Ask Auntie – Do compliance officers benefit from whistle blowing protection?

Dear Auntie

We have just announced bonuses for 2016, and our Head of Compliance is complaining that his bonus is lower than it should be. He believes this is because he “blew this whistle” about various regulatory breaches when he gave his regular compliance report to the Board. We think he was just reporting concerns raised by others as part of his normal duties. Is he also protected as a whistle blower just by doing his job?

Mark Clattenburg

Dear Mark

It is increasingly common for employers to have a dedicated whistle blowing champion or compliance officer who is responsible for receiving and investigating allegations of wrongdoing from internal whistle blowers. You will need to analyse exactly what the compliance officer has done in order to determine whether or not he has a potential claim.

What is a protected disclosure?

If a worker makes a disclosure of information that is “protected” they are afforded protection from:

• being unfairly dismissed because they have made a protected disclosure; or
• from being subjected to a detriment,

because they have made a protected disclosure. There is no minimum length of service requirement to bring this type of claim in the Employment Tribunal.

Whether a disclosure is “protected” depends on a number of factors as follows:-

1. There must be a disclosure of information (i.e. not just an allegation, or a mere gathering of evidence).
2. The subject matter of the disclosure must relate to one of the six types of failures such as criminal offences or breaches of any legal obligation.
3. The worker must have a reasonable belief that the information disclosed concerns such unlawful activity.
4. The worker must have a reasonable belief that the disclosure is in the public interest.

Who must the disclosure be made to in order for the disclosure to be “protected”?

The disclosure of information must be made to a responsible third party or a prescribed person. Disclosure to a responsible person will be a protected disclosure where the worker reasonably believes that the matter is the legal responsibility of that person and not the employer.

However, the statutory whistleblowing provisions are silent as to whom within an employer a disclosure should be made to in order for it to be regarded as having been made to the worker’s employer and as such considered a “protected” disclosure. Many employers will have a Whistleblowing Policy which expressly confirms who a disclosure can be made to such as a designated Whistleblowing Officer or a member of Compliance. In these instances any disclosure made to such individuals would be “protected” provided it meets the other requirements. However, in the absence of any such policy, the position is unclear.

What if the protected disclosure is made by a worker to a senior employee such as those in Senior Legal / Compliance roles and this is then reported to the board of directors? Who is the “whistle blower”?

The worker will benefit from protection from unfair dismissal and from being subjected to any detriment, irrespective of his length of service.

It is arguable that the senior employee in a Senior Legal / Compliance role did not make a protected disclosure when he reported the worker’s concerns to the Board. This is because part of the senior employee’s role is for workers to make disclosures to him and for him to then report this concern to the Board: the protected disclosure to the employer was made by the junior worker and not by the senior employee. There is unlikely to be any dispute that a disclosure made to a person senior to the worker with express or implied authority over the worker (i.e. those in Senior Legal / Compliance roles or named in a specific Whistleblowing Policy) should be regarded as having been made to the employer. It would also seem contrary to public policy for employees in such positions to benefit from whistleblowing protection each time they reported a disclosure that had been made to them by a colleague.

What was the reason for the low bonus award?

Even if the senior employee is a whistle blower, you should consider why he received a lower bonus than he expected? If the reason, or the principal reason, is that they have made a protected disclosure then the individual will have a claim. However, if the employer can demonstrate that the principal reason for awarding a lower bonus was another reason (e.g. poor financial performance) then a whistle blowing claim will not succeed.

Potential compensation

Compensation for unfair dismissal or being subjected to a detriment is uncapped and is based on the workers’ future loss of earnings. This can make it an attractive claim to assert for workers with less than two years’ service. Workers pursuing a detriment claim will also be able to seek an award for injury to feelings currently capped at around £40,811 (including inflation).