Employment Update 2022: Whistleblowing – bringing you up to speed

So, before we get into that though just a reminder about why it matters. Jane has already touched on the ESG point, but at the heart of whistleblowing it is actually meant to be a good thing and I think we can forget about this. At the heart of it, it enables us to investigate issues so I have [on the slide] got my good friend, Sherlock Holmes, whose books I am quite a fan of, insert your own favourite detective in there but it helps you investigate things to find out route causes and take remedial action. Hopefully to avoid disaster such as the ferry disaster pictured up there on the left, you know truly horrific things have happened where people have either not been able to speak up or they have spoken up and have not been listened to.

Whistleblowing is as Jane mentioned a fundamental part of ESG. It underpins everything but sits under governance under the G there. If you do not have whistleblowing built into your compliance and governance framework then I think you are missing a trick. Excuse me. If my voice does not hold, apologies, I am recovering from Covid but will get there through it as we go.

But linked to the ESG is the impact on people. Whistleblowing and speak up cultures, there are plenty of statistics out there, if you have a good culture which enables people to speak up in any form then that is going to help your employee engagement. It is going to help employee wellbeing which reduces absence, helps mental health and improves productivity as well and that then goes back into society and the company's reputation which is again part of the S under ESG.

And lastly but not least it matters because the regulators tell us it does. Whistleblowing is a real stick for regulators and stakeholders to use to kind of force the compliance risk and control agenda. I have put the FCA up there as kind of one I feature I deal mostly with but you see it through all the regulators including corporate governance codes and shareholder interests as well. But it also matters from a kind of legal risk and cost point of view. At this point I am just going to ask Lucy to put up on the screen a poll just to highlight the impact of getting it wrong can be so Lucy if we could have the poll.

Hopefully everyone can see the poll with the question 3 answers; what is the highest reported award in the employment tribunals for a whistleblowing case? I will just give it a few seconds for that.

OK Lucy if we could then have the answers back up and we will just take a view to see how we get people up from there. Yes so a fairly mixed bag. Most people have unfortunately pitched it too low. It is in fact over £2 million. Well that was the case a few years ago so and that was a detriment case but that included loss of earnings, injury to feelings and number of other different aspects so I wanted to do that not least to make sure you are all listening, but also to just drive home how important this can be from a legal employment tribunal point of view.

OK so then coming on to the first bit, an update on a legal context. The first thing I think just is really important we are explaining this to go back to the basics and have a reminder. As you will see through the cases if you do not do this, even the tribunals do not do it, they get things wrong so just a reminder up on the slide there what we are talking about when we are talking about whistleblowing in the legal context is a qualifying disclosure that is a qualifying protected disclosure.

First of all it is where worker - and notice that is much wider than employee so that includes partners in an LLP, it includes judges, it is very broad - who discloses information and one of the cases, we will look at, we will talk though a bit more about what that information is but it has to be something tangible. Something to kind of hang a hook on but that disclosure has to be a reasonable belief that the disclosure is in the public interest and again we will talk though one of the cases last year which helps show the tribunal's approach to that but it also has to have a reasonable belief that disclosure or tends to show a relevant failure.

I am supposing a basic knowledge of whistleblowing in this talk but as a reminder a relevant failure is that there are concerns relating to breaches of health and safety and miscarriages of justice, criminal offences, damages to the environment, breaches of legal obligations which is in effect a catch all and a deliberate concealment of any of the above and the key thing in those bits really to take from that is that the reasonable belief has to be there as well and I flag reasonable belief because that is not your belief and it is not my belief. It is the belief of the individual making it so do they have a belief that it is in the public interest or it shows a relevant failure and is that belief reasonable. They are things that need to be explored and it does not matter if you know that they are wrong but if they think that they are and that belief is reasonable then the tribunal will say it is OK.

So that is the legal context to bear in mind.

Simon: So yes the second point of the context moving on from content is what I call the consequence. There we have dismissal and detriment so once you have jumped through those loop holes and somebody has been found to have made a qualifying disclosure and they are then protected from being unfairly dismissed and subjected to a detriment and I have flagged up here these two because the test is very different for each one (and we will see the problems that that can cause later) but you are protected from being unfairly dismissed because you are automatically unfairly dismissed if the reason or the principle reason is that an individual has made a protected disclosure so that is very kind of quite a high hurdle really what is the reason behind the dismissal?

