We are all well aware of the Public Interest Disclosure Act 1998 (the “Act”) and the concept of a ‘protected disclosure’ under a company’s Whistle Blowing Policy however, despite the fact that everyone may assume that they know what a protected disclosure amounts to, the legal position remains open to debate and interpretation.

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The PRA and FCA issued policy statements of clarification back in 2015 recommending who should be responsible for managing the process establishing the concept of “whistleblower’s champions”. The recent case of Chesterton Globalchallenged the position by questioning whether a disclosure which was in the private interest of the worker also satisfied the ‘public interest’ requirement of the Act.

Legal Position

The Act introduced a new form of unfair dismissal in cases where the reason, or principal reason, for the dismissal of an employee was due to them blowing the whistle on ‘wrongdoing’.

Establishing a claim for unfair dismissal under this head has three potential advantages:

  1. Protection is available from the beginning of employment, instead of only qualifying after 2 years;
  2. There is no cap on compensation; and
  3. Where appropriate a claim for interim relief (i.e. continuing salary) can be made.

The Act was amended in 2013 to state a qualifying disclosure means:

…any disclosure of information which, in the reasonable beliefof the worker making the disclosure, is made in the public interest andtends to show one or more of the following – ”

Chesterton Global Ltd (CG) anor v Nurmohamed anor [2017] EWCA Civ 979

In this case decided (July 2017), Mr N worked as an estate agent for CG. He was entitled to commission based on revenue. CG changed the basis of commission payments so that they were based on profits. Mr N reluctantly accepted the proposal but later raised an issue with CG’s monthly accounts, stating they had a number of discrepancies which resulted in the profitability of his office being artificially suppressed. Mr N claimed that he, along with about 100 colleagues were affected to the tune of £2m - £3m in lost commission. He was dismissed. CG admitted unfair dismissal but denied Mr N had made a protected disclosure within the meaning of the Act.

The question for the Court was whether this disclosure about a commission structure which affected only a small(ish) group of salesman could reasonably be in the 'public interest'?

The Court held where the disclosure relates to a breach of the worker’s own contract of employment, there may nevertheless be features of the case that make it reasonable to regard disclosure as being in the public interest as well as in the personal interest of the worker. However, the Court stated that tribunals should be cautious about reaching such a conclusion because it went against the spirit of the Act.

Although highly fact specific, this case does leave the opportunity on whistleblowing matters in the private domain open to interpretation. Time will tell as to how the law develops from here but it is clear that whistleblowing will remain a popular road to take due to compensation being uncapped.

The Regulatory Position

On 6 October 2015, the PRA and FCA issued policy statements on whistleblowing for large financial institutions, and a package of new rules for large banks, building societies, credit unions, PRA-designated investment firms and insurers.

These rules which came into effect on 7 September 2016, require all relevant institutions to appoint a senior manager or director (preferably a non-executive director) as their "whistleblower’s champion" (earlier introduction date of 7 March 2016). There is also the need to establish internal whistleblowing channels and a requirement to inform staff about the arrangements, and the role of the regulator and their rights under the Act. Affected institutions must ensure that the wording in any employment or settlement agreements does not deter staff from whistleblowing, and there is the requirement for an annual whistleblowing report to be produced to the board. The whistleblower's champion has responsibility for overseeing the effectiveness of internal policies and procedures, and for the report to the board.

The Regulatory Position

We think that it is only a matter of time before the PRA & FCA extends this guidance to all firms, irrespective of size. We advise that you put in place and maintain whistleblowing policies which are separate to your grievance policies. It seems to us that best practice dictates that in the very least you should:

  • Make staff aware of an easily-accessible whistleblowing policy, or appropriate written procedure.
  • Train staff on how to make a disclosure and managers on how to deal with disclosures.
  • Appoint an individual in your organisation who is responsible for taking complaints forward in a confidential and professional manner.
  • Develop a culture where staff feel safe to make disclosures, that they know whom to go to and that they are confident that they will not face any detriment for doing so.
  • Undertake to protect the identity of a worker who makes a disclosure, unless required by law to reveal it, and to offer support throughout with access to mentoring, advice and counselling. Keep them informed about timing of action and steps to be taken.
  • Confirm that any clauses in settlement agreements will not prevent workers from making disclosures.

If you require any assistance in this area then please contact: Rose Djaló, Solicitor T: + 44 (0) 203 553 4877

Further references

The Government’s code of practice can be accessed here: https://www.gov.uk/government/publications/whistleblowing-guidance-and-code-of-practice-for-employers

The Whistleblowing Commission, set up in 2013 by Public Concern at Work, has produced a Whistleblowing Code of Practice. See: http://www.pcaw.org.uk/files/PCaW_COP_FINAL.pdf