As the Office of the Whistleblower Bill moves to a second reading, how should employers prepare for a shift in the regime? Francesca Titus explains.
Whistleblowing is a hot topic for government and regulatory agencies but is not on the radar of all businesses.
This year is set to see significant changes to the whistleblowing regime and the complexities and challenges facing companies of all sizes will grow.
Policymakers are investigating the ability to financially reward whistleblowers and the Office of the Whistleblower Bill is set to get its second reading.
What is a whistleblower?
Currently whistleblowing is the action someone takes to report wrongdoing at work that affects others and the report is in the public interest. Legally this is known as “making a disclosure in the public interest”.
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Complaints that count as “qualifying disclosures” under whistleblowing laws include allegations of criminal offences such as fraud, health and safety breaches, environmental damage, breach of legal obligations and attempts to cover up wrongdoing.
By law, most people are protected if they make a protected disclosure and are afforded whistleblowing protection.
To be legally protected, the qualifying disclosure must be reported to an appropriate prescribed person or authority, at which point it becomes a “protected disclosure”.
There is a long list of prescribed people and bodies ranging from the Bank of England, HMRC and the Financial Conduct Authority, through to the Children’s Commissioner and Environment Agency. A full list is available on the government website.
Financial incentives
Enforcement agencies are now actively seeking whistleblowers – in fact, the Competition and Markets Authority and HMRC already have the ability to pay whistleblowers.
The FCA has a dedicated whistleblowing hotline and has recently shown support for incentivising whistleblowers with financial rewards.
Last year, the Serious Fraud Office announced that they were only interested in hearing from corporates self-reporting or whistleblowers, not individuals who have been the victims of financial crime.
Nick Ephgrave, director at the Serious Fraud Office, has spoken of his vision of incentivising whistleblowers by paying them.
He has spoken about how well whistleblowing works in the United States of America and sees whistleblowers as a weapon the SFO could use in its fight against crime.
The Office of the Whistleblower Bill
After several failed attempts there is once again a Private Member’s Bill progressing through the House of Commons covering whistleblowing.
Its main aims are to establish an independent Office of the Whistleblower to protect whistleblowers and whistleblowing; to make provision for the Office of the Whistleblower to set, monitor and enforce standards for the management of whistleblowing cases; to provide disclosure and advice services and to direct whistleblowing investigations; and to order redress of detriment suffered by whistleblowers.
The Bill has come about because the current framework for whistleblowing in this country is very much looked at through the lens of employment law.
That means that the remedy and redress that is available to the whistleblower normally ends up in an employment tribunal, which looks at the occupational and work-related loss that the individual has suffered, and not necessarily at some of the social and reputational damage that they suffer as a result of being the person who stands up and speaks out.
The Bill wants to redress that. An All-Party Parliamentary Group report on whistleblowing found that the existing law has “failed to protect whistleblowers or the public against wrongdoing and harm”.
If the Office is created, it will lead to changes in how organisations deal with whistleblowers who may choose to report it there rather than internally.
Many organisations will now need to ensure they have robust internal protections for those wishing to make disclosures and will need to revisit existing policies and procedures.
The Bill defines protected disclosure broadly and covers nine different types of matters that may be subject of a protected disclosure. These range from a criminal offence or regulatory breach to mismanagement of public funds or abuse of authority.
The Bill defines the term ‘whistleblower’ as a person who ‘has made, makes or is intending to make a protected disclosure or is perceived by a relevant person to have made, be making or intend to make a protected disclosure’.
The Bill proposes that protected disclosures can be made to a so-called relevant person, such as, but not limited to, an employer, regulator or public authority but also the OWB.
The second reading of the Bill will take place in July this year.
Failure to prevent offences
By autumn this year there will be three pieces of legislation designed to hold organisations to account if they profit from corporate crime committed by their employees or linked third parties.
Failure to prevent bribery and failure to prevent the facilitation of tax evasion are already on the statute books, and shortly they will be joined by failure to prevent fraud.
These kinds of offences, going on in the heart of organisations, are exactly the offences where law enforcement see the benefit to their investigations of whistleblowers.
How can businesses prepare?
While legislation does not currently impose a requirement on all companies to have a whistleblowing policy (although there are specific rules for listed companies and those in the financial services sector) the development and implementation of a robust and well publicised policy and clear procedures for dealing with whistleblowing is best practice.
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