However, an individual is subjected to a detriment if there is any act or failure to act on the grounds that they had made a protected disclosure and that is a much lower hurdle and the cases that the tribunals have held that on the ground effectively means that the disclosure had materially influenced the act or failure to act and that influence has to be more than trivial so it is actually a very low hurdle but we will see the problems that it can cause from that so moving on to the next slide, oh I feel like Professor Whitty.

There are therefore two, I have bucketed this into two key legal areas. I think we really need to focus on when dealing with whistleblowing and I think the problems arise when people do not do this and tribunals don't do it and we do not follow this kind of forensic analytical approach because whistleblowing, people do not submit a whistleblowing kind of issue, don't tend to breaking it down following all the technical statutory tests. Whistleblowing occurs over time in a number of different disclosures and there are a lot of emotional stuff involved as well so it can be quite quickly caught up in what I call a lot of fog which distracts from actually how the law works so I think it is very important to focus one first of all what is the content and what is the consequence and I am going to look at how, if we can move on to the slide, the key legal updates in those two areas.

First all looking at content kind of what is disclosed. Looking at the case of Mr Ayodele Martin v 1)London Borough of Southwark 2) The Governing Body of Evelina School from 2021 and in the transcripts that we provide afterwards, I will make sure that cases references are in there for you, but what this case made very clear is that tribunals should take a very structured approach to applying the necessary conditions, those conditions that apply that I went through earlier on.

What happened in Martin was that Martin was a teacher and he raised, he sent an email, well he sent four or five emails starting with his head teacher and ending up with the governors, raising concerns for the hours worked by teachers, himself and others were in breach of the kind of required guidelines and limits and he started phrasing this in lines of these are my calculations, we are in excess of this. I must have missed something, can we have a chat and ultimately what the tribunal did was they did not provide, they did not go through kind of that forensic analysis of what the information was, did he have a reasonable belief etc. They really looked at that and just said well he is not really raising anything. He is making an enquiry. He is enquiring about what is happening but they did not go through that approach of breaking down the requirements of the Employment Rights Act.

So the Employment Appeals Tribunal dismissed the judgment in a pretty damming judgment themselves and they said what the tribunal should have done was broken down each limb and then take an analysis of whether he met the requirements from that and they said in particular in relation to information, what they had not done was had a look specifically about what he was saying and whether or not it actually contained sufficient factual content and detail to demonstrate that actually wrongdoing etc. had happened so despite the fact that he had raised in in the form of an enquiry it could actually still be information and I think that is a really important thing for us to take away and particularly those who deal with whistleblowing on a daily basis because quite often these issues start with somebody questioning something "but I have noticed that ABC is happening, is this right" and people might well think actually well that is not raising a whistleblowing, that is just a question.

I think this is really good example of a question can still contain enough information and if it is still then linked to somebody having a reasonable belief that it shows wrongdoing and a reasonable belief that it is in the public interest a question still could meet the definition to be a protected disclosure which could then have those consequences we looked at.

So the learning point here is to always break down alleged disclosures and that is when you are dealing with the claim yourself and you are advising on one looking at what it actually is breaking it down but I think also when looking at things that come up in whistleblowing investigations or grievances or complaints or indeed even if someone is just being a bit difficult which is where training for managers and staff and having a speak up culture is so key so people are aware and able to a step back and so oh hang on a minute I can see where this one might end up so I am just going to take a step back.

OK so moving on to the next slide on content which is the public interest and the case I wanted to talk through her was the case of Mr A Dobbie v Paula Felton (trading as Felton Solicitors). Dobbie was a legal consultant not a legal elf as I have been called fairly recently but this was a case where he had been working with Felton for a number of years working on a big litigation case and he raised concerns that the client, a really important client for the company for the solicitors had been overcharged. Other people's kind of hours were being inflated, overcharged etc.

