The Government announces changes to the whistleblowing framework

United Kingdom

The Department for Business Innovation & Skills has just published the Government Response to the Whistleblowing Framework Call for Evidence of July 2013. The Call for Evidence required further exploration of the law governing whistleblowing which the Government acknowledges has not always achieved its intended outcome – namely to reduce malpractice in organisations and to ensure individuals can report malpractice without fear of reprisal.

The scrutiny applied recently to the responses of public and private sector organisations, particularly the NHS and financial institutions, to whistleblowers illustrates the challenges employers face in applying the law in a balanced and proportionate manner. Employers will be conscious of the need to manage the risk of employment law claims based on assertions of detriment or dismissal deriving from whistleblowing as these are not subject to a statutory cap on compensation if successful, and have reputational implications.

The Government has announced that it will take a number of legislative and non-legislative steps to address what it sees as deficiencies in the current regime in order to drive behavioural change.

The Government will:

  • Create a model whistleblowing policy to help business by improving the understanding of how the legal provisions work, making the employer’s role clear and highlighting the benefits of whistleblowing to a business through embracing an open culture;
  • Ensure an updated list of prescribed persons is published as soon as possible after changes are made by statutory instruments and review the list on an annual basis;
  • Introduce a requirement on prescribed persons to report annually on whistleblowing and consult on matters these reports cover. This is to ensure a balance between the individuals’ need to know action has been taken in respect of their disclosure, with the constraints that prescribed persons operate within, such as their responsibilities to maintain confidentiality;
  • Analyse the current ET1 referral system (whereby employment tribunals refer an issue relied on by whistleblowers to the prescribed persons) in order to evaluate its effectiveness with a view to making appropriate changes;
  • Bring student nurses within the scope of the framework through secondary legislation;
  • Identify employers who have embraced whistleblowing as an effective part of an internal audit processes to prevent malpractice, in order to show others what value it can bring as well as celebrate where organisations embrace whistleblowing and where they use it to prevent malpractice.

The Government recognised the need for better guidance for both employers and individuals. Importantly this will clarify that the legislation is a remedy not a protection, that it addresses the detriment an individual suffers not the matter about which a disclosure is made, and that a whistleblower has to take steps to enforce their rights under the framework.

The Government will not:

  • Broaden the categories of disclosure to include ‘the abuse and misuse of power’ and ‘gross waste or mismanagement of funds’. It considered that inclusion of such categories would create legal uncertainty as the scope would be difficult to define and would be subject to varying interpretation;
  • Change the process for amending the prescribed persons list (currently through a statutory instrument) to a less formal method;
  • Introduce financial incentives as part of the framework to reward whistleblowers. However the Government did note that it is aware of the Financial Conduct Authority’s (FCA) and Prudential Regulation Authority’s pending statements on the impact of incentivising whistleblowers which may be helpful to other authorities or bodies when forming their whistleblowing policies. It will also in due course consider whether use of financial or other incentives would be beneficial as a way to encourage openness and enhance support to those who report a wrongdoing in specific organisations or in very specific cases.

Many of these changes will not come into force for some time yet – the legislative ones are not expected until April next year. Whistleblowing is therefore likely to remain on the agenda for the foreseeable future with the particular focus being on tackling negative cultural attitudes and creating working environments where whistleblowers feel able to come forward.

In line with this the FCA’s 2014/2015 business plan identifies whistleblowing as one of its areas of focus for the year ahead, identifying trends and under-represented sectors and carrying out work to implement and supervise changes in firms.

All employers will need to review their existing whistleblowing policies in the light of the Government’s intended model policy and guidance when available. Despite the reduction in the volume of tribunal litigation since the introduction of tribunal fees employers will want to ensure that their risk management for whistleblowing matters is current and addresses the various revisions made by the Government.