Whistleblowing: how to handle it, Simon Stephen - ThinkHouse November 2013

Mark Greenburgh: I'm joined by Simon Stephen, an associate in our employment and equalities team, to talk about recent changes to the Public Interest Disclosure Act, commonly known as whistleblowing, and how they might affect both the public sector and service providers.

Simon, what is a whistleblower as opposed to a disgruntled employee with a grievance?

Simon Stephen: The purpose of a grievance is to raise a personal issue that an employee has in the workplace, so for example an employee may feel they have been underpaid for a shift that they have done and may wish to complain about this to their employer. This would be using the grievance process.

They may also complain that they feel they have been treated badly during a promotion exercise, maybe for a form of discrimination or some other unlawful reason. Again, this would be a personal issue that should be raised through the grievance process.

Whistleblowing, or the making of a protected disclosure, is a different concept. It is the concept of raising wrongdoing that isn't personal to the attention of the employer or an organisation. So, for example, it might be raising to the organisation that health and safety regulations are being violated, or that accounts are being fiddled, or indeed that bribery and corruption has taken place.

Whistleblowing is covered by the Public Interest Disclosure Act 1998 and this has set and detailed provisions as to what a disclosure is. There is, of course, the possibility that a grievance and an act of whistleblowing, or making a protected disclosure, can be overlapped. The raising of a corporate wrongdoing may of course have personal impacts on the individual.

This led to a change of law in July 2013, where an extra element was added to the legal provisions, which meant that the making of a protected disclosure had to be in the public interest. The aim is to remove the likelihood of a personal grievance being protected by the whistleblowing procedures.

Mark: So Parliament's intention, really, is to raise the bar and to distinguish more clearly between the personal and the corporate, the public, good?

Simon: Yes, definitely. The intention there is to bring back the overriding objective behind the Public Interest Disclosure Act, which was to highlight acts of wrongdoing which would have an impact on the public. There were a number of scandals which gave rise to the legislation coming in, such as the Piper Alpha oil rig disaster, the Zeebrugge ferry disaster and the Maxwell pension scandals. All of these cause some harm either in loss of life, injury or financial harm, and there is a general feeling and understanding that these could have been prevented either if people had blown the whistle or indeed been listened to when the whistle was blown.

Mark: Okay, so we can see that these are big issues, but why would they be particularly important to an employer, particularly a private sector contractor working for the public sector?

Simon: There are a number of legal issues which kick in once somebody has blown the whistle, so managing whistleblowing and understanding are important to make sure that you don't fall foul of these legal issues.

There are also compliance issues in relation to anti-bribery and corruption provisions. The Bribery Act is quite stringent about the actions that an organisation must take to limit exposure to bribery and corruption, and whistleblowing can be an important mechanism in achieving those aims of anti-bribery and corruption.

Organisations, and perhaps especially those in the public sector, also need to be conscious of the public relations aspect of whistleblowing. Where somebody has raised an issue internally in the workplace and it has not been dealt with, it could well come back to bite them at a later stage. Not a week goes past when there isn't some form of press activity in relation to a whistleblower, for example the mid-Staffordshire hospital scandal and the Winterbourne Care Home scandal have all been linked back to people blowing the whistle about issues which, of course, then came out in the public knowledge.

Mark: So as an employer, what should you do if somebody whistleblows to you, and how do you know one when you see one?

Simon: When somebody blows the whistle, the first thing that needs to be done is to understand exactly what it is that is being said and this can be very difficult, as there is no set way in which the whistle is to be blown; there is no definition of procedure through which you must go before it's identified as a whistleblow or the making of a protected disclosure.

So it can be quite difficult to work out whether it is a protected disclosure or not. The key thing there is to understand what is being said that separates the different allegations and different issues and then apply the correct procedure.

Mark: Well, you've talked about the procedures and protections that employees get if they blow the whistle. Can you tell us what those are, please?

Simon: It isn't just employees who actually have protection. The protection extends wider to include a number of workers, and indeed this is something that is being looked at at the moment, about whether the law should be increased to widen the scope of the workers who are protected.

The protection that workers and employees then have is essentially two-fold. First of all, employees have the right not to be dismissed for having made a protected disclosure, so if somebody has made a protected disclosure and they are dismissed as a result of doing that - or the main reason is that they have done so - it will be automatically unfair.

The second level of protection is the right not to be subjected to a detriment for the reason of having made a protected disclosure. Now a detriment is often, or perhaps normally, in the form of harassment or victimisation by other colleagues as a result of an individual having blown the whistle. And on that point, it is important to note that an organisation can be vicariously liable for the acts of its employees if they themselves subject the whistle blower to a detriment.

