Whistleblower protection and proposals for reform

When an individual raises concerns regarding suspected wrongdoing, important legal considerations arise for organisations: it can lead to an internal investigation, the interest of regulatory authorities or litigation. A huge range of issues can arise in such situations and the rights of the whistleblower and available protections are key considerations. In addition, the approach and expectations of the authorities in the UK are changing, particularly with support being voiced for the idea of introducing financial rewards for whistleblowers.

Andreas White and Caroline Day provide an overview of the key features of existing whistleblowing protection in the UK and comment on the approach of the authorities when it comes to informants and proposals for reform.

UK law has granted protection for those who raise concerns of potential wrongdoing in the workplace (whistleblowers) since 1999 through the Public Interest Disclosure Act 1998. At the time this was a ground-breaking piece of legislation. It focussed on the protection of whistleblowers by providing them with the means to claim compensation in the Employment Tribunal if dismissed or subjected to detriment in retaliation for whistleblowing. 

In 2019 the EU Parliament passed the EU Whistleblowing Directive which Member States were required to implement by December 2021. Consequently whistleblowing rules have now become the norm across most of Europe, as shown on the EU Whistleblowing Monitor website. Whistleblowing rules also apply across other parts of the world, for example in the US, where a range of federal and state laws protect whistleblowers from retaliation. The US is also notable for the wide range of whistleblower bounty schemes in place, which seek to incentivise whistleblowers to come forward with the offer of substantial financial awards.  

This article provides a summary of the UK whistleblowing regime currently in force and commentary on the proposals for reform.

THE CURRENT REGIME

1. Who is protected?

The protection provided by whistleblowing legislation is afforded not only to employees, but also a range of others such as agency workers, members of limited liability partnerships and workers who are not employees. However, gaps exist, for example Non-Executive Directors are generally not protected.

There is no minimum service requirement in order to bring a whistleblowing claim (protection is a “day one right”) and, significantly, there is no cap on the amount of compensation that may be awarded in whistleblowing claims (unlike in standard unfair dismissal claims). 

2. Protected from what?

If an employee is dismissed because they have made a “protected disclosure” (i.e. blown the whistle), that dismissal is automatically unfair.

Those who are not employees are protected from being subjected to detrimental treatment as a result of making a protected disclosure (for example, by being bullied or excluded). Similarly, employees are also protected from being subjected to detriment short of dismissal.

3. What disclosures are protected?

In order for someone (the whistleblower) to be protected, they must make a disclosure of information which, in their reasonable belief, is made in the public interest and tends to show that wrongdoing relating to one or more of the following has, is, or is likely to occur:

• criminal offence;
• failure to comply with a legal obligation;
• miscarriage of justice;
• health and safety;
• damage to the environment; or
• deliberate concealment of information relating to any of the above.

The most common type of wrongdoing we come across in practice is in relation to a failure to comply with a legal obligation, which is widely interpreted and includes breaches of regulatory requirements. For example, an employee raising concerns that their employing bank is not complying with applicable regulatory rules would fall within this category.  

Other requirements regarding disclosures include the following:

• There must be a “disclosure of information”, which can include conveying facts which are already known by the person the disclosure is being made to. 
• The disclosure may be verbal or in writing.
• The information being disclosed does not necessarily have to be correct, but the person making the disclosure must have a “reasonable belief” that it is.
• The person making the disclosure must have a reasonable belief that it is in the public interest to make the disclosure. This is a fairly low threshold to meet and is judged in light of factors such as: the number of people in the group whose interests the disclosure served; the nature of the alleged wrongdoing and of the interests affected; and the identity of the wrongdoer.
• The disclosure must be made to one of the categories of people listed in the legislation (see below).

4. Who should the disclosures be made to?

The disclosure should normally be made to the individual’s employer. 

If the employer’s whistleblowing policy authorises the disclosure of concerns to a third party (a whistleblowing hotline, for example), disclosure can be made by that channel in accordance with the policy and the individual will be treated as having made the disclosure to their employer (and therefore qualify for protection).

It is also possible to make a disclosure to a “prescribed person” as specified by statute, such as HM Revenue & Customs, the Health & Safety Executive, the Serious Fraud Office (SFO) and regulators such as the Financial Conduct Authority (FCA).

However, it is important to note that, in order to be protected, persons making a disclosure to a “prescribed person” must reasonably believe that the matter being reported is within the remit of that entity and that the information disclosed is “substantially true”. This is an additional hurdle that does not apply when making the disclosure to the employer. 

In exceptional circumstances, disclosures made to others, such as the media, can also amount to “protected disclosures”. The role of investigative journalists in whistleblowing cases has recently been the subject of widespread interest as a result of the enormous impact of the BBC Panorama documentary and ITV docudrama in the Post Office / Fujitsu Horizon scandal. 

5. Causation

One key aspect for claimants bringing a whistleblowing claim is establishing causation. That is, demonstrating that one has been subjected to a detriment (such as being ostracised, bullied, denied promotion or a bonus, etc) on the ground that they made a protected disclosure. This requires a close analysis of the facts of each individual case to establish whether it can be shown that the making of the protected disclosure materially influenced the detrimental treatment. 

The causation test is more stringent in cases involving dismissal in that, for the dismissal to be automatically unfair on grounds of whistleblowing, it must be shown that the sole or main reason for the dismissal was the making of the protected whistleblowing disclosure. 

