals will take a narrow approach to finding against Claimants on this ground alone. InNorbrook Laboratories (GB) Ltd v Shaw UKEAT/0150/13/RN Slade J considered the question of whether a manager noting the pressure on the team to drive on wintry roads was dangerous and that it could affect health and safety amounted to a disclosure of information. She held to her position that information is required and not merely an allegation or statement of an opinion, but concluded that the two emails fell on the correct side of the line. Again in Millbank Financial Services v Crawford [2014] IRLR 18 HHJ Richardson held that an ET was entitled to take the view that a letter setting out facts that related to an omission rather than setting out the omission in terms satisfied the necessary disclosure of information.

However, these lines in the sand are not always easy to draw[3]. Take for example the employee who is dismissed as he persistently asks awkward questions the answers to which may show a breach of some obligation but which the employee does not disclose. Would the mere asking of a question about the matter amount to a disclosure?

It is also notable that the information disclosed does not have to be about the employer’s wrongdoing or failure. In Hibbins v Hesters Way Neighbourhood Project [2009] ICR 319; [2009] IRLR 198 (EAT) Ms Hibbins forwarded the details of a student who was a suspect in an investigation to the police. She had interviewed the suspect and was concerned that she had been left alone with him. The EAT found that the reference in s.43B(1)(b) to “a person [who] has failed, is failing or is likely to fail to comply with any legal obligation….” was not limited in any way to an employer, nor could any limiting intent be found in the Act. In addition, s.43C expressly uses the word ‘employer’ which could have been used here but was not. Finally a purposive and protective interpretation should be favoured in relation to whistleblowing so as to protect those who make disclosures in the public interest.

ii. Reasonable Belief