Whistleblowing liability

In the recent case of Timis v Osipov [2018] EWCA Civ 2321, the Court of Appeal has confirmed that employees who have been dismissed for making a protected disclosure can also bring a claim against an individual colleague for detriment suffered following a dismissal and a claim for vicarious liability against the employer, in addition to an unfair dismissal claim.

The decision raises important questions for employee claimants, employers and their staff alike.

The Law

A worker has the right not to be subjected to detriment on the ground that they have made a protected disclosure.

If workers or employees bring information about a wrongdoing to the attention of their employers (or a relevant organisation such as the police or HSE), they are protected in certain circumstances under the Public Interest Disclosure Act 1998.

This approach is for the public interest – so people can speak out if they find malpractice in an organisation. Qualifying protected disclosures can be disclosures of information where the worker reasonably believes (and it is in the public interest) that one or more of the following matters is either happening, has taken place, or is likely to happen in the future.

• A criminal offence

• The breach of a legal obligation

• A miscarriage of justice

• A danger to the health and safety of any individual

• Damage to the environment

• Deliberate attempt to conceal any of the above.

This protection applies to detriment by the employer as well as detriment by the worker’s colleagues. In the case of detriment by a colleague, it will be treated as also having been done by the employer, subject to a reasonable steps defence for the employer.

A worker who is also an employee will have a claim for automatically unfair dismissal if they are dismissed for the sole or principal reason that they have made a protected disclosure.

An employee cannot bring a claim for detriment where the detriment in question is the actual dismissal. The employee would need to bring a claim for unfair dismissal instead. However, a worker who is not an employee (and so who is not eligible to claim unfair dismissal) can bring a detriment claim in respect of the termination of their employment.

The Facts

The employee was dismissed from his role as CEO of International Petroleum Ltd after he made a series of protected disclosures. His dismissal was carried out by a non-executive director on the instruction of another.

He made a claim in the employment tribunal claiming automatic unfair dismissal against the company and further, that by the conduct of his two colleagues in relation to his dismissal, the two colleagues had subjected him to a detriment, and that the company should be vicariously liable for their conduct.
His detriment claims were made against both IP Ltd, as his employer, and against his colleagues in their individual capacities.

The tribunal found that the principal reason for the dismissal was that he had made protected disclosures. Accordingly, it was held that he had been unfairly dismissed by IP Ltd.

However, importantly, the tribunal also held that, by their conduct in relation to his dismissal, his colleagues had subjected the claimant to a detriment. The individuals who had carried out the dismissal were therefore held jointly and severally liable with IP Ltd to compensate the claimant for the losses he had suffered as a result of his dismissal. The tribunal awarded approximately £1.7 million in compensation.

The two individuals appealed to the Court of Appeal to avoid their own personal liability, but the Court of Appeal upheld the decision.

Subject to any successful appeal to the Supreme Court, the law now seems clear that in addition to the employer, individuals may be personally, and therefore financially, liable for their actions towards whistle-blowers.

Points to note

It is now open to an employee to bring a claim against an individual co-worker for subjecting them to the detriment of dismissal; i.e. for simply being a party to the decision to dismiss; and also to bring a claim of vicarious liability for that act against the employer.

The decision confirms that liability in whistle-blowing claims is similar to that for unlawful discrimination under the Equality Act, namely that individuals are not protected from liability for the consequences of the most serious detriments to which they subject others.

Individuals may already be aware of their potential individual liability for discrimination in the workplace, but most are likely to be unaware of their liability with respect to whistle-blowing colleagues. Employers will need to highlight this to workers from now on.

Accordingly, individual employees should now consider whether they should be pursuing claims against ex-colleagues as well as the employer in cases where dismissal is the issue.

Generally, the employer will have more financial resources however there could be occasions where the directors may have deeper pockets, such as where the employer is insolvent or in the case of a small start-up company.

From a tactical point of view, employees may pursue a claim for detriment rather than (or in addition to) an unfair dismissal claim, as the former can give rise to compensation for injury to feelings and the employer may therefore be vicariously liable for a higher sum than it would be in an unfair dismissal claim alone. There may also be occasions where an unfair dismissal claim would fail, such as if they are not an employee or where the dismissing manager can persuade the tribunal that the principal reason for dismissal was not the disclosure.

This decision will also have significant implications for individuals who are involved in disciplinary processes.

Action to take

1) Check whether your policies cover non-executive directors as well as executive directors, and other senior staff, and consider how those who are not officers should be protected.

2) Training is essential, and you will want to ensure that all employees and office holders responsible for decision making are supported with HR and legal advice when making decisions which could give rise to a substantial financial risk, both to you and to individuals themselves.

3) When facing whistle-blowing claims, you will also need to consider whether employees will need to take their own legal advice as there may be a conflict of interest; for example, it is very likely that we will see the situation where an employer argues that they are not vicariously liable, and that the employee was acting ‘on a whim’.

Case Reference

Timis v Osipov [2018] EWCA Civ 2321 – Court of Appeal

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