Why whistleblowing is becoming the go-to claim - as published in economia

Employees used to have the right to claim unfair dismissal once they’d been employed for a year. The coalition government increased this to two years in April 2012. Employers welcomed the move, but the fact is that the increase may have lulled them into a false sense of security

Most employers dismissing during the first two years will be aware that employees keen to sue will be on the look out for a discrimination angle as no period of qualifying service is needed to bring a claim. However, employees who don’t have discrimination claims will be looking for something else on which to hang a claim. Whistleblowing is proving to be a popular choice as, along with discrimination, no qualifying period of employment is required.

Why a whistleblowing claim is attractive

But it’s not just employees dismissed during the first two years of employment who will be looking at bringing a whistleblowing claim. There is the added attraction that a whistleblowing dismissal is automatically unfair and there is no cap on compensation. Adding whistleblowing to the mix can therefore significantly enhance the value of a claim, which would ordinarily be capped at a year’s losses for a standard unfair dismissal, or £78,335 if lower. In some rare cases, it may even be possible to obtain an order requiring the employer to continue to employ and pay the employee until the employment tribunal decides their claim.

Any employment lawyer worth their salt will therefore almost certainly explore the possibility of a whistleblowing claim when a potential new client turns up on their doorstep seeking advice about their dismissal. Many an employee will have knowledge of the inside workings of their employer and will be able to point to something that they have mentioned to their employer which could arguably be construed as a whistleblowing disclosure, but which the employer has not even identified as a potential issue – for example, off the cuff comments about health and safety or suspected financial irregularities.

There is also a greater awareness of whistleblowing as a result of recent high profile cases. Michael Woodford, the CEO of digital camera company, Olympus, secured himself a £10m settlement when he was dismissed after blowing the whistle on a £16bn fraud scandal.

Problems for employers

The difficulty for employers is that while it is normally easy to spot the potential for a discrimination claim, that’s not always the case when it comes to whistleblowing claims. Some cases, such as Woodford’s, will be obvious; others will be less easy to spot. An employee may blow the whistle by providing information highlighting that their employer has breached a legal obligation. Until recently, disclosure of information that an employer had breached the employee’s employment contract was sufficient to amount to a whistleblowing disclosure.

The government sought to clamp down on this by introducing a new public interest requirement, so that an employee is only protected if they reasonably believe that the disclosure is in the public interest. However, a recent case construed this requirement narrowly, so that where an employee alleged that there were financial irregularities in the business’ accounts which led to reduced commission payments to him and 100 other managers, the court considered that the 100 managers were a sufficient section of the public and so the disclosure was found to have been made in the public interest. It is also worth remembering that there is no need for the disclosure to be correct. In that case, the accounts were audited and verified as being true and accurate, but the claim was still successful.

What should employers do?

What this means for employers is that even where an employee does not have two years’ service, and so cannot bring an ordinary unfair dismissal claim, they need to act with a degree of caution when dismissing, and be alive to the prospect of departed employees manipulating an off the cuff comment they have made into a full blown disclosure. Of course, just because an employee may have made a whistleblowing disclosure does not mean they are home and dry in terms of an automatic unfair dismissal claim. The employer must also have dismissed them because they blew the whistle and not for another reason. Employers will therefore need to be able to point to a genuine reason for dismissing unrelated to the disclosure, such as gross misconduct. It is therefore essential that in discussions with an employee leading up to their dismissal the employer is very clear on the reason why it is dismissing and that there is a paper trail in place setting this out clearly.

Alternatively, if a disclosure has been made and the employer is aware of it, it should make sure it deals with that disclosure. Investigate the complaint, take any appropriate action and thank the employee for bringing the matter to its attention. If that employee is subsequently dismissed, the individual will find it that much harder to link their disclosure to their dismissal. Provided that (a) the real reason for the dismissal and/or (b) the action taken as a result of any disclosure is clearly documented, employers should have nothing to fear from an unscrupulous employee who claims they were dismissed for whistleblowing in order to obtain a large pay-off.

This article, written by Victoria Burnip, was originally published in economia at  http://economia.icaew.com/opinion/november-2015/why-whistleblowing-is-becoming-the-go-to-claim