Staff are well protected in law when they draw attention to workplace
malpractice and, as recent case law shows, failure to investigate can land
employers in hot water. Phil Boucher reports
Whistleblowing in the workplace is legally sanctioned under the Public
Interest and Disclosure Act 1999. This is largely an amendment to the
Employment Rights Act 1996, and protects people who have found instances of
workplace malpractice and wish to make them selves heard.
The organisation concerned is obliged to investigate the matter fully and is
restricted from reprimanding or victimising a whistleblower in any way.
The legislation itself was introduced in the wake of high-profile cases such
as the North Wales child abuse scandal and inquiry into baby deaths at Bristol
Royal Infirmary. An investigation into the Bristol case found the infirmary
suffered from a culture of silence and a tendency to close ranks. To blow the
whistle, the individual had also fought against a hierarchy described as
"inhibited".
Despite the fact two surgeons and a senior doctor administrator were
eventually found guilty of serious professional misconduct, the whistleblowing
happened later than it could have because a coherent disclosure policy was not
in place.
The PIDA was designed to remove this major sticking point by providing a
framework for reporting workplace malpractice.
In reality, while most employers do not deal with the life and death
situations of a major city hospital, similar cultures remain in place in many
parts of the business world. Many organisations do not even have a coherent
disclosure policy in place.
A recent case involving the European Commission highlights the difficulties
employees still face in attempting to raise concerns within an organisation.
Marta Andreasen, the Commission’s chief accountant, recently spoke out in the
press about "Enron-style" accounting practices in the EU’s £63bn
budget.
She had been asked to sign off the 2001 budget, even though she had not been
working for the Commission at that time and had grave doubts about the
reliability of the computer systems. Mrs Andreasen had been shocked to discover
the EU did not have double-entry bookkeeping when she joined in January 2002,
and feared funds could be diverted without leaving an electronic fingerprint.
When Andreasen brought her worries to the attention of her superiors in
European Commissioner Neil Kinnock’s office, she claimed they were ignored, and
that out of frustration she then contacted the Court of Auditors and some MEPs.
Kinnock’s actions were first to move her to another job, then invoke
disciplinary proceedings, and finally to suspend her in August 2002. He also
claimed Andreasen violated staff rules by defaming her superiors, bringing
disrepute on the Commission and violating hierarchy lines. According to
Kinnock, Andreasen should have signed the 2001 books and attached a reservation
note to show her concern.
Finally, Andreasen took her worries to an outside party. Although Kinnock
has claimed she is making wild allegations, it is unlikely he would have had to
comment at all if a trusted disclosure path had been made available and
followed up with investigation.
Marcus Rowland, solicitor at law firm Kemp Little, explains: "You might
have a procedure in place but it might not do you any good. If the employee is
not interested in using it or does not trust that it will work, there is not a
lot you can do to stop them going to an outside source."
It is in the organisation’s interests that a disclosure policy encourages
potential whistleblowers to stay in-house as far as possible. The best way of
doing this is to make it clear that a worker will not suffer a detriment if
they make an internal disclosure. People need to know how, where and to whom
they can make a disclosure.
The recent case of Fernandes v Netcom Consultants, 18 May 2000, shows what
can happen if these steps are not followed.
Fernandes, who was the chief financial officer responsible for the accounts
of computer firm Netcom and two sister companies based in the UK, queried the
expense accounts of his MD and sent a letter to board members in the UK,
Luxembourg and the US.
He was told to remain at home on the same day, pending an investigation by
the US parent company. Within a week, he had been interrogated twice by a US security
man and once by the chief executive of the US company. Further, he was asked
during two telephone conversations to resign, and the second time was
threatened with criminal prosecution.
Less than two weeks after disclosing his concerns, Fernandes was dismissed
for gross misconduct. One reason given was that he had allowed the
misappropriation of £316,000 in authorised expenses by the MD. The MD kept his
job, however.
A full tribunal hearing found the reasons given for the dismissal were a
smokescreen and Fernandes had been dismissed because of his concerns about the
financial malpractice of his employers. He was awarded record compensation of
£293,441.
