Legal Q&A: Whistleblowing

By David Hetherington, solicitor, Fladgate Fielder

Q Our accounts clerk informed his manager that a director was making
excessive and suspect expenses claims which appeared to be fraudulent.
Following subsequent enquiries, the director produced supporting receipts, thus
proving the clerk to be wrong. Can we give the clerk a disciplinary warning, or
even dismiss him, because of the allegation?

A Under the Public Interest Disclosure Act (PIDA), which introduced
protection for whistle-blowers, it would be unlawful to give the clerk a
warning (thereby subjecting him to a detriment) or to dismiss him, if the
reason is that he made a ‘qualifying’ disclosure which is ‘protected’.

If the clerk reasonably believed that a criminal offence had been committed,
the disclosure would be a qualifying one, even if that belief was incorrect.
The disclosure would be protected if it was made in good faith, even if this
was without due care.

Other categories of information in respect of which qualifying disclosures
can be made include the breach of a legal obligation, danger to the health and
safety of any individual and damage to the environment (see answer below).

A disclosure made in good faith to anyone other than the employer or person
responsible for the wrongdoing is not protected unless the employee reasonably
believes the information is substantially true.

Additional requirements must be met if the disclosure relates to an
exceptionally serious failure, or is made to a third party other than a
prescribed regulator – such as company shareholders, a professional body or the
media.

Q How can we reduce the risk of any qualifying disclosure made about us
to the media, or another third party, being a protected disclosure?

A The introduction of an internal whistleblowing policy could make it
difficult for a worker to reasonably believe that he would be victimised for
making a disclosure to the employer, rather than externally. Failure by the
worker to follow the policy could result in the disclosure being unprotected.

The policy should make clear that wrongdoing in the workplace is taken
seriously by the employer, and encourage workers to speak up about genuine
suspicions they may have. It should reassure workers that they will not be
victimised for raising genuine concerns and provide a procedure for disclosing
such concerns to a particular person outside the line management structure or,
if appropriate, a dedicated compliance officer. The policy should state that
disciplinary penalties (including dismissal) may be imposed where a worker
makes false or malicious allegations – particularly to the media.

Q One of our workers informed the Environment Agency that our production
processes are polluting the environment. 
However, we are not doing anything illegal. Is the disclosure protected?

A The ‘environment’ category is very wide and covers damage that may
not involve a breach of the law. As the disclosure has been made to the correct
prescribed regulator, it will be protected if it was made in good faith and the
worker reasonably believed the information was substantially true. Examples of
other prescribed regulators include the Inland Revenue and Customs & Excise
for tax and VAT evasion, and the Serious Fraud Office for serious fraud.

Q We dismissed a 66-year-old employee following disciplinary proceedings
against him. Coincidentally, he had complained to the Health & Safety
Executive that we failed to enforce a number of health and safety measures. He
has brought an unfair dismissal claim, alleging that he was dismissed for
making a protected disclosure. He had completed less than a year’s service. Is
he eligible to bring the claim? Is there an upper limit to the compensation
that can be awarded?

A He is eligible. No qualifying period of service or upper age limit
applies where the making of a protected disclosure is alleged to have been the
reason for dismissal.

A dismissal for making a protected disclosure is automatically unfair and
compensation is not subject to any limit. Statistics show that the average
tribunal award made for whistleblowing dismissals in the first three years
since PIDA came into force in July 1999 was £107,000, with the highest award
standing at £805,000.

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