He raised these kind of really in the context of if they were going to go for a cost assessment then he did not think that they would be very successful in getting those costs back if they were overcharging. That was the initial kind of context of how he raised them and what the employment tribunal kind of said in this context was yes he had a reasonable, yes he had disclosed information kind of how he had phrased it, made it clear that he did have these, there was a concern that was overcharging. Yes he had a reasonable belief that they showed wrongdoing because the legal obligation is a regulatory requirements so that was fine but where Mr Dobbie failed was in relation to the public interest. The tribunal said they did not think that he had raised it in the public interest. At the time that he raised it, they did not think he had a reasonable belief that it was in the public interest. They said actually what it was, was a private issue for the firm as to whether it would be able to reclaim its costs back through the cost assessment.

The EAT disagreed with this and said actually what the tribunal had not done was they had not properly analysed the public interest. They had not forensically gone through whether or not he had a reasonable belief that it was in the public interest and importantly the tribunal did not seem to have looked at the relevant case law - in particular the case of Chesterton Global Ltd & another v Numohamed & another which is a Court of Appeal case and the EAT looked at that and said there are four things really to consider when looking at whether something is in the public interest. The first is whether the number of people whose interest a disclosures serves, have to look at how many there are. The more there are the more likely it is in the public interest but still the point is one can be enough.

You also have to look at the nature of the interest affected and the extent of how it is affected so looking at kind of everything in the round and all the circumstances and these were things that the tribunal did not do, they had not kind of broken it down or referred back to these.

You then have to look at the nature of the wrongdoing and particularly if it was deliberate so if there is something deliberate if people are deliberately cooking the books then that is going to be more likely to be in the public interest than not.

You also then have to look at the identity of the wrongdoer as well so you know who is it, what role do they play, where do they sit in society? So they are the things to consider which the tribunal did not so they are the things to consider which the tribunal did not and the EAT when looking at that in the context of what Mr Dobbie had said, (that actually it is not for them to decide because they remitted it back) that made it very clear what they thought and I think looking at the nature of the wrongdoing it is potential regulatory breaches by a firm of solicitors and so regulatory breaches by the very nature of them are something which is of wider interest and then you are looking at the identity of the wrongdoer as well the firm of solicitors and looking at that firm of solicitors we are subject to high requirements of honesty and integrity so the EAT gave that all pretty short shrift and booted it back down to another tribunal to consider.

I think that is another really good example of how you can look at something on the face of it and just think well that is just a personal gripe or that is just a private motive but actually the public interest test is a lot wider than that and they have so many things you have to take into account and look at it and it is going to be the tribunal ultimately that decide.

OK so moving on to the next slide so moving away from the content bucket and moving into the consequence bucket. So it shows what I want to show for those cases that the tribunal struggles with whistleblowing as well kind of getting to grips with it and a lot of that is if it is not presented to them in a neatly packaged way setting everything out, distilling all the emotion etc. and where that then causes problems is, is there an issue in kind of a consequences - dismissal and detriment - and particularly what I call a battle ground of causation. Because even if you have got the content, even if somebody has made a protected disclosure they have still got to then make that causative link to either the dismissal and the detriment and the following three cases I think give really good examples about how that works in practice.

So first of all Ms L Kong v Gulf International Bank (UK) Ltd. Here there was an issue & where somebody senior raised issues around the compliance of products that had been made so actually were these products that were being kind of, were they legal, were they compliant, did they meet regulatory practices etc.? Ms Kong was raising these concerns. For want of a better phrase, it ended in a spat internally about whether they actually did kind of do that and it culminated in Kong being dismissed.

Now she had made disclosures and of course everyone was unhappy about that because they were challenging things but ultimate what the tribunal said that you could separate the dismissal from the concerns raised so you could drive a wedge between the two. She had raised concerns "yes" and of course that fed in to the dismissal because, in a way, but because she was dismissed for how she acted rather than the reason being the dismissals themselves then it was not an automatic unfair dismissal. So I think a clear case showing - controversial maybe - showing that it is really key to separate the reasons for dismissal from any disclosures where possible.

In the case of Secure Co UK Limited v Mr R Mott is another good example as well but it also shows the importance of being very clear as to what is accepted to be disclosures and what is not and what is the causative link between them as well because there were three of nine disclosures which were found to qualify for protection and what the, here Secure Care Co UK Limited they provide transport services to the NHS particularly for mental health patients. Mr Mott was a senior logistics manager and had control of the control room etc. and he raised a number of disclosures about resource, about the ability to meet requirements and there was one as well where he felt that he was being effectively told to lie to a client about cover being made available in breach of regulatory requirements. He was then made redundant together with two other people. The tribunal and he was claiming that that dismissal was by reason of his protected disclosure and he claimed that detriments in the run up to that process as well and if he had been put at risk of redundancy.