This shows just how much protection a whistleblower has under PIDA – and how
costly arrogance in the boardroom can be. Elaine Aarons, partner at Eversheds,
says: "If employers carry out an investigation into whistleblowing, they
have to get the fundamentals right. Any conclusions drawn from an investigation
will be undermined if those conducting it could be said to be biased, or if
certain individuals who should be interviewed in the course of the
investigation are left out."
Sue Nickson, head of employment law at Hammond Suddards Edge, agrees:
"I would emphasise the need to take care in treating the concerns
seriously, and being open about the response," she said.
In most cases, organisations won’t take the heavy-handed approach favoured
by Netcom. But those that do should be aware that compensation is unlimited.
Whistleblowers also have a very broad protection afforded to them under the
PIDA. There is no minimum length of service requirement, and any dismissal is
automatically treated as unfair. Confidentiality clauses in employment
contracts and severance packages are also void if they preclude a protected
disclosure.
The case of Dr Jennifer Colman also highlights the sort of difficulties that
can arise when employers fail to follow the necessary procedures. Colman
recently issued a £5m writ against the General Medical Council for a whispering
campaign she believes started when she blew the whistle on alleged financial
abuses. She says she has not been asked to perform any service for the GMC
since she made the disclosure and has effectively been prevented from working
as a result.
In a separate claim, she also maintains that the GMC breached the Data
Protection Act by destroying documents and disparaging e-mails about her after
she demanded they be handed over. Colman is currently claiming loss of
earnings; injury to her feelings and reputation, and aggravated damages. The
GMC is conducting a review of her position, which has already run up £150,000
in costs.
All this points to a breakdown in communication. Rachel Heenan, barrister
and associate at Beechcroft Wansbroughs, explains: "You have to give
feedback to the member of staff who has raised the concerns about what the
employer proposes to do and the final result of any investigation. If you leave
them out in the cold, they will feel vulnerable."
The outcome of this case has yet to be decided. It may even transpire that
Colman has no grounds for her complaints. But by keeping her in the dark, the
GMC has simply made a bad situation worse.
It has also failed to foster the element of trust so crucial in containing and
managing a disclosure successfully. The best way of doing this is by
implementing a procedure that is secure and which deters employees from hanging
their washing outside to be aired.
Find out more…
on the PIDA at www.pcaw.org.uk
Who is protected under the PIDA?
The Public Interest Disclosure Act
applies to anyone who is genuinely concerned about an organisation’s working
practices, whether permanent staff, agency workers, contractors, trainees or
homeworkers. All professionals in the NHS are also covered by the Act.
The only people currently uncovered by its provisions are
volunteers, members of the intelligence services, the Army, police officers and
the self-employed.
Under the PIDA, employees can speak out about any criminal and
civil offence they witness, including negligence, breach of contract, breach of
administration law, miscarriage of justice, danger to health & safety or
the environment. They are also protected if the organisation has tried to cover
up an offence, the information is confidential or the malpractice extends to
actions overseas.
To protect the individuals concerned the Act confirms that
workers can safely seek legal advice on any concerns they have about
malpractice. A disclosure in good faith to a manager or the employer also has
to be protected if the whistle- blower has a reasonable suspicion that the
malpractice has occurred, is occurring or is likely to occur.
This does not mean workers have to keep things in-house. Wider
disclosures to such people as the media, police and MPs are also protected in
certain circumstances – most notably, if the individual believes that an
internal disclosure will result in them being victimised.
When this happens a tribunal will assess the identity of the
person the wider disclosure is made to, the seriousness of the concern and
whether the risk or danger remains.
Do
– Have a clear procedure that staff
can follow if they want to make a disclosure
– Publicise the protection that PIDA gives to employees
– Stress that you will not shoot the messenger
– Investigate the matter fully and without prejudice
– Train staff who are likely to be involved in operating the
procedure
Don’t
– Take any form of disciplinary
action against an employee who has made or wants to make a disclosure
– Force staff to make their disclosure to a third party such as
the press
– Keep the results of investigations secret from the
whistleblower
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– Sweep the issue under the carpet and hope it will go away
– Encourage a culture where whistleblowing is frowned upon
