The Lifeline Project was a well-regarded charity. Failure to carry out the targets within the contracts led the charity into insolvency and resulted in a personal, 7-year disqualification order.
You can read the full Judgment here.
Under the Employment Rights Act 1996 a worker who makes a ‘protected disclosure’ cannot be subjected to detriment or be dismissed by his employer because of his actions. In order to deem the disclosure as ‘protected,’ the worker has to show that they have made a qualifying disclosure. Before June 2013, and somewhat curiously given the title of the original legislation (the Public Interest Disclosure Act 1998), there was no public interest element to the test. This effectively meant that it was possible for a worker to bring claims about alleged breaches of their own employment contracts (Parkins v Sodexho Ltd ). To close this loophole, the whistleblowing legislation was amended to introduce a requirement that a worker must have a reasonable belief that making the disclosure was “in the public interest”.
N, an estate agent, was dismissed from a senior management position at Chesterton Global Limited (CGL). He brought claims of ordinary unfair dismissal and automatic unfair dismissal on the basis that his dismissal was because he had made protected disclosures concerning wrongdoing on the part of CGL. In addition, he claimed to have suffered various detriments, besides his dismissal, because of the same disclosures.
Along with around 100 other senior managers, N was paid commission for his work. He believed that CGL was misrepresenting its accounts to shareholders to depress profits which, in turn, reduced commission payments payable to 100 senior managers, including himself. On the face of it, N’s disclosure was a matter of private interest; his reduced commission payment. However, as multiple employees shared the same private interest, could N show that he reasonably believed that the disclosure about his employer's commission structure was made in the “public interest”?
The Employment Tribunal (ET) held that:
- Where a section of the public would be affected, rather than just the worker concerned, this might be sufficient for a matter to be in the public interest;
- N had a reasonable belief, which is both a subjective and objective test, that his disclosure was in the interest of 100 other senior managers;
- They were a sufficient group of the public to amount to being a matter in the "public interest".
The Employment Appeal Tribunal agreed with the ET and found that the mere fact that N's disclosure affected a number of other workers meant that the public interest test was satisfied.
Court of Appeal (CA) guidance
On appeal to the CA, the only live issue was: “…whether the ET was entitled to find that the Claimant had made the disclosures in question in the reasonable belief that they were “in the public interest...”.
The CA dismissed CGL's appeal. It found that although a disclosure concerning a breach of a worker’s employment contract remained fundamentally a private matter, there may, nevertheless, still be features of the disclosure that engage the public interest. By way of guidance, the Court identified four factors that Tribunals will consider when deciding whether a disclosure of a worker's private interests satisfies the public interest test:
- The number of workers whose interests the disclosure affected. In this case, 100 other senior managers were affected by the disclosure. The Court emphasised however that numbers are not likely to be sufficient in themselves and other factors will, therefore, be required to strengthen the argument that the public interest is engaged.
- The nature and extent of interests affected. In this case, the accounts in question were internal, but if the accounts had been statutory accounts, even of a private company, then the disclosure of such a misstatement would have engaged the public interest. Therefore a disclosure of wrongdoing directly affecting a very important interest is more likely to be in the public interest than a disclosure of trivial wrongdoing affecting the same number of people where the effect is marginal or indirect.
- The nature of the wrongdoing disclosed. In this case, the disclosure was said to be of deliberate wrongdoing and took the form of misstatements in the accounts to the tune of £2-3m. Deliberate wrongdoing will, therefore, more likely be in the public interest than mistaken or inadvertent wrongdoing affecting the same number of people.
- The identity of the alleged wrongdoer. In this case, the Respondent was a very substantial and prominent business in the London property market. The more prominent or larger the wrongdoer (regarding the size of its relevant community, for example, its staff, suppliers and clients), the more likely disclosure about its activities will engage the public interest.
The CA also confirmed that the Tribunal had applied the correct test to ascertain whether N held a reasonable belief. A Tribunal will need to establish whether the worker subjectively believed at the time that the disclosure was in the public interest and the CA warned that a Tribunal should be careful not to substitute its own view for that of the worker. Importantly, a worker does not need to prove that other workers or the public are actually affected; only that they had a reasonable belief that the disclosure was made in the public interest, which is a relatively low hurdle to overcome.
Despite the amendments made in 2013 to exclude complaints about breaches of a worker's own contract of employment from whistleblower protection, it may still be possible for workers to show that a disclosure of their own private interests satisfies the public interest test. Disclosures that are solely in the self-interest of the person making the disclosure, however, are unlikely to qualify for protection.
Employers will need to be alert to this decision when considering and managing complaints about seemingly private matters from their workers. Large private and public sector employers are more likely to be affected by the decision due to the size of their workforce as workers will be able to demonstrate that colleagues’ interests are also affected. Public sector employers and charities, in particular, will be impacted by the decision given the public nature of their services which means workers are more likely to be able to demonstrate that the disclosure is made in the interest of the wider public.
In light of the Judgment, one issue employers may wish to consider is whether or not to stipulate the public interest test within an internal whistleblowing policy. Including the requirement that a disclosure has to satisfy the public interest test may discourage workers raising genuine concerns. It may also increase the burden on employers in deciding whether or not the test has been satisfied given it is highly fact specific.
Whether the public interest test has been met is ultimately a question for a Tribunal to determine on a case by case basis, taking into account the four factors highlighted by the CA, and will undoubtedly remain an area open to significant dispute.
If you would like to discuss this briefing further or have any other questions around public interest disclosure, please get in touch with your usual contact in the Employment Team or speak to Joanna Burrows.
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