If an employee blows the whistle on illegal activities committed by their employer, what are their rights if they are dismissed? Judith Rhule provides an update
The Public Interest Disclosure Act 1998 (‘PIDA’) came into force over ten years ago with a view to protecting workers from blowing the whistle. New tribunal rules introduced this year widens the potential for alleged wrongdoing to come to the attention of a regulatory body. PIDA protects employees and workers who have made a protected disclosure (blown the whistle) in the workplace about information concerning one of six relevant failures:
1) a criminal offence,
2) a risk to health and safety
3) miscarriages of justice,
4) failure to comply with a legal obligation,
5) damage to the environment or
6) concealment of information relating to any of those matters.
Employees will only be protected if:
(a) they have a reasonable belief that the information disclosed relates to one of the relevant failures;
(b) the disclosure is made to a prescribed person (either the employer or a third party defined under PIDA); and
(c) (c) the disclosure is made in good faith.
PIDA is a powerful piece of employment rights legislation, a worker who claims that they have been dismissed as a result of whistleblowing does not need the usual 12 months service in order to bring a claim for unfair (or constructive) dismissal. Also any compensation awarded will be unlimited and not subject to the statutory cap for unfair dismissal claims (currently £65,300).
New tribunal rules
Last year there were 1700 claims involving PIDA allegations. Prior to April 2010 the employment tribunals (‘tribunals’) had no power to take action in respect of such allegations. However on 6th April 2010 the government introduced new employment tribunal rules, (Employment Tribunals (Constitution and Rules of Procedure (Amendment) Regulations 2010 (‘Regulations’). Under these Regulations, employment tribunals have the power to forward the whole or extracts of the tribunal claim form (‘ET1’) to the relevant regulator if they contain allegations of whistleblowing. Regulators include a variety of bodies such as the Care Quality Commission, the Charity Commission, the Financial Services Authority, and the Environment Agency. The ET1 has been amended so that the claimant can tick a box to give consent to the tribunal to pass details of the claim to the regulator. Where the claimant does not consent and has not ticked the box, the details of the claim will not be forwarded. The reasons for not ticking the box will of course vary, for example a claimant who has notified the regulator directly will not need to tick the box.
Where a claim involves whistleblowing and the claimant has given consent to refer the matter to a regulator, the claim form will be passed to a centralised team of administrators in the Employment Tribunal Service to process. The decision to make the referral will therefore be made by administrators and not employment judges. Once the referral has been made, letters will be sent by the Tribunal to the parties in the claim to confirm exactly what has been passed on and to whom. Details of the allegations will not be passed on to anyone other than the relevant regulator.
Under the regulations, the Secretary of the Employment Tribunals has the discretion to only refer information where it considers it appropriate to do so. However it is questionable whether the administrators will be qualified to make such a judgement. It will therefore be for the regulator to determine whether the allegations merit further investigation. This will inevitably increase the regulator's workload.
Effect on tribunal cases
The government's view is that the new rules will have no impact on employment tribunal litigation. It is true to say that once the matter has been referred to the regulator the tribunal has no further dealings with them. However the report of the regulator will inevitably find its way into the tribunal hearing bundle if it is available before the hearing. A report confirming malpractice or concealment by the employer will make it difficult for the employment tribunal to find that the worker has not suffered a detriment. Conversely, a report that suggests that the complaint was ill-founded may make it difficult for the claimant to convince the tribunal that the disclosure was made in good faith. The tribunal may well find that the whistleblowing claim was malicious or vexatious and dismiss it. Further if the consent box has not been ticked and no individual referral to the regulator has not been made, the employer may find it easier to argue ‘bad faith’ on the part of the claimant.
Settlement of claims
Prior to 6th April 2010, claimants sometimes added whistleblowing claims to claim forms as a means of increasing awards of compensation beyond the statutory cap or defeating the one-year rule in unfair dismissal claims.
However, there is now a further risk that claimants will use the new rules to negotiate higher settlements with employers who are reluctant to have their business affairs investigated by a regulatory body. Maybe there is a risk to the employer that other matters will be unearthed during the investigation or the regulator may target them for future investigations. There is also a risk to the employer's reputation. More employers may be inclined to settle cases quickly, often before the claim is issued in the tribunal, irrespective of the merits of the case. Early settlement means such matters may escape investigation.
A further concern for employers is that allegations will be in the hands of the regulators before the tribunal has tested whether the allegation was made in good faith or if there was a genuine belief in its truth.
Furthermore, even where the claim is dismissed or struck out the regulators are no doubt at liberty to continue with the investigation.
What should employers do?
It is essential for employers to have a robust whistleblowing procedure in place and to thoroughly investigate allegations so that there is no doubt in the whistleblower's mind that their complaints are being taken seriously. This may avoid the worker feeling compelled to report matters to the regulators. Employers will have to balance the time and costs of investigating spurious allegations with the risk of being investigated by the regulator which could result in a negative report or may unearth matters that the employer was not even aware of.
See: ‘Lloyds whistleblower Andrew Constantine loses £1m unfair dismissal case’
See also: ‘The Perils of Whistleblowing’ by Kirsty Barnes, In-Pharma Technologist, 6 January 2006