The tribunal said or found as I said three out of nine disclosures they then found that he had been subject to detriments and he had been automatically unfairly dismissed but they applied the wrong test and they had not really helped themselves by breaking down the test etc. to be applied but whilst they had referred themselves to the right test what is clear is that they had actually effectively said that the protected disclosures had influenced the decision to dismiss and therefore it was automatically unfair but actually what they should have applied is that test is the reason and they thought it was clear what the reason was that actually it is linked to the disclosures, the reason was him being at risk of redundancy not the disclosures and they also said that the tribunal had not made it clear which of the disclosures was actually the ones which were linked to the dismissal which they thought it was. They bucketed them all up so whilst finding that there were three disclosures that qualified they still referred to them kind of in the general as nine and talked about them all as a whole so it is really important there to separate which disclosures you are talking about when talking about kind of the consequences.

I think the learning point for kind of employers there is also making it absolutely clear when you are dealing with people what the core reason is, making it clear that if it is redundancy "yes we know he has made noises and there are all these things in the background" but having clear objective reasons behind it.

If we can move on to the final slide in the consequence in relation to detriment and I just thought I would just flag up there the point that the tribunal made in Secure Care UK Limited v Mott is that they used the test for detriment which is to materially influence which is very different.

The next case I wanted to run through Oxford Said Business School & Dr A White v Dr E Heslop I think is a case which really clearly gives an example about how that should work in practice when tribunals are dealing with it and here Heslop was a senior person working for Oxford Said Business School and raised a number of concerns about the products that they were having and whether they were compliant with governing contracts and indeed the most famous one I think that is reported in The Times etc. was that one of the courses that they were producing and I think charging around £1 million, they just cut and paste from other courses so kind of were not doing what they should have done. There were a number of these were accepted to be protected disclosures. .

They were not really dealt with but at the same time or around the time she had raised these a number of people were making complaints about her management, about her leadership which were then picked up on by the Business School and then taken to her. They said we have got all these complaints. We are going to be taking action, we are going to be doing these things. She then resigned effectively in response, well she did resign in respond to her treatment alleging that that treatment was a fundamental breach of contract and that reason was because she had made protected disclosures so she is saying I am resigning because of your treatment and your treatment was because I had made protective disclosures.

What the tribunal said was actually applying the test correctly the steps taken up to her resignation which was a dismissal where indeed detriments on the ground that she had protective disclosures. The treatment of her in relation to managing the complaints and managing the disclosures she has made which they did not do. They breached the ACAS code or practice and treated her pretty badly. Their decisions there including failing to act were materially influenced by her making the protective disclosures so she was subjected to detriments in the run up to the resignation, but actually the reason that they kind of met with her and told her that she was going to be effectively disciplined all this kind of stuff so the reason on the back of which she resigned was not because of the protected disclosures, it was not by reason of, it was by reason of the complaints that had been made against her so a fine line and that was something which the tribunal decided and the EAT upheld.

So again it is a really good example of how things should work in practice and how important it is to understand how those tests works but also understand how when dealing with whistleblowers it is very important to separate any action that may be taken from the actual disclosures themselves.

OK so moving on to the next slide now I am going to touch on the impact of the EU Directive as Jane said this is pretty big impact now for EU member states sort of coming through. Obviously we are not part of the EU, we are not bound by the Directive and we are not implementing here in the UK but I think it still does have a big impact on UK businesses. For those who do not know, it was supposed to have been implemented by member states by 17 December 2021. I think it is fair to say that not many have done that as we are speaking, I think it is Denmark, Sweden and Portugal who have implemented it. The others are in various stages. So you might kind of think well would we worry about the EU Directive if it does not apply to us you know if we do not need to do anything. Well I think you do need to think about it and you need to start building it in to your planning as to how we are dealing with whistleblowing because first of all what it does is it obviously goes across the EU member states so there should be a cohesive pattern in a way of people dealing with whistleblowing. If you have got any presence in the EU, this is going to impact you but I think also the key things to understand is what the whistleblowing directive says because this shows a pattern I think in kind of a pattern of movement.

