Individual liability for whistleblowing dismissals

In a significant whistleblowing decision Timis and anor v Osipov, the Court of Appeal has ruled that co-workers who dismiss an employee for making protected disclosures can be held personally liable. As a result, two directors were personally liable for the payment of an award totalling over £2m.

To recap

Since 2013, whistleblowers have had the right to bring a claim directly against their co-workers if subjected to a detriment other than dismissal itself. Dismissal and detriment are treated differently in the legislation. Only employees can claim unfair dismissal, yet whistleblowing protection is wider than this and offers protection to the broader category of workers who suffer detrimental treatment because of blowing the whistle. Part X of the Employment Rights Act (s.103A) offers unfair dismissal protection to employees and Part V (s.47B) offers protection to workers from detrimental treatment. The provisions differ slightly on the legal tests, and significantly only s.47B offers compensation for injury to feelings.

At the heart of this case was s.47B(2) which deals with the interaction between detriment and dismissal. The provision appeared to exclude co-worker liability in a situation where the detriment amounted to a dismissal. The question which the Court of Appeal had to decide was whether this provision meant that claims could be brought against co-workers only in relation to detriment short of dismissal – or did it extend to the act of dismissal?

The answer was the latter.

Facts

Mr Osipov, the Chief Executive Officer of International Petroleum Ltd made various protected disclosures. Shortly after making the disclosures he was dismissed by Mr Sage, a non-executive director of IPL. Mr Sage had been instructed to do so by Mr Timis, who was IPL’s largest individual shareholder and a non-executive director. The tribunal found that the main reason for Mr Osipov’s dismissal was that he had made protected disclosures or colloquially, blown the whistle.

The Employment Tribunal ruled that Mr Osipov had been unfairly dismissed by IPL as the principal reason for dismissal was that he had made a protected disclosure; and Mr Sage and Mr Timis, in making the decision to dismiss Mr Osipov, had subjected Mr Osipov to a detriment on the ground that he had made protected disclosures, contrary to s.47B ERA 1996.

Mr Sage and Mr Timis appealed arguing that while co-workers may in theory be liable for detriment short of dismissal, they could not legally be held liable for the losses flowing from the dismissal itself. Both the EAT and the Court of Appeal, dismissed Mr Sage and Mr Timis’ appeals. Given the importance of determining the scope of individual liability the whistleblower charity Protect intervened in the appeal.

In reviewing the authorities and the purpose of the whistleblowing legislation, the Court of Appeal explained that once Parliament had made the decision to make co-workers personally liable for whistleblower detriment it was difficult to see why this should not have been intended to extend to cases where the detriment amounted to dismissal, albeit the legislation was not entirely clear.

Comments

An employee can now bring a claim against co-workers for dismissal for having made a protected disclosure. In most cases, employees will only bring a claim against the employer (which they did in this case.)

However, there are two situations where this development will make a difference. The first is where the employer invokes the reasonable steps defence and avoids vicarious liability for the acts of the individual responsible for the detrimental acts (and now the dismissal). The second situation arises where the employer is insolvent, which happened in this case. Having a right of redress against the directors may have enabled the claimant to recover the award.

Impact on employers?

Cases like this involving large sums of money where there is no statutory cap and scope to claim compensation for injury to feelings should remind employers of the need to have robust safeguards in place to avoid being held vicariously liable for the actions of their employees.

As with harassment cases, an employer which can demonstrate that it has taken reasonable steps to prevent the detrimental treatment by the co-worker will not be held liable. This can be a difficult defence to run. This defence may work in the context of detrimental treatment by a rogue manager where the behaviour has slipped under the radar but it is unlikely to help in the case of dismissal.

The reasonable steps defence in a whistleblowing situations will only be available when there is appropriate awareness about what should happen if an employee discloses wrongdoing or malpractice, the need to avoid detrimental treatment and the requirement to follow internal processes.

There is an obvious warning here for individuals effecting a dismissal on behalf of an employer. The ability to bring a claim directly against the individual decision maker who caused or carried out a dismissal may prove to be very attractive to claimants.