HM Insights

Whistleblowing and employment law - back in the "Public Interest"

With the pace of change in employment law getting ever quicker, employers will be forgiven for having forgotten all about the whistleblowing amendments that came into force in June 2013.

However, a recent Employment Appeal Tribunal decision has now interpreted the amendments to the legislation and appears to have set a relatively low threshold for whistleblowers to satisfy in order to bring claims “something all employers will have to take into account when dealing with protected disclosures by employees".

'In the public interest'

Chesterton Global Ltd and anor v Normohamed UK/EAT/0335/14 ("Chesterton") is the first case to consider the meaning of the words "in the public interest" since their insertion into whistleblowing provisions by the Enterprise and Regulatory Reform Act 2013 ("2013 Act").

The purpose of inserting "in the public interest" into section 43B(1) of the Employment Rights Act 1996 ("1996 Act") was to reverse the effect of the case of Parkins v Sodexho Ltd [2002] IRLR 109 had on whistleblowing claims, where it was held that employees could bring whistleblowing claims from breaches arising from their own contract of employment. This appeared to be contrary to the intended spirit of the legislation (introduced in response to allegations that employees were uncomfortable in bringing matters to their employer's attention, fearing for their jobs, and this contributed to disasters such as Piper Alpha).

There are two striking features of the "public interest" amendment. First "public interest" is not defined in the 1996 Act. Second, that there is no requirement that the disclosure is actually in the public interest; all that is required is that the worker has a "reasonable belief" that the disclosure is in the public interest.

Facts of the case

N was employed as a senior manager in the Mayfair branch of Chestertons. He alleged that he made protected disclosures on three separate occasions between August and October 2013. N made disclosures to directors that there were inaccuracies with the company's' profit and loss statements and that the figures were being manipulated to make the company seem more profitable for the benefit of shareholders.

N was concerned that the inaccurate figures were used to calculate commission and there was a deliberate misstatement of between £2 and £3 million of actual costs and liabilities. The misstatement affected over 100 senior managers' earnings, including his own. N was dismissed and brought various claims against Chestertons, including automatic unfair dismissal as a result of his whistleblowing.

The employment tribunal upheld N's claim and found that he was dismissed due to a protected disclosure. It did state that the person that N was most concerned about was himself (and his loss of bonus as a result of the over-inflation of costs), but found that, as he had other managers in mind in as well as him and this had formed part of the disclosure, then the public interest test was satisfied.

Chestertons appealed, focusing on whether the "public interest" test was satisfied. The EAT dismissed the appeal.

It stated that the test is not whether the disclosure per se was in the public interest but whether the worker making the disclosure had a reasonable belief that it was. Importantly, it also upheld the tribunal's view that – even although that N was mainly concerned with his own earnings – there was sufficient public interest due to his statement that other managers' earnings would be adversely affected.

It would seem, then, in the "public interest" presents a relatively modest hurdle for claimants bringing whistleblowing claims, and this test may not limit whistleblowing claims as widely as first thought.

Further thoughts

The 2013 Act removed the requirement that any protected disclosures must be made in "good faith" and also inserted that employers may be held vicariously liable for the actions of their employees if they do not take any reasonable steps to prevent the worker, who has made a protected disclosure, from being subjected to any detrimental acts by his/her fellow employees. Where a worker is subject to such detriment then that is treated as also done by the worker's employer.

Workers who do not have two years' continuous employment may be able to rely on whistleblowing provisions if they are able to show that any protected disclosure was made in the reasonable belief that it was in the public interest and that they have suffered detriment (either by the employer or their fellow workers) after making the protected disclosure. In addition there is no longer the requirement that a disclosure must be made in good faith for it to be a protected disclosure.

Practical implications of Chesterton

The result of the Chesterton decision when considered alongside the amendments made by the 2013 Act means that employers should be fully aware that whistleblowing claims appear easier to satisfy then previously thought.

Employers should take steps to ensure that any protected disclosures made by employees are dealt with appropriately. Firstly, employers should have a whistleblowing policy that reflects the recent changes made by the 2013 Act. Secondly, employers should ensure that all managers and senior staff are aware of the whistleblowing policy and appropriate training is given on the policy to all employees.

If you have any questions arising from the above, either from whistleblowing in general or how to implement a whistleblowing policy and/or how to deliver whistleblowing training, please contact one of our employment team.