“Lights. Camera. Action!” – Re Motion Picture Capital and standing for minority shareholders to bring unfair prejudice petitions
In light of a growing number of scandals and public enquiries, whistleblowing law has become a hot topic for politicians, regulators, the media and the general public. For years it has been one of the most interesting areas of practice for employment lawyers, but suddenly it is headline news and everyone seems to be talking about whistleblowing.
The background is well known. In recent years, serious wrongdoing has come to light across key parts of the public and private sectors: from the City and the financial services sector, to the media, the NHS, the police and even Parliament itself (during the expenses scandal). Similar questions have then arisen. How could this have happened, how did it go on for so long, and did anyone on the inside blow the whistle? An extremely uncomfortable picture is emerging, in which relevant employees felt unable to speak out, or were ignored, ostracised, bullied or even dismissed for making their concerns known. There is increasing acceptance of the view that much more needs to be done to encourage potential whistleblowers to speak out, and to ensure that the legal protection that is available to them is sufficiently robust.
Since the introduction of the Public Interest Disclosure Act 1998, whistleblowers have been protected against detriment or dismissal by their employers. At the time, this was a major step forward. On the international stage, it was felt that the UK had taken a progressive and pioneering approach to the protection of whistleblowers. However, over time it became increasingly clear that our legal regime is far from perfect, and could be improved and strengthened.
For example, recent cases have exposed significant gaps in the legislation. Two decisions of the Court of Appeal last year stand out in this regard. In Clyde & Co LLP v Bates van Winkelhof it was held that a junior equity partner of a law firm could not proceed with her whistleblowing claim. Her case, which was denied by the firm, was that she was dismissed for blowing the whistle on bribery and corruption at the Tanzanian law firm at which she was seconded. The Court held that as a partner she was not covered by whistleblowing legislation. The Claimant is seeking leave to appeal to the Supreme Court. In the meantime, the position is that very large numbers of partners at professional and financial services firms are not covered by whistleblowers’ protection. It seems unlikely this was really the intention of Parliament when the 1998 Act was passed, whilst this case can only discourage a potentially very important group of individuals from blowing the whistle on wrongdoing, even if many partners will still do so (for reasons of principle and professional ethics).
In NHS Manchester v Fecitt (Public Concern at Work intervening) the Court of Appeal found that as the law stands, employers are not liable for the actions of their employees who retaliate against a whistleblower. The claimants in this case were nurses who raised concerns about the qualifications of a colleague. Their concerns were found to be justified but the employer decided that no action was required. Relations in the team then deteriorated and threats were made against the claimants. Ultimately two of them were redeployed and the third (who was a bank nurse) was not allocated any more work. The Court of Appeal found that the employer’s actions were based on the dysfunctional atmosphere in the team, not the whistleblowing itself, and that the employer could not be liable for the actions of employee in the team (for example, the threats).
This latter case has taken on particular resonance in light of the Mid Staffordshire NHS Foundation Trust Public Inquiry. The Inquiry has led to serious public concern about the treatment of whistleblowers and usage of ‘gagging’ clauses in the NHS. The issue came to a head when Gary Walker, the former chief executive of an NHS trust, spoke to the media about the circumstances surrounding his dismissal, which he alleges was linked to a dispute that arose after he raised concerns over patient safety. Mr Walker did so in defiance of a letter from the trust’s lawyers warning him that he should not breach the terms of the confidentiality or ‘gagging’ clause in his severance agreement, and that if he went ahead and spoke to the media, he would be liable to repay the substantial compensation that had been paid to him under the agreement.
Initially it seemed the Government was flat-footed by these developments. It was in the process of passing legislation to close a loophole that until now has allowed workers to bring whistleblowing claims after blowing the whistle on alleged breaches of their own employment contracts. In the course of parliamentary debates on the legislation, some further reforms were proposed by the Government, but they fell far short of the overall review and substantial reform of whistleblowing law that many believe is needed.
However, after the Gary Walker story broke last week, it was reported that the Employment Relations Minister, Jo Swinson, has written a private letter to MPs and peers campaigning for reform, indicating that the Government now plans a broader consultation on whether the current regime is fit for purpose (see Whistleblowing laws to be overhauled as new claims emerge over NHS trust). It remains to be seen where this will lead but the signs are that the pressure on Government to strengthen the UK’s whistleblowing legislation is not about to ease. The well respected whistleblowers’ charity, Public Concern at Work this week announced their own Whistleblowing Commission. With a heavy weight line-up of members, including Michael Woodford (the Olympus whistleblower who is arguably the UK’s best known whistleblower) and Mr Walker himself, the Commission will be examining four key questions:
Further, on 21 February 2013 the Government announced plans swiftly to bring into force protection for whistleblowers who suffer bullying or harassment by colleagues. Its proposal is to amend the law to make the employer liable for such actions, with a defence for the employer who can show that they took all reasonable steps to prevent the bullying or harassment (or other detrimental treatment) of the whistleblower by their colleague. This proposal seeks to address the problem exposed by the Fecitt case, as then highlighted in the recent controversy surrounding NHS whistleblowers in light of the Mid Staffordshire Inquiry.
With the House of Lords due to debate the current reforms on the table on 26 February 2013, and the Whistleblowing Commission due to report in November 2013, after carrying out their own consultation process, these issues are going to remain high on the agenda. The signs are that the Government wishes to be seen to lead the debate, not merely to follow it. We now have the intriguing prospect of two whistleblowing consultations ahead of us: a private one carried out by the Whistleblowing Commission, and an official one by Government, although there is some doubt about the latter. In any event, legal reform is inevitable, and in certain respects at least it will strengthen the protection of whistleblowers. Whether this will lead to the introduction here of rewards or ‘bounties’ for whistleblowers, as happens in the US, is open to debate. It would be a radical and controversial move, but it is clear that the Whistleblowing Commission will consider this issue. It really would be a ‘game-changer’.
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