As the recent Severn Trent whistleblowing case demonstrates (when one of Severn Trent’s employees revealed that the company was providing misleading data to the water regulator, OFWAT) “whistleblowing” is now a term very much in the public eye and workers are becoming more and more aware of their rights. Indeed a recent survey of 2,000 employees conducted by YouGov on behalf of the British Software Alliance found that nearly a third of employees are more likely to take action on discovering inappropriate or illegal activity at work compared with three years ago.
So we all know the term, but why should employers care and what’s the law behind it?
Following various financial scandals, such as Enron, and the introduction of the Sarbanes-Oxley Act in the
In the UK, under the Public Interest Disclosure Act 1998 (“PIDA”) if an employee discloses wrongdoing in his organisation and, for example, is dismissed because he has done so, the employer will be liable to an uncapped compensation award in the Tribunal.
Initially implemented after a number of public disasters in the early 1990s, PIDA (which inserts provisions into the Employment Rights Act 1996) puts in place a framework of protection against detriment or dismissal for workers who blow the whistle in good faith.
PIDA aims to give workers comfort that they can raise their concerns safely with their employer without fear of reprisal, and aims to allow employers the opportunity to deal with the alleged wrongdoing internally. Although workers can make disclosures direct to an external body they have to meet strict conditions first or they lose their protection.
PIDA gives protection not just to employees, but to workers. No service qualification is necessary. A worker will have a whistleblowing claim if he makes a protected disclosure as stipulated under PIDA, and suffers a detriment or dismissal by his employer because the disclosure was made.
A qualifying disclosure is a disclosure which in the reasonable belief of the worker tends to show one or more of the following:-
Breach of a legal obligation is not surprisingly the most used category, as it is so wide in scope as the case-law has shown (e.g. Parkins v Sodexho Limited 2002 IRLR 109). This case highlighted that the legislation catches any breach by an employer of its legal obligations, so that breach of the employer’s own contractual duties to employees are included. In other words if an employee raises a concern that the employer is breaching its own contract with him that will be a protected disclosure. Although arguably this is not the point of the legislation and this decision has been criticised, the legislation does not specifically require a disclosure to be in the public interest.
For a qualifying disclosure to become a protected disclosure it must be made in one of the stipulated ways in PIDA. As the purpose of PIDA is for matters to be resolved internally within the organisation, the easiest way to make a protected disclosure under PIDA is to the employer in good faith. However in some circumstances (for example an exceptionally serious disclosure) where the strict conditions in PIDA are met, the disclosure may be made directly to an external/other body.
The disclosure must be made in good faith (e.g. as the case law has shown, not with an ulterior/personal motive, and not maliciously). One case (Mehaoua v Demipower Limited ET 2201 602/04) showed that, in the absence of any satisfactory explanation, a delay of one year in raising a concern of fraud indicated a lack of good faith.
A worker can only bring a claim against his employer if he can show he has been treated to his detriment because he made the disclosure. If the principal reason for dismissal is the fact the employee made the protected disclosure the dismissal will be automatically unfair. However unlike normal unfair dismissal, the compensatory award is uncapped.
So what should you do?
Whistleblowing and data protection
However, when concentrating on implementing a whistleblowing policy do not forget your data protection duties. The “Article 29 Working Party”, the EU Working Party set up to consider the compatability between whistleblowing policies and EU data protection rules recently issued its opinion.
It is outside the scope of this article to examine the Working Party’s opinion in detail but here are a few points in summary:-
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