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Whistleblowing update

Following recent court cases, and significant public interest in whistleblowing following the Libor debacle and scandals such as Winterbourne View and Mid Staffordshire Foundation NHS Trust, the Government is proposing significant amendments to the Public Interest Disclosure Act 1998 (PIDA). PIDA is intended to protect workers who make whistleblowing disclosures against any detriment or dismissal. The changes are being implemented through the Enterprise and Regulatory Reform Bill (ERRB), which has recently completed its Report stage in the House of Lords.

The ERRB will amend PIDA as follows:

  • In future, workers will need to show that they reasonably believed that their disclosure was "in the public interest". This will reverse the effect of the case of Parkins v Sodexho EAT, 2002 in which the Courts held that a disclosure of a breach of a whistleblower's own contract of employment was protected, even though, on the face of it, there was no "public interest" aspect.

  • The ERRB removes the current requirement that a protected disclosure must be made in "good faith". The "good faith" test has always attracted criticism on the ground that it may discourage genuine whistleblowers from coming forward. It may well be that a matter is in the public interest, even if the worker raising the concern has a variety of motives for raising a concern.

  • In response to the case of NHS Manchester v Fecitt, CA, 2012 which decided that an employer could not be vicariously liable for the acts of workers who bullied or otherwise victimised whistleblowers, the House of Lords has introduced an amendment to the ERRB to make employers vicariously liable for any such treatment by work colleagues.

  • Protection for job applicants: the House of Lords approved an amendment to ERRB to include job applicants in the definition of "workers" entitled to protection under PIDA.

However, the Government has called for evidence on whether this is a problem before legislating on this point.

Significant increase in whistleblowing complaints to FSA

The number of cases reported to the FSA's whistleblowing helpline increased by 276% over the four years from June 2007 to May 2012, according to information obtained by the consultancy Kroll Advisory Solutions under the Freedom of Information Act. During the period June 2011 to May 2012, Kroll found that the FSA had received 3,733 contacts to the helpline.

Source: www.krolladvisory.com/press-releases/whistleblowing

Should whistleblowers be rewarded?

The Parliamentary Commission on Banking Standards has generated scrutiny on the effectiveness of the current whistleblowing regime. The Commission has heard evidence from a range of sources on whether there should be financial rewards for those who blow the whistle, in line with US legislation (and particularly the Dodd-Frank Act). Opinion is divided. Views have ranged from those of Thomas Curry, the US Comptroller of the Currency, who gave evidence that in the United States rewarding whistleblowers had helped regulators uncover wrongdoing. Mr Curry diplomatically stated that "It is something you might want to consider" after being asked by the Commission if he would recommend the introduction of financial incentives in the UK.

A submission from the Ecumenical Council for Corporate Responsibility stated "there is a strong argument for rewarding those who highlight wrongdoing that causes financial or reputational damage, as well as punishing the wrongdoers. The FSA and Bank of England should require such incentives for self monitoring as preferable to more expensive, and less effective, external oversights."

The new head of the Financial Conduct Authority, Martin Wheatley, was more cautious. In response to questioning from Lord Lawson of Blaby, Mr Wheatley stated "under (the UK's) structure, the incentive is effectively to do the right thing. It is a personal moral incentive. Under our rules you are required to tell us if there is anything suspicious, but it is still down to a moral incentive. The US system introduces a financial incentive, and there are some pros and cons with that."

When asked by Lord Lawson where he stood on the idea of financial reward for whistleblowing, Mr Wheatley replied: "Personally, I am unconvinced that that will yield a better structure than we have."

Recent cases

Can an employee who blows the whistle after his employment has ended claim protection under PIDA?

Yes, says the Employment Appeal Tribunal in the case of Onwango v Berkeley (t/a Berkeley Solicitors) 2012 EAT.

The Courts had already held that an employee who suffered a detriment after his employment had terminated (for example, where his employer supplies an unfavourable reference) is protected. However, this is the first reported case in which the Courts had looked at whether an employee who makes a protected disclosure after their employment has ended can claim protection.

The EAT held that a post-termination disclosure does attract protection. The reason is that the definition of "employee" in the Employment Rights Act 1996 includes individuals "who work under (or, where the employment has ceased, worked under) a contract of employment."

The law is now clear that a worker is protected under whistleblowing law whether he blew the whistle:

• during his employment with his current employer;
• after employment with his current employer has terminated; or
• during employment with a previous employer, if as a result he suffered a detriment or dismissal at the hands of his current employer.

However, the law does not currently protect job applicants. Parliament is reviewing this loophole in the Act. See "Proposed Changes to Whistleblowing Law" above.

 PCAW launches independent Whistleblowing Commission

Public Concern at Work (PCAW), the whistleblowing charity, has initiated its own Whistleblowing Commission, with a view to examining the existing arrangements for workplace whistleblowing and making recommendations for change. The consultation launched on 27 March 2013, and ends on 21 June 2013. PCAW expects to produce its final report by the end of the year. See Related links to access the consultation.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at April 2013. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.

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