Mark: So what are the risks involved in not dealing with whistleblowing properly when it comes up?

Simon: Well, first and foremost, the legal risks are claims for unfair dismissal, which would be an automatic unfair dismissal, and a claim for being subject to a detriment. Both of these carry a financial risk and compensation will be due. The important thing to note with the unfair dismissal claims here is that not only is there no requirement for a qualifying period of two years, there is also no upper limit on the compensation. So in relation to public sector pensions, this loss could be very high.

There is also the reputational risk involved in not dealing with a whistleblowing issue properly. If somebody has raised an issue internally and it hasn't been dealt with, it can come back to bite you, as indeed has been seen in the mid-Staffordshire and Winterbourne issues.

Mark: We've heard quite a bit about the approach taken in the United States to whistleblowing, which is quite different to here. Do you think that their approach is going to catch on and be adapted and adopted in this country?

Simon: I don't think it can necessarily be adopted wholesale in this country, but a lot of the principles and points that come from the US approach I think are being looked at at present, and may well find themselves being adopted in one way or another.

I think there are two main areas where the US approach will have an impact on what happens here in the UK. First of all, in the US I think there is better use of confidential hotlines. Here in the UK there are a lot of whistleblowing hotlines that are used, but I think the understanding of how they are used and in fact the actual take up of use could be better and more widespread.

The second aspect of whistleblowing in the US which is being actively considered at the moment is the issue of financial reward for having blown the whistle. Under various US statutes and legislation, a whistleblower can receive a cut of a fine which is ultimately levied against an organisation, and this can be as much as 30%25 of the fine, so it can be a substantial figure going into millions of dollars.

This has been floated here in the UK as a possibility to strengthening whistleblowing provisions. At the moment it has met with fairly lukewarm reception. It has been looked at by the home office as part of the statutory review into serious organised crime, and is being looked at by the financial operators as well.

However, a recent report by a commission instigated by the charity Public Concern at Work recommended that no financial rewards policy is brought in, mainly because it goes against the culture that we have here; it would be a huge cultural shift to include it; and it would also seem to undermine the purpose behind whistleblowing itself, which is to raise wrongdoing without personal gain.

Mark: Turning to perhaps more practical aspects, you have explained to us what the law is and how it affects employers, but there isn't any requirement to have a policy, so should you have one? And if you are going to have a policy, what should be in it?

Simon: The answer is yes, you should have a policy. In terms of what a whistleblowing policy should contain, as with all employment policies, it should first of all be as short as possible and as succinct as possible. One should avoid the temptation to have legalese and to make the policy as easy to read as possible.

The first thing the whistleblowing policy should contain is a clear explanation of what whistleblowing is and isn't, and this sets the expectations of employees to make sure that the right policy is used. A policy should then go on to explain what will happen once the whistle has been blown in terms of process, and also in terms of end result, or end outcome, which of course may not be communicated to the employee. So this manages the expectations of the employee as to what will indeed happen with what might be a personal issue to them.

A whistleblowing policy should also make it clear what protection and what rights a whistleblower has, not least to try and assure the whistleblower that they are able to raise issues in safety, but also to limit the risk or minimise the risk of managers, either on purpose or unwittingly, subjecting individuals to a detriment or dismissing them for having made a protected disclosure, thereby exposing the company to the claims.

Mark: Well, whistleblowing is clearly an important issue to organisations, but what are the key points for an in-house lawyer to consider in their role for the organisation?

Simon: To manage whistleblowing properly it is important not to be scared of whistleblowing. Whistleblowing is something which is important and which is going to have an ever-growing importance, certainly in the world of the public sector. In order not to be scared of whistleblowing it is important to understand it, to understand the legal side but also the practical implications, and indeed the workings internally of how an organisation should and chooses to deal with it.

And this comes on to maybe the fundamental point, which is to make sure that you have somebody somewhere in the organisation designated as the person responsible for whistleblowing issues to which all issues should be referred, or dealt with through them or their office.

Mark: And would that be the chief executive or somebody else?

Simon: It's probably advisable not to have it as a chief executive, but to look as to where you can have as independent as possible a body, such as maybe a committee of non-executives, or an off-shoot of the audit or risk committee. The key thing is it has to be somebody who is able to deal with these issues and is able to deal with them with as much independence and autonomy as possible.

Mark: Simon Stephen, thanks very much.