Just whistle while you work

Most people will have heard of “whistleblowing” from the high-profile cases reported in the media. Simply put, whistleblowing occurs where an employee or worker provides certain types of information, usually information which has come to their attention through work, to an employer or a regulator. It can cover everything from raising a failure to take action when a defective piece of equipment is reported, to exposing a major organised fraud.

The whistleblower is usually not directly affected personally by the danger or illegality. Whistleblowing occurs when a worker raises a concern about danger or illegality that affects others, for example members of the public. Often the whistleblower is not personally affected by the danger or illegality, but is concerned about danger or illegality affecting others.

How do employees benefit?

Both employers and employees may have a lot at stake when whistleblowing occurs. Where malpractice is shown to have occurred, this may reflect badly on management systems, or on individual managers who may appear in a bad light. Whistleblowers may fear that management will be tempted to “shoot the messenger”. A clear procedure for raising issues will help to reduce the risk that serious concerns are mishandled, whether by the employee or by the organisation. It is also, however, important for workers to understand that there will be no adverse repercussions if they raise cases with their employers.

The Enron and Société Générale accounting scandals have reinforced the damage that fraud and business malpractice can create. They also highlight the need for organisations to ensure that whistleblowing procedures are in place and are supported by the management culture. Business ethics are perceived as an issue that can either build or destroy the reputation of a company. If public confidence is lost, the consequences for a business can be extremely serious.

A positive benefit has been reported by many organisations arising from their whistleblowing procedures. For example, the Treasury’s Annual Fraud Reports record a marked increase in the number of Whitehall frauds discovered and stopped by staff raising concerns following the introduction of whistleblowing policies. The cost-benefit analysis section of the Financial Services Authority’s policy paper Whistleblowing, the FSA & the financial services industry (2002) concludes that respondents all agreed that there were minimal costs in implementing or reassessing the whistleblowing procedures. On the other hand the benefits were described by one respondent as “hard to quantify, but of significance for the business of any regulated firm”. One respondent stated that it was “easy to see that effective in-house whistleblowing arrangements are a benefit to both firms and consumers”.

The existence of a whistleblowing procedure, together with evidence that the employer was concerned to deal effectively with any malpractice, will make it less likely that a tribunal will find that an employee was behaving reasonably by making disclosures to an outside body or person. It would normally be the case that the employer will be the best person to investigate and, if necessary, put matters right. The existence of an internal procedure will also help to prevent the serious damage to an employer’s business or reputation that can occur as a consequence of public disclosures.

What should the procedure contain?

It is important that employers make clear to their employees what they should do if they come across malpractice in the workplace. This should encourage employees to report these issues to an individual with the ability to do something about the problem. Any guidance produced will need to reflect the circumstances of individual employers, but should make clear that: the kinds of actions targeted by the legislation are unacceptable and the employer attaches importance to identifying and remedying malpractice (specific examples of unacceptable behaviour might usefully be included);

employees should inform their line manager immediately if they become aware that any of the specified actions is happening (or has happened, or is likely to happen);

in more serious cases (e.g. if the allegation is about the actions of their line manager), the employee should feel able to raise the issue with a more senior manager, bypassing lower levels of management;

whistleblowers can ask for their concerns to be treated in confidence and such wishes will be respected;

employees will not be penalised for informing management about any of the specified actions.

It is better to deal with the issue of whistleblowing separately, rather than have it tagged on to or form part of an existing grievance procedure. This is in part because the scale of risk to the organisation and to the employee will generally be significantly greater in whistleblowing cases than with other matters. Moreover, the whistleblower may have no grievance regarding their terms and conditions, or for that matter in relation to the employer (it may, for example, concern the conduct of a contractor).

Companies have codes of behaviour or ethical standards with which employees are expected to comply. Such codes can assist in reinforcing whistleblowing policies and may be cross-referenced in written guidance on whistleblowing.

What to do when it happens

A procedure is useful only to the extent that it is complied with. One obstacle is the reluctance many employees feel to “snitch” on their colleagues. Notwithstanding their display of great courage and determination, it is true to say that whistleblowers are not necessarily popular with colleagues, particularly where the disclosure proposes a threat to jobs. HR managers, however, have a duty to support whistleblowers who act in good faith and it is in the long-term interests of any organisation that they should do so.

It should be emphasised that managers may need training to ensure that matters brought to their attention are resolved in line with the policy and in a manner that will cause the least damage to the organisation. It is essential that Policies have the full support of directors and senior managers and be communicated to all employees.

Managers who are notified of a concern:

have a responsibility to ensure that concerns raised are taken seriously;

where appropriate, should investigate properly and make an objective assessment of the concern;

should keep the employee advised of progress;

have a responsibility to ensure that the action necessary to resolve a concern is taken.

Employers may wish to specify different methods for employees to record their concerns within the organisation in situations where they do not wish to approach their line manager. This could be for example via telephone hotline, and/or a designated manager or officer reporting to the most senior person in the organisation.

It may be necessary to qualify confidentiality clauses which are often found in the contract of employment or staff handbook, to take into account workers’ rights under the Act. As a consequence of the US Sarbanes-Oxley Act, which applies to EU-based affiliates of publicly held US companies, there has been a significant increase in anonymous reporting hotlines for employees. The European Commission has, however, recommended that companies should not encourage anonymous reporting since whistleblowing schemes require the processing of personal data and are subject to data protection rules.

Alistair Young is a solicitor with the Litigation Section of West Dunbartonshire Council and a committee member of the In-house Lawyers Group of the Law Society of Scotland