The protections afforded to employees who decide to raise complaints of wrongdoing with their employers have been brought to the forefront as Jes Staley, the Chief Executive of Barclays, has come under investigation by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) after admitting he had broken rules on protecting whistleblowers and used the bank’s internal security team to attempt to identify individuals who had sent anonymous letters complaining about the recruitment of a senior employee.
What is whistleblowing?
This is where a worker or employee discloses information on certain suspected wrongdoings or malpractices in the workplace to their employer (in most cases) or a third party, such as the FCA or the press, for example information which in their reasonable belief tends to show the commission of a criminal offence. A disclosure of information by a whistleblower usually relates to something that impacts on either the employer or a third party, but may not impact on them personally.
Overview of current UK legislation protecting whistleblowers
Under the Public Interest Disclosure Act 1998 (PIDA) a two-tier protection mechanism is in place for whistleblowers:
- The dismissal of an employee is automatically unfair if the reason for their dismissal is that they have made a protected disclosure; and
- A worker is protected from being subjected to any detriment as a result of making a protected disclosure.
For a whistleblower to qualify for protection they must have made a ‘qualifying disclosure’ in accordance with s43B Employment Rights Act 1996 (ERA) which also must be made in a way which meets the requirements for ‘protection’. For a qualifying disclosure to be protected the main factor taken into consideration is the identity of the person to whom the disclosure is made i.e. whether they are internal or external to the employer. Further to this, changes to the ERA in 2013 added a new requirement for those raising whistleblowing allegations to have a ”reasonable belief” that the disclosure is made in the ”public interest”.
A case to watch out for in 2017
Chesterton Global v Nurmohamed
In this case the claimant employee brought a whistleblowing claim alleging that Chestertons were deliberately manipulating the accounts to give him a lower commission income, which also affected around 100 other senior managers. On appeal, the Employment Appeal Tribunal confirmed a fairly low threshold for the ‘public interest test’ and that it is the worker’s “reasonable belief” that matters. There was no need to assess whether the disclosure was of real interest to the public, so long as the worker’s belief that the disclosure was made in the public interest was objectively reasonable. The decision in this case was reiterated in Underwood v Wincanton Plc confirming that the ‘public’ can be interpreted as a subset of the public as opposed to a whole, even if this subset consists only of fellow employees. That case concerned a written complaint by drivers about their terms and conditions of employment and the allocation of overtime. The ‘public interest test’ can therefore be satisfied even if a relatively small group of people are directly affected by the subject-matter of the disclosure.
The case of Chesterton will be reviewed by the Court of Appeal in June 2017 and when this appeal is decided it will be important for developments of the ‘public interest’ requirement of a whistleblowing claim and whether this low threshold will be maintained or reversed.
Is the current protection enough?
In the UK over the past two years the number of whistleblowers who have reported grievances to the FCA has dropped. The common hypothesis for this decline is that not enough protection is offered by regulatory organisations such as the FCA, nor by employer organisations to those employees who decide to speak out.
Current whistleblowing legislation puts no positive obligation on employers to encourage whistleblowing or implement a whistleblowing policy, and the protection offered by current UK legislation for whistleblowers has come under scrutiny and criticism over the years. This criticism has been further compounded by the recent publication of the Law Commission’s report setting out proposals to reform the Official Secrets Act. This called for a significant increase in prison sentences for those who decide to reveal state secrets, which was met with an outcry from whistleblower charities and civil liberties groups.
The Barclays whistleblower investigation provides a serious test of the whistleblowing provisions that came into effect in the financial services sector in 2016, alongside the senior managers and certification regime which is targeted at improving individual accountability in this sector and which is intended to promote an open culture encouraging employees to raise concerns about poor behaviour as a key element of good corporate governance. There are concerns that these whistleblowing regulations have not gone far enough to protect whistleblowers and there is speculation that this investigation will lead to demand for more meaningful scrutiny and accountability of financial institutions by the regulators.
Despite recent legislative changes and increased emphasis on supporting whistleblowers, there are concerns in some quarters that the regimes for the protection of whistleblowers still leave a lot to be desired. Whether the media attention surrounding the Barclays investigation will resonate into the wider corporate culture is still to be seen. What is clear is that whistleblowing needs to be addressed by all companies and employer organisations alike in order that effective systems are put in place to provide employees with the necessary safeguards.