Lucy Sellen, joint 2014 University of Sussex Mason Hayes Essay prize winner assesses how Legislation to Protect and Encourage Whistleblowing in Relation to Work Issues has Proved Inadequate

“Legislation to protect and encourage whistleblowing in relation to work issues has proved inadequate.”  Discuss:

Introduction

Traditionally there has been a prevailing culture within many organisations where whistleblowers are contemptuously regarded as a “grass” or a “sneak”[1].  However, more recently they have come to be viewed by society as “courageous, public-spirited citizens”[2], who play a valuable role in holding organisations to account.[3]  The issue is that those who “blow the whistle” are frequently either sanctioned by their employers or ignored, resulting in a culture where employees prefer to remain silent.[4]  The Public Interest Disclosure Act 1998 (PIDA) was Parliament’s attempt to break this silence.  The Act sought to encourage employees to raise their concerns by removing the fear of reprisal by employers.[5]  This essay will discuss the extent to which this goal has been achieved.  It will be argued that whilst the scope of PIDA is commendably comprehensive, recent developments in case law[6], as well as the inquiry into the Mid Staffordshire NHS Foundation Trust scandal[7], have revealed a number of loopholes in its protection.  Whilst the Enterprise and Regulatory Reform Act 2013 (ERRA) has eliminated some of the PIDA’s most obvious failings, these reforms are not sufficient.  In particular, the Act fails to prevent “blacklisting” of whistleblowers and does not impose any obligation on employers to establish whistleblowing procedures, or to investigate issues that are raised.  This is highly regrettable.  If the law truly wishes to encourage employees to “put their head above the parapet”, it must ensure that there are effective procedures in place where they can raise their concerns and that those concerns will not be ignored.  Without this, the law will offer little incentive to an employee who might more safely remain silent.

What is whistleblowing and why does it warrant protection?

“Whistleblowing” refers to the situation where an employee exposes a “danger, risk, malpractice or wrongdoing”[8] that has occurred, or is likely to occur, within their workplace.  That exposure may involve reporting the wrongdoing internally, for example to a manager or complaints department, or externally, for example to a government minister or the press.  Since the late 20^th century, whistleblowing has been regarded as a mechanism for “achieving accountability in private and public organisations”.[9]  This view recognises that when there is wrongdoing within an organisation, the employees will usually be the first people to know about it.[10]  These individuals can perform a “valuable service”[11] to their employer and to the public by reporting their concerns, so that dangers can be dealt with before they escalate.[12]

The problem is that there is a tendency amongst employees to maintain a “discreet silence”[13] and those who do speak up “pay dearly for their candour”.[14]  Evidence of this came to light following a series of financial scandals[15] and fatal disasters[16] in the 1980s and 1990s.  Public inquiries revealed that while many of the employees of the organisations involved had been aware of dangers or misconduct, they had been too afraid to raise their concerns with their employers.[17]  For example, the investigation into the Piper Alpha disaster found that “workers did not want to put their continued employment in jeopardy through raising a safety issue which might embarrass management”.[18]  Where employees did voice their concerns, they were often dismissed and found it difficult to obtain employment elsewhere.  Whistleblower Dr Bolsin, who exposed the high mortality rates for children undergoing heart surgery at the Bristol Royal Infirmary Hospital, was forced to leave his position as an anaesthetist and was unable to secure further employment within the NHS.[19]  It was equally common for employees’ concerns to be ignored, or for the issue not to be referred to the correct person.  The most infamous example of this is the Zeebrugge Ferry Disaster, in which 193 people died because the ferry had been sailing with its bow doors open.[20]  The Sheen Inquiry found that on 5 separate occasions staff had raised concerns that the doors were open, but that these warnings had been lost in “middle management”.[21]

It was these discoveries which “shaped the future of whistleblowing”.[22]  Politicians recognised that it is in the public interest that negligence in the workplace be eliminated, health and safety violations corrected, criminal wrongdoing exposed and, further, that those who bring such matters to light need protection.[23]  The response of Parliament was to introduce statutory whistleblower protection through the Public Interest Disclosure Act 1998.

PIDA 1998:  The most comprehensive law of its kind?