First of all the EU Directive will cover a wider category of individuals, obviously employees, for those who are self-employed it covers contractors, employers of contractors, sub-contractors and suppliers so a much wider range of people are going to be caught. It also includes facilitators. People who facilitate whistleblowing in the workplace so they do not actually make the whistleblowing themselves so again a much broader sense. What we are looking is across the EU member states there will be a much wider category of people who will be caught.

There is also a requirement to make sure that disclosures are kept as confidential as possible. Now this is something which most policies will deal with and regulators will say so but it is not a legal requirement in the UK so I think that is a key point to bring out as well, and there is also a requirement of the EU Directive to take action within set time frames so first of all you have to acknowledge the whistleblowing report within seven days and have to provide an update within a minimum of three months so very different from the UK approach which is looking after the horse has bolted if you like what is the protection available here is kind of putting things in at the front end and perhaps the biggest impact is the requirement to have local internal reporting procedures, whistleblowing hotlines, most people will have whistleblowing hotlines in place but a directive is making it a matter of law across the EU that you have to have local internal reporting procedures and this requirement kicks in for organisations, public and private with 50 plus employees. If you have got between 50 and 249 you have got a couple of years kind of breathing space but they kick in. So that is going to be quite a big change there.

So moving on to the next slide please. So why does this matter? Well as I said if you have got any presence you are going to have to understand these local obligations when they emerge. I said the idea of the directive is to have a fairly uniform approach across the EU to whistleblowing but the reality is that as and when local jurisdictions implement their laws those laws are going to be very different so you are going to have to be able to do that due diligence.

We are doing this with a number of clients of looking at what their obligations are in the areas where they have a presence whatever that might be, and I think at the very least what this is meaning is that and we are seeing a number of clients looking at doing this now is having an audit of whistleblowing governance on the back of what the EU whistleblowing should take place. If you have an EU presence in anyway then it is important to do this audit to make sure that your governance not only complies with UK law but across the board as well.

It is also important to kind of make sure you understand what is coming in and building in those local obligations and one of the key things I think as part of that audit having a review of your reporting channels both global and local ones because one of the big difficulties that we are seeing with the directive is this clash between having a local reporting channel which is what people are required to do so if you are in France, you have a French reporting channel and what has been customary practice before to have a global risk whistleblowing channel. Can you still actually have a global one? The jury is out a bit in that. Denmark have proceeded on the basis that they can but the EU Commission have been pretty clear to say that actually you can still have a global one but you must have a local one as well and individuals must have the option to use the local one over the global one which causes them big problems in how do you monitor them? How do you keep consistency? How do you monitor themes and trends? So something very much to look at with the whistleblowing providers. I think there also needs to be a review of whistleblowing policies and procedures.

A number of clients again are doing this looking to see as best they can if you have a global whistleblowing policy and procedure to make sure it builds in the EU Directive where you can but also expressly allows for local kind of amendments and changes where possible and I think as well something that is missed a bit is given the wider definition of people who can raise concerns under the whistleblowing directive to include employees of those in the supply chain. I think it is wise then to do a review of supply chain requirements into whistleblowing governance as part of the governance of that supply chain itself making sure that you have the requirements in there that if issues are raised, they are dealt with properly and perhaps also that you know about them so you know what they are along the lines of ethical or legal concerns to make sure that they are built in.

So they are the maim impacts of the EU Directive and actions that need to be done now even if you do not have an EU presence, I think the whistleblowing directive will be used as a benchmark at where things should be and I think it is just part of that travel.

Coming on to the last slide, future proofing. In terms of future proofing and looking forward and I think it has reminded us to keep speak up cultures and psychological safety a key part of ESG. All the points we talked about now will be part of that ESG and regulating stakeholder scrutiny is only going to get stronger using the EU whistleblowing directive, using all the lessons we have learnt over the past few years to kind of enhance that carrot and stick approach if you like, and whilst there is continued lobbying for stronger UK protection to mirror a number of points in the whistleblowing directive and to broaden it out even wider, there is however no foreseeable change to the UK legislation. I think it is going to come at some point. The Government has clearly different priorities at the moment but I think it is only a matter of time before we do have that but at the moment it is all about the culture and the continued improvement and I think fundamentally making sure they are all whistleblowing processes are a key and fundamental part of your overall risk strategy and approach to ESG. My voice is well and truly going and I have shot over time not least for the technical issues so I am going to stop there and we can move on to questions.

