Blowing the whistle on workplace malpractice

What would you do if, as a qualified assistant, you discovered that a partner in the firm was routinely overcharging on legal aid accounts, or that the firm was breaching health and safety regulations by having boxes of old files blocking the fire escape? As a solicitor you are of course familiar with your legal rights not to be victimised or dismissed under the Public Interest Disclosure Act. But would you know how to raise these concerns, and would you be confident that they would be treated appropriately, and that you would not suffer reprisals?

Would a junior secretary be similarly confident?

These and other questions are being asked by Public Concern at Work as part of a project which has been established to raise the profile of public interest whistleblowing in Scotland, and to highlight the role that it can play in improving openness, good governance and accountability in public, private and voluntary organisations in Scotland.

Public Concern at Work is an independent institute which promotes accountability through its work with individuals and organisations. It has three key functions:

• offering free advice to individuals who are concerned about wrongdoing in the workplace but who may be unsure whether or how to raise the matter,
• providing training and support services to employers and other  organisations on good governance and how to implement effective whistleblowing policies, and
• informing public policy on regulation, compliance and accountability

The impetus behind the launch of the charity in 1993 had been the number of disasters and scandals in the late 1980s and the early 1990s where subsequent public enquiries found that they might have been prevented. For example, the Zeebrugge ferry disaster in 1987 resulted in the deaths of 194 people when the Herald of Free Enterprise sank after leaving port with its bow doors open. The subsequent inquiry found that workers had raised their concerns about the risk on five separate occasions, but the message got lost in middle management. The Piper Alpha Disaster in 1988 killed 167 oilrig workers in the North Sea. Lord Cullen found that employees did not raise their safety concerns because they did not wish to embarrass the company and possibly lose their jobs. Harry Templeton, a print shop worker with the Daily Record in Glasgow, challenged Robert Maxwell’s use of the pension fund and was sacked for his trouble by Maxwell and has never worked in the industry again.

In these cases, and in many others, it was found time and time again that people within the workplace knew about the malpractice that was going on, but were either afraid to raise their concerns or the concerns were raised in the wrong way or to the wrong person. A safe and effective whistleblowing policy is an alternative method of communication. By ensuring that important information is channelled appropriately within an organisation, management will learn about concerns early and be able to resolve them effectively. Such policies are becoming more widely recognised as a crucial risk management tool. PCaW has worked with health authorities and trusts in England and Wales, with Whitehall departments and local authorities as well as with numerous private sector companies including financial institutions in Scotland. The Nolan Committee in its first four reports endorsed the approach of PCaW and following the Committee’s recommendations, every public body is required to implement a whistleblowing policy. This work has had a significant impact, helping to signal a change in the culture in public sector workplaces and its benefits are now also being seen in the private and voluntary sectors. Employers are now recognising that people who raise concerns in good faith about dangers or wrongdoing are worthy of a supportive response because they are acting in the best interests of the organisation as a whole as well as for the public good. This approach has significant implications not only for solicitors in their work with clients, but on solicitors’ firms as employers themselves.

The Public Interest Disclosure Act, which came into force in July 1999, is now beginning to have an impact on employment relations as the first cases start to come through. The Act provides protection to those who have raised a concern about malpractice in accordance with the Act’s provisions, and are subsequently victimised or dismissed for doing so. In addition to employees, it covers trainees, agency staff, contractors, homeworkers, trainees and every professional in the NHS. The usual employment law restrictions on minimum length of service and age do not apply. The Act does not presently cover the genuinely self-employed, volunteers, the intelligence services, the Army or police officers.

Public Concern at Work was closely involved in settling the scope and detail of the legislation. The success of Richard Shepherd MP’s Bill owed much to a pledge from the opposition leader Tony Blair that if the Labour Party were elected his Government would legislate on these terms. In 1997, at the request of Richard Shepherd and the Government, PCaW consulted on the proposals and secured the support of key interests such as the CBI, IoD, TUC and other professional bodies.

Lord Nolan praised the legislation for “so skilfully achieving the essential but delicate balance between the public interest and the interests of employers”. The Act makes it clear that victimising workers who raise genuine public interest concerns in the workplace is unacceptable and that employers who do not establish whistleblowing procedures increase the risk that wider disclosures, to the media for example, might be protected.

The decisions so far indicate that the Tribunals are applying the Act in a robust and purposive manner. In one of the first decisions reported last year, a Tribunal awarded approximately £300,000 to Antonio Fernandes for unfair dismissal.1 Mr Fernandes was financial director of a telecommunications company who was subjected to intimidation and pressure to resign by his employer for raising serious concerns about the managing director’s expenses claims. Mr Fernandes refused to resign, and was soon after summarily dismissed for gross misconduct primarily for authorising the misappropriation of funds.The tribunal took the view that the reasons given for his dismissal were a “smokescreen” and that the real reason was for making a protected disclosure about financial malpractice. Mr Fernandes, 59, was compensated for his actual financial losses which took into account his attempts to mitigate future losses up to his retirement age.

In Scotland the changes to the regulations in January 2001 to allow legal aid in certain employment appeal tribunal cases is a further incentive to all employers, and their professional advisers, to implement whistleblowing policies to allow their employees a safe route to raise concerns internally. While legal aid will not be available in every PIDA claim, the fact that it may be in complex cases is another check on those employers who threaten the public interest.

Public Concern at Work recognises that its mission will be fulfilled when people at work have the confidence to raise concerns about wrongdoing in the workplace.The only circumstances where an employer is liable under the Act is where they have victimised or dismissed a worker who has raised a legitimate concern. Economically, it makes more sense to take preventative measures and to encourage an open and accountable workplace than it does to pay to defend a claim. Likewise, the earlier a managing director hears about something which might be going wrong, the more time he or she will have to properly investigate the concern and the more effectively they will be able to resolve the issue before it becomes a serious problem. If no internal alternative communication channel exists, the higher the risk that a genuine concern will not be raised, that nothing at all will be done, that profitability will be reduced, or worse, that public confidence will be undermined. A worker who feels unable to raise concerns internally may raise the issue externally, which may force a company into crisis management unnecessarily. When concerns are not dealt with properly and a tragedy or scandal occurs in a single organisation, an entire industry may ultimately be burdened with new or increased regulatory control, as happened in the pensions industry as a response to the Maxwell scandal.

Public Concern at Work’s Scottish Project is encouraging Scottish public bodies, regulators, politicians, the legal and business community, and the voluntary sector to address this issue. The work we have done so far has indicated that awareness of the legislation and the issue remains fairly low. However, we are also finding that those we have met have a keen interest in our work and a desire to know more. The work on our confidential helpline indicates that individuals in Scotland still face considerable barriers when trying to raise public concerns in the workplace.

The legal profession itself is one of the key industries in Scotland, employing thousands of people throughout the whole country. As such, individual firms should be well aware of the need to ensure that their own culture is one that encourages openness in order to identify actual or potential malpractice quickly and stop it just as fast. Here is a way you can allow that to happen.

For more information on the Act or Scottish PCaW and its services, please contact Lynne MacMillan, Scottish Project Manager, on 0141 579 2991or visit our website at www.pcaw.co.uk. The helpline number is 0207 404 6609