The purpose of PIDA is to “protect individuals who make certain disclosures in the public interest”.[24]  It does so by providing employees with a remedy should they be dismissed or suffer detriment by their employer for raising a concern at work.[25]  The Act itself neither encourages nor discourages whistleblowing, and no worker is obliged to become a whistleblower.[26]  However, by protecting employees from reprisals, it was hoped that the Act would serve to loosen the restraints that previously prevented workers from raising concerns.[27]  The scope of the Act is exceptionally broad and it has been described by the Council of Europe as “one of the most comprehensive laws of its kind”.[28]

In respect of the persons covered, PIDA is not limited to employees but also encompasses workers, former workers, independent contractors, agency workers, homeworkers and work trainees.[29]  By comparison, whistleblower legislation in South Africa specifically excludes independent contractors,[30] and three of the four states that have whistleblowing legislation in Australia only offer protection to public officers.[31]  Notably, the usual employment law restrictions on age and minimum qualifying periods do not apply in the whistleblowing context.[32]

The type of information that can attract protection under the Act is also extensive.  According to section 43B[33], a “qualifying disclosure” is one which, in the reasonable belief of the employee, tends to show a criminal offence; a failure to comply with any legal obligation; a miscarriage of justice; danger to the health and safety of any individual; damage to the environment; or the deliberate concealment of any of these.  The matter may have occurred in the past, be currently occurring, or likely to occur.[34]  This vast list can be compared with the South Australian Whistleblower Protection Act 1993, which only covers “misadministration and waste in the public sector”[35] and “corrupt and illegal conduct generally”.[36]  Further, a disclosure under PIDA may relate to either a public or private body[37] and may concern a wrong that has occurred outside the UK or which is not covered by UK law.[38]  By way of contrast, the Australian statutes largely fail to cover information relating to the private sector,[39] and jurisdictions such as New Zealand do not appear to protect disclosures about matters which occur outside its territory or legal jurisdiction.[40]

PIDA also allows disclosures to be made to a range of individuals and bodies.  There are three main categories of recipient.  The first is the whistleblower’s employer or another person who is responsible for the matter disclosed.[41]  The second is the authorised regulator and agency charged with enforcing the laws covering the type of wrongdoing alleged.[42]  Finally, there is the wider public audience, encompassing the media, police and Members of Parliament.[43]  Importantly, there is a clear perception of an institutional “ladder” from employer to media,[44] and the requirements which must be satisfied in order to enjoy the Act’s protection become increasingly stringent as one “progresses up the ladder”.[45]  The rationale for this is that the employer should be given the first opportunity to correct any deficiencies, since it is they that will ultimately be held responsible for any harms resulting therefrom.[46]  It also prevents whistleblowers heading straight to journalists “waving chequebooks”.[47]

Finally, the Act covers various forms of victimisation and provides substantial relief for any harm suffered.  Section 47B(1) states that a worker has the right not to be subjected to any detriment on the grounds that the worker has made a protected disclosure”.[48]  This covers dismissal[49] and redundancy,[50] but also applies to more subtle forms of detriment such as demotions, cuts in pay or relocation.[51]  Notably, case law has established that in some cases, protection may apply to detriment suffered after the contract of employment terminated.[52]  In terms of remedies, if an employee is dismissed for making a protected disclosure, the tribunal has the authority to reinstate them.[53]  However, reinstatement may not be an attractive remedy for either the employer or employee, as mutual trust may have been irrevocably damaged.[54]  With this in mind, a tribunal can instead make an award of compensation to the employee.  Compensation under PIDA is unlimited,[55] providing a strong incentive to employers to treat whistleblowers well.  This can be contrasted with South Africa, where only limited compensation is provided.[56]

Inadequacies and the response of the ERRA 2013

It is clear from the above that the PIDA is a major step towards protecting whistleblowers and that its scope exceeds that of its foreign equivalents.[57]  However, soon after its implementation a number of loopholes emerged and it became apparent that the Act was not functioning as Parliament had intended.[58]  This resulted in claims that PIDA was a “good idea let down by wobbly drafting”.[59]  Consequently, the Government passed the ERRA 2013, in an attempt to “remedy some of its most obvious defects”.[60]

The first major failing of the Act was that, despite its title, it did not require disclosures to be made “in the public interest”.  The implications of this came to light following the decision in Parkins v Sodexho,[61] where the Employment Appeal Tribunal took the controversial step of interpreting “failure to comply with any legal obligation”[62] to include employment contracts.[63]  This ruling brought “entirely personal disputes within the scope of the protection of the legislation”[64] by enabling workers to blow the whistle in respect of breaches of their own personal work contracts, irrespective of whether the breach related to a matter of public interest.[65]  This was clearly not how the legislation was intended to operate, and called into question the credibility of the Act.[66]  The Government’s solution was to pass section 17 ERRA, which adds a new requirement for “qualifying disclosures”; individuals must now show a reasonable belief that their disclosure was made in the public interest.[67]  However, Stilitz argues that this requirement will bring difficulties of its own because “public interest” has not been statutorily defined.[68]  As a result, what precisely Employment Tribunals should look for in determining the “public interest” will take some time to emerge from decided cases.[69]  During this time, there is likely to be uncertainty which may deter some people from making a disclosure because they are unsure whether it will be considered to be “in the public interest”.[70]  Whilst the inclusion of a public interest test was undoubtedly necessary in order to bring the Act back in line with its intended purpose, further guidance from Parliament as to what factors will indicate that a disclosure was made in the public interest would be beneficial.[71]  Without this, the “public interest” requirement may serve as a barrier to whistleblowing.

A further defect which the ERRA sought to address was the requirement that disclosure be made “in good faith”.  Effectively, if a tribunal found that a disclosure was made for some “ulterior purpose”[72] this would take it outside the protection of PIDA, even if the allegation made was true.  A case in point is Street v Derbyshire[73] where, despite the serious allegations of corruption, the whistleblower’s personal animosity towards her manager was held to have been the primary motivation for her disclosures and therefore she could not rely on PIDA.  This sparked much controversy.  Lewis argued that the possibility of motive being examined could serve to deter important disclosures in the public interest.[74]  He submitted that “if workers have reasonable grounds to believe that their information is true, why should their motive be relevant?”[75]  Accordingly, the “good faith” requirement has now been removed by ERRA.[76]  Instead, there is a “monetary sting”[77] for “bad faith whistleblowers”, because Employment Tribunals will be able to reduce compensation by 25% if a disclosure is not made in good faith.[78]  Critics of this reform argue that making modest adjustments for bad faith is inadequate and that the law is now “exceptionally generous to the malicious whistleblower”.[79]  However, Gobert and Punch argue that the public interest is best served by the disclosure of all misconduct, regardless of whether the discloser is acting in good faith.[80]  Furthermore, whilst the new “public interest” requirement may be seen to present an obstacle to whistleblowers making claims, the removal of the “good faith” requirement will help to balance this out.

Finally, perhaps the most fatal shortcoming of PIDA was its failure to offer protection to whistleblowers who, as a result of making a disclosure, suffered detriment at the hands of their colleagues rather than their employer.  This was exacerbated by the decision of the Court of Appeal in Fecitt v NHS Manchester,[81] which held that employers could not be held vicariously liable where an employee victimises a whistleblower colleague.[82]  The result was that whistleblowers who were bullied or harassed by their co-workers could not take action against the culprits directly, or against their employer for failing to prevent the behaviour.  Given that in many instances the failure to report malpractice is traceable to a fear of the response of colleagues,[83] this was a detrimental loophole in the legislation.  Indeed, one of the major findings from the inquiry into the Mid Staffordshire Hospital scandal was that individuals were reluctant to blow the whistle for fear of being bullied or harassed by co-workers.[84]  In response to this, the ERRA now makes workers who subject whistleblowers to detriment in the course of their employment, personally liable for their actions.[85]  It also makes employers vicariously liable for any such detriment caused by their workers, unless they can demonstrate that all reasonable steps were taken to prevent the worker’s actions.[86]  This should promote whistleblowing by reassuring those who may have been dissuaded from making a disclosure that they have an effective route of redress against reprisals of co-workers.[87]  It is also hoped that the provision will encourage co-workers to behave appropriately towards each other by supporting those who make disclosures.[88]

Missed opportunities for reform

In light of the reforms introduced by the ERRA, it can be argued that PIDA has now been brought back in line with its intended purpose and that a number of the gaps identified in its protection have been remedied.  However for those who advocate the strengthening of protection for whistleblowers, these reforms have not gone far enough.[89]

One issue that the ERRA failed to address is the “blacklisting” of whistleblowers by employers.  There is significant anecdotal evidence[90] that individuals who have “blown the whistle” have had difficulty securing new employment, as a result of being a known whistleblower.[91]  The reason for this is that whistleblowers often acquire a reputation as a troublemaker – a quality which will not endear them to future bosses.[92]  Blacklisting is a particular concern in the construction industry, where discriminating against workers who have raised health and safety concerns is commonplace.[93]  However, it is apparent that it also occurs in other sectors.  For example Lisa Martin, who exposed serious abuse in the Orchid View Care Home, revealed that she was unable to get a job in the care sector after making her disclosure.[94]  At present, candidates for employment who are victimised because of a prior protected disclosure have no recourse under PIDA.[95]  This is likely to be a major concern for an employee who is thinking about blowing the whistle, and one which may well serve to deter them from voicing their concern.  Indeed in a YouGov survey, 21% of respondents identified “damage to career” as the main reason why they would not blow the whistle.[96]  In order to overcome this issue, it is imperative that PIDA is extended to cover “job applicants”, to reassure individuals that if they make a protected disclosure their career will not pay the price.

A further matter for reform is whether the law should impose an obligation on employers to establish whistleblowing procedures within their organisation.  Whilst PIDA indirectly encourages employers to have such systems, they are not currently mandatory.  There are already some examples across the UK where regulators do require whistleblowing arrangements to be in place.  For example, the International Civil Aviation Organisation requires whistleblowing procedures as part of a mandatory safety reporting system.[97]  However, these systems are not widespread.  Research suggests that only 42% of employers have whistleblowing procedures in place.[98]  If organisations do not have mechanisms where individuals can safely raise their concerns, employees may be deterred from reporting the issue altogether or may resort to making a more public disclosure, via the press or using the internet.  This has led to claims that whistleblowing arrangements should be mandatory.[99]  Supporters argue that such procedures would bring a range of benefits.  First, employers will receive early warning of problems, giving them the opportunity to rectify the problem before it escalates,[100] reducing the likelihood of malicious or anonymous leaks to the public.[101]  Second, whistleblowers are less likely to be seen as an adversary by their employer if they report issues internally, meaning that they are less likely to suffer retaliation.[102]  Finally, the public will gain from the speedy rectification of wrongdoing without the need for investigation or expenditure by government agencies.[103]

An additional issue is that even where organisations do have whistleblowing procedures in place, there is currently no obligation on employers to investigate allegations or deal with wrongdoing that is reported.[104]  The same is also true of regulators who have concerns reported to them.[105]  The result is that many employees who raise concerns are ignored and the issue remains unresolved.[106]  For example, the Treasury Committee’s report into fixing of LIBOR rates, found that a senior manager at Barclays had flagged the potential conflict of interest between those derivative traders with risk positions and those who submit LIBOR rates: yet no action to deal with the conflict was taken.[107]  More recently, in the scandal surrounding Mid Staffordshire Hospital, whistleblower Helen Donnelly reportedly filled out 100 “incident forms” to voice her concerns about poor patient care, but received “no indication that these were read”.[108]  Crucially, even when a whistleblower case reaches an Employment Tribunal, it does not necessarily mean that the wrongdoing will be dealt with since tribunals are not empowered to investigate disclosures or order rectification where wrongdoing is established.[109]  It goes without saying that if people do not believe that reporting their concern will make a difference, they will simply remain silent.  Indeed, in a survey conducted by the University of Greenwich, 20% of respondents said that they would not blow the whistle because it “wouldn’t make a difference”.[110]

In order to overcome these issues, the Public Concern at Work whistleblowing charity has made a number of recommendations.  Firstly, it suggests that the government issue a Code of Practice, setting out guidelines to employers for establishing effective whistleblowing arrangements.[111]  These arrangements should be clear, understandable and accessible, so that employees considering blowing the whistle are aware of their existence and understand what they must do to follow the correct procedure.[112]  The arrangements should cover the investigation and handling of complaints.  Additionally, it should ensure that anyone who reports a concern will be told how the concern will be dealt with and, where appropriate, be told the outcome of the investigation.[113]  In order to encourage employees to obey the Code, Employment Tribunals should take non-compliance into account when deciding issues of whistleblowing.[114]  In addition, the PCAW recommends that regulators should have a greater role in protecting whistleblowers and investigating whistleblowing cases.  It recommends that they should establish clear procedures for dealing with whistleblowers who come to them, including the provision of feedback.[115]  Further, it is suggested that Employment Tribunals be given the power to refer whistleblowing claims to regulators, so that they receive information about disclosures, and can investigate any information that they receive.[116]  If these proposals are implemented, there will be a real incentive for organisations to set up whistleblowing procedures, reassuring those considering blowing the whistle that there are safe and effective procedures in place.  Further, obliging both employees and regulators to handle any complaints they receive will ensure that all disclosures are reasonably investigated.  This will demonstrate to whistleblowers that their concern will receive the attention that it deserves, and ensure that wrongdoing in the workplace is actually eliminated.

A final proposal, which has received some support,[117] is the giving of financial rewards to those who blow the whistle.  Supporters of this reform argue that at present there is more risk than benefit for those who blow the whistle.[118]  A system of financial rewards would change that, acting as a strong incentive to those who may otherwise choose to keep quiet.  Historically, financial award systems have been used in the US to encourage whistleblowing in the financial sector.[119]  For example, the False Claims Act 1863 allows individuals to bring claims of fraud on behalf of the government and rewards successful claimants by giving them a percentage of the amount recovered.[120]  More recently, the Dodd-Frank Act 2010 offers similar rewards for reporting securities violations.[121]  However,  it has been noted that introducing rewards for whistleblowing in the UK could have a number of undesirable consequences.  For example, there is the risk that an individual may wait until there is concrete evidence of wrongdoing or unacceptable risk before going to the authorities, to increase the changes of a fine or restitution and therