Whistleblowing update

This time last year we were advising clients that new rules had just made significant changes to the whistleblowing regime in the UK. Employees and workers who blew the whistle could do so without showing good faith, employers could be liable for employees who victimised whistleblowers, and the victimising employees themselves could find themselves named as respondents in tribunal action. The key founding concept of “public interest” had been given renewed focus, which would limit the scope for claims based on breaches of personal contracts of employment. We knew at the time that more was to come, as the Government announced a public consultation exercise on more reform.

Arguably, there was much work still to be done. Surveys last year for the charity Public Concern at Work found that only 31% of employees polled would see no barrier to coming forward; 22% feared reprisals; 22% worried what colleagues would think; 19% would not want to be identified; and 21% would worry if their managers were involved. If whistleblowers were to come forward to avert harm, miscarriages of justice and unlawful and criminal practices, they needed to be encouraged and to know they were secure if they did so.

A raft of further proposals was therefore subject to further consultation. The outcome has just been announced, with little substantive change proposed.

In summary, the existing categories of disclosure, being criminal offence, breach of legal obligation, miscarriage of justice, danger to health and safety, environmental damage, and risk of concealment of any of the foregoing, will remain. It had been argued there was public interest in expanding the categories to include “abuse and misuse of power” and “gross waste or mismanagement of funds”, but it was concluded that this would cause too much legal uncertainty.

No further methods of protected disclosure will be introduced. The list of prescribed persons will be reviewed annually, but there are no new bodies included for now. “Workers” will now include student nurses, and case law has recently established that members of LLPs are protected (Clyde & Co LLP v van Winkelhof [2014] UKSC 32: see p 17 of this issue). Consideration was given to the position of non-executive directors, solicitors and police officers and consultants, but no other groups are to be added. In particular, job applicants will not be added to the potentially protected group. It was concluded that existing “blacklisting” legislation already helps some, and data protection provisions may help others.

Incentives?

Potentially the most controversial issue for consideration was whether financial incentives should be introduced to encourage and reward whistleblowing. In the US, the Securities & Exchange Commission’s Office of the Whistleblower was set up to administer its whistleblowing programme. Those who provide high quality information, leading to enforcement action where sanctions orders of $1 million or more are made, can expect awards of between 10% and 30% of monies collected.

Following consideration of this and a range of other possible measures, no plans are coming forward for now. The Financial Conduct Authority and the Prudential Regulation Authority are due to publish statements on the impact of incentivising whistleblowers. The Government has stated it may revisit the issue in due course. In the meantime, guidance will be produced for employers and individuals on how the legislation works. The Government seeks a “culture change” rather than more legislation to drive further progress.

Care should be taken by advisers to consider any sector-specific guidelines regarding obligations to disclose and how matters should be handled. New guidance has just been issued by the Chartered Insurance Institute entitled “Speaking up”, which very clearly and helpfully sets out the obligations on its members in order to comply with both the law and professional obligations. The guidance makes clear that the CII code of ethics expects members to speak up about concerns as part of their professional obligation to “act with the highest ethical standards and integrity”.

Described as a “missed opportunity” by Public Concern at Work, it remains to be seen whether the changes made and to come will give more encouragement and confidence to those who see, hear or suspect that something wrong is going on at their work.