In practice, most employers do not simply dismiss employees because of them raising whistleblowing concerns about wrongdoing in the workplace. More commonly, such raising of concerns may lead to an employee losing support of management and perhaps receiving a poor appraisal or bonus or being subjected to a performance improvement plan on allegedly unrelated grounds and/or being more likely to be made redundant.

6. Approach of the authorities

Some regulated sectors have specific and more onerous requirements regarding whistleblowing. For example, both the Prudential Regulation Authority Rulebook and the FCA Handbook contain specific whistleblowing rules and policies. 

Organisations within the scope of those rules are required to appoint a “whistleblowing champion” (a senior manager or director (preferably a non-executive director)) who is responsible for overseeing the effectiveness of whistleblowing policies and procedures within that organisation. They must also establish internal whistleblowing procedures which comply with the regulators’ rules and inform their staff about those procedures, the role of the PRA and FCA and of their rights under whistleblowing legislation.  

In March 2021, the FCA launched a whistleblowing campaign, “In confidence, with confidence”, encouraging individuals working within the financial services sector to come forward and raise any concerns they have regarding potential wrongdoing, emphasising its commitment to protecting their identity. In May last year, it announced that it would be taking a number of actions to improve the confidence of whistleblowers, including: sharing further and more detailed information with whistleblowers on how it has acted on their information; improving the use of information provided by whistleblowers across the FCA; and improving how it captures information from them, including its online form.

Despite this, the report published by the House of Commons Treasury Committee, “Sexism in the City”, noted that contributors to the inquiry held an “overwhelmingly negative view of the effectiveness of financial services firms’ internal whistleblowing procedures in dealing with allegations of harassment” and that, in relation to the FCA’s whistleblowing hotline, “awareness of the FCA’s whistleblowing line or how it works was low”. 

These findings appear to be supported by the FCA’s most recent whistleblowing data (relating to the last quarter of 2023) which showed that only 249 new reports were received by its Whistleblowing team between October and December 2023 (compared to 276 reports received in the same period in 2022).  

Reform?

There have been calls for many years now to modernise UK whistleblowing legislation to preserve the UK’s status as a leading example of a country providing comprehensive whistleblowing protection – particularly given the changes taking place in Europe following the adoption of the EU Whistleblowing Directive. However, there has been little concrete progress in recent years.  

In March 2023, the UK government launched a review of the current whistleblowing framework. The review sought evidence on the effectiveness of the current regime in meeting its original objectives. Those objectives were: providing a route for workers to make disclosures; protecting those who do so; and supporting wider cultural change to recognise the benefits of whistleblowing. The evidence gathering stage of the review was due to conclude by end 2023 and to inform government policy on the development and improvement of UK whistleblowing law. 

In terms of legislation, the latest proposal has been a Whistleblowing Bill introduced in the House of Commons at the end of January 2024. This Bill is due to have its second reading in the House of Commons on 19 April 2024. It proposes, among other things, to introduce a new Office of the Whistleblower and new civil offences (for which financial penalties may be issued by the Office of the Whistleblower) and criminal offences for subjecting whistleblowers to detriment (punishable by fine and/or imprisonment). However, the prospect of this or other legislative reform in this area being finalised or coming into force before the next UK election currently looks slim.   

REWARDS FOR WHISTLEBLOWERS?

Unlike in other jurisdictions such as the US, the provision of financial incentives to those who blow the whistle is not generally a feature of the regulatory and investigations landscape in the UK.

Neither the FCA nor the Serious Fraud Office (SFO) offer financial rewards. HMRC can offer financial incentives for those who provide information about tax fraud, but the total amounts paid out are minimal compared to US counterparts.

The Competition and Markets Authority (CMA) has a whistleblowing reward programme for those who provide information concerning unlawful cartel activity, providing the whistle-blower is not directly involved in the cartel themselves, and last year the CMA announced an increase to the reward available to whistle-blowers from £100,000 to £250,000.

Change may be on the horizon for other authorities too, particularly given recent comments made by the new director of the SFO, Nick Ephgrave. In his first public speech in February 2024, Mr Ephgrave made clear his view that the SFO should offer a financial incentive to whistleblowers, referring to the example of the US which offers payments to those blowing the whistle and where 86% of the $2.2 billion recovered in civil settlements and judgments were based on whistle-blower’s information. As noted in his speech, since 2012 over 700 UK nationals have engaged US law enforcement through whistleblowing reports. The Royal United Services Institute (RUSI) has recently published commentary making the case that the evidence shows that incentivising whistleblowing works and that the ingrained UK antipathy towards whistleblower bounty schemes is outdated. 

However, legislative reform would be needed to allow the SFO to offer financial rewards to whistleblowers and any change is therefore unlikely to be imminent. Having said that, the Labour Party announced in October last year that a Labour government proposed to change the law to provide financial rewards to whistleblowers who expose stolen assets, sanctions breaches and recover misappropriated funds. A change in the law may, therefore, be on the horizon, if we have a change in Government. It will be interesting to see whether this proposal is indeed explored further and, if so, the impact on investigations moving forward.

further information

If you have any questions or concerns about the topics raised in this blog, please contact Andreas White in our Employment team or Caroline Day in our Criminal team. 

about the authors

Andreas White is a partner in our employment team.  He has substantial litigation experience, with a particular focus on complex and high value employment and partnership disputes.

Caroline Day is an investigations specialist. She advises organisations and individuals caught up in serious and complex criminal and regulatory investigations. She has extensive experience in this area and conducts internal investigations on behalf of her corporate clients when allegations of misconduct arise.