Jane: Thanks Simon. So we have got a few and I've got time to get through most of them I hope so there is one here picking up on the EU Directive actually and the reporting channels and the relevant number of staff to trigger the obligations. The question is the 50 number, is that a global figure or is it triggered by the number of staff in a particular country?

Simon: Well this a matter of debate at the moment because there was no definition in the Directive. In other directives, it is very clear it talks about kind of where those people have to kind of be based and the current thinking is actually that is a global figure. So rather than thinking do I have 50 people in France therefore do I need to have a whistleblowing hotline in France it is do I have 50 people across the entity in which case I need to have a whistleblowing hotline in every country where I have a base. That is the current thinking.

Jane: Well a member state where you've got a…

Simon: Sorry yes.

Jane: And then you might choose to do it here as you say so and another question on the EU Directive. Is it only breaches of EU law that this is meant to be flushing out or does it also cover domestic law and a member state that does not derive from the EU so something the country has decided to put in place but does not require the EU level.

Simon: Yes so the EU Directive itself is concerned with EU law and it has a set kind of list if you like, a kind of EU law that covers like public procurement, financial services, transport safety, protection of the environment and things like that. So that is what the Directive said but it is up to individual states to kind of gold plate if they like so individual member states may well include their own domestic law kind of in there which was one of the, well another one of the key reasons why it is always important to make sure we understand what those member states have actually implemented as part of their law, but the Directive itself is based on breaches of EU law.

Jane: Yes OK. So moving away from the Directive and there is a question here about damages and someone saying they thought there was a case on the point about whether you can claim damages for dismissal where the dismissal flows from a detriment?

Simon: Yes there is and in fact the Oxford Said Business School case is one of only one's I am really aware of that has applied that as well. There was the case of Timis & Sage v Osipov and Timms many years ago where somebody could not claim dismissal because of their non-executive director etc. because of their stature but you cannot claim detriment as a dismissal so you cannot say oh I have been dismissed and that is a detriment. You know they are very separate but what the Osipov case and what is now accepted law is that if you had been subjected to a detriment the consequence of that is a dismissal and there was loss that flows from that, then it is possible for you to claim damages that flow then from the detriment to include the fact that you are no longer employed and in the Oxford Said Business School case, that is what the claimant successfully argued and there was a remedy hearing I think which is under appeal as well that she was awarded £1.5 million in that because of the impact on her future career from having raised disclosures from which it subjected to detriment which then led to her being dismissed even though the dismissal was not be principle reason of them so it is very complicated but hopefully I have made that a bit clearer.

Jane: Yes and no it just shows the breadth of the protection doesn't it, there is a tendency to broaden it where possible rather than abuse a legal technicality.

We have got time for one very quick final question and answer. You said the Kong case you referred to is controversial. Do you think it was actually quite fact specific and is not one people should put too much store by or is that overstating it?

Simon: I think the legal principle is not controversial and I for one as somebody advises respondents daily on whistleblowing was kind of pleased to see it because it is something that is really important but I think it is very fact specific there and I think I would not say that that is a licence for you to act as they did and I would not necessarily recommend kind of that. It is always the case even if you are taking action with a whistleblower for completely different reasons make sure you follow a set process. You know follow your internal processes making sure you have documented reasons and you can back things up so it is controversial in that you can see why a different tribunal might have decided otherwise but I think the legal principles are sound.

Jane: OK. Great. I think that brings us to the end of our 40 minutes so we cannot squeeze any more in but as I said if we have not got back to you on your, then we will follow up after the webinar so it will not go unanswered. So we will be circulating afterwards the feedback questionnaire by email. As I said if you could take a couple of minutes to fill that in and send it back to us we will use that when we are looking at the content for future webinars. We will be doing a round up in the mid-year; June./July but we also look at those to see if there are specific topics people might want a webinar on in between. So I will say thank you very much to Simon and well done for your voice holding out. Thank you very much to all of you for joining. Hopefully we will see you again on Thursday same time for our next webinar in the series which is on the menopause, but otherwise I hope you have a good rest of the day. Thank you.