Blowing the whistle

The outcome of a recent employment tribunal could pave the way for claims of
unfair dismissal under the whistleblowing legislation – without the one year
service required. Malcolm Pike looks at practical ways employers can protect
themselves

There can be few employers who have not had to deal with breach of contract
claims from disgruntled former employees. Now imagine that in addition to the
obvious claim under contract law, those employees also have a whole new cause
of action for automatic unfair dismissal, with no service or age requirement
and no cap on compensation. What is more, the employee can also claim interim
relief until the date of the hearing (likely to be several months in some areas
of the country) which, if successful, would mean the employer must continue to
pay the dismissed employee their full wages during that period.

With its controversial judgement in Parkins v Sodexho Ltd [2002] IRLR 109,
the Employment Appeal Tribunal has made this unwelcome scenario a potential
reality. The case established that a worker can claim the protection of the
Public Interest Disclosure Act 1998 – or the ‘Whistleblowing Act’ as it has
become known – where the ‘protected disclosure’ in question is a breach of the
employment contract.

When it came into force on 2 July 1999, the PIDA inserted new provisions
into the Employment Rights Act 1996 to protect workers from dismissal or other
detriment at the hands of their employers for disclosing information about
certain kinds of malpractice. The Act provides protection for employees by
rendering automatically unfair the dismissal of an employee for having made a
‘protected disclosure’. The statutory definition of ‘protected disclosure’
includes any disclosure of information which, in the reasonable belief of the
employee or worker making the disclosure, ‘tends to showÉ that a person has
failed to comply with any legal obligation to which he is subject’. The EAT’s
broad and employee-friendly interpretation established that this failure can
include a breach of the employment contract.

Parkins v Sodexho – the facts

Mr Parkins was employed by Sodexho Ltd from 17 January 2000 until 28 April
2000, when he was summarily dismissed. The reason for his dismissal, he
claimed, was that he had complained to Sodexho that there was no supervision on
one of the sites where he worked. He said that, instead, he had to telephone
his day supervisor to inform him when he left at the end of his shift and of
any problems that he had encountered during the shift. He brought a claim
before an employment tribunal arguing that Sodexho was legally obliged, under
his contract of employment, to arrange for him to report directly to on-site
supervisors and that the company’s failure to do so not only amounted to a
breach of contract but also to a breach of ‘any legal obligation’ under the
PIDA. Since he did not have the necessary one year’s service to claim unfair
dismissal in the usual way his argument that he was covered by the PIDA was
crucial.

The tribunal’s decision – claim not in spirit of the legislation

In the employment tribunal Mr Parkins’ argument was rejected. As the
tribunal saw it, "[w]hile everybody is obliged to comply with contracts of
employment, we do not consider that an allegation of breach of an employment
contract in relation to the performance of duties comes within the letter or
spirit of the statutory provision". This is not a surprising view for the
tribunal to take. As one of the promoters of the legislation, Lord Borrie, said
during the committee stage of the Bill’s passage through Parliament:
"[t]his Bill is meant to encourage any worker in any workplace who
discovers a malpractice of some kind, whether it is financial, a breach of
safety regulations or the commission of a criminal offence by the employer –
several examples were given to me and several other noble Lords during second
reading – to disclose those matters in the public interest. It is not concerned
with a worker who wishes to disclose some malpractice for his own ends,
possibly to try to gain a private advantage. As the title of the Bill clearly
indicates, it is concerned with the public interest’. So, an employee who
merely alleges breach of contract to contrive a claim for unfair dismissal
should fall outside the Act and should fail. That, surely, is what Parliament
intended and how most employers and workers would see it.

The EAT decision – breaches of contract are caught

Not so at the EAT. It allowed Parkins’ appeal and decided there is no reason
to distinguish a legal obligation which arises under an individual’s contract
of employment from any other form of legal obligation.

The EAT’s only comfort for employers, effectively acknowledging the
possibility of contrived claims from employees not qualified to claim unfair
dismissal, was to make it clear that no claim would succeed unless the
principal reason for the dismissal was a protected disclosure made by the
employee in good faith.

The EAT added: "We anticipate that the difficulty for an employee to
show that that was likely to be the reason for his dismissal would be as
difficult a hurdle to surmount in this area as it has shown to be in the past
in other areas."

The issue of whether Mr Parkins was dismissed because he complained (as he
argued) or because he refused to take orders (as Sodexho argued) was not
resolved; the EAT remitted the issue to a freshly-constituted tribunal. It will
be interesting to see how robust a line that tribunal is able to take.

Possible claims from private disputes

The EAT’s decision to give a literal and therefore very wide interpretation
to ‘legal obligation’ and extend it to breaches of the employment contract is,
on the face of it, logical. After all, the employment contract is full of legal
obligations. In Parkins, arguably, the nature of the breach of contract fell
within the spirit of the whistleblowing legislation – a health and safety
obligation which had implications for the rest of the workforce.

The problem with the decision arises from the fact the EAT, by its own
admission, could not define the spirit of the legislation. Perhaps that was the
underlying reason it did not attempt to say which types of legal obligations
owed to employees under their employment contracts fall within the scope of the
PIDA. The EAT’s failure to do that means we have no guidance on that issue yet.

Meanwhile, employers risk whistleblowing claims arising out of a purely
‘private’ dispute which has nothing to do with the wider public interest – for
example, an employee’s entitlement to wages or holiday. Clearly, this is not
the type of malpractice the whistleblowing legislation was intended to cover –
in most cases the dispute will be of relevance only to the individual making
the complaint.

Policies and grievance procedures

While the Parkins case concerned one particular type of protected disclosure
– breach of a legal obligation – the range of qualifying disclosures is far
wider. They include the commission of criminal offences, miscarriages of
justice, the protection of health and safety and the protection of the
environment. Complaints falling into any of these additional categories should
be dealt with under the employer’s whistleblowing policy, which should set out
clearly to whom the complaint should be directed and how it will be addressed
[see box]. The purpose of a whistleblowing policy is, primarily, to deter and
detect malpractice in the workplace and it should normally be kept separate
from the normal grievance procedure, which is used to handle individual or
group grievances.

Despite the Parkins case, the grievance procedure will continue to be the
more appropriate policy for handling the vast majority of complaints relating
to allegations of breach of contract. The contract of employment or the
statement of terms and conditions should identify the employer’s grievance
procedure and specify the person to whom a complaint should be made in the
first instance. Importantly, it should not be contractually binding, otherwise
any failure by the employer to follow it will amount to a breach of contract
itself.

Whistleblowing: practical steps to take

The independent charity Public
Concern at Work offers the following useful guidance for employers.

– Employers should make it clear that it is safe and acceptable
for workers to raise a concern they may have about misconduct or malpractice in
the organisation.

– Where a worker raises a concern about a specified
malpractice, every effort should be made to ensure the employer responds (and
can show it has responded), rather than ‘shooting the messenger’.

– It is in employers’ own interests to introduce effective
whistleblowing procedures. This will not only help separate the message from
the messenger but will also reduce the likelihood that a public disclosure will
be protected under the Act.

– Where a protected disclosure has been made, employers should
take all reasonable steps to try and ensure that no colleague, manager or other
person under its control victimises the whistleblower.

– Confidentiality clauses in severance agreements and
employment contracts should be reviewed (since any such clause is void if it
precludes a protected disclosure).

– Employers should review the terms and conditions in their
arrangements with contractors to ensure that those who work for key contractors
also have access to the employer’s whistleblowing policy if the concern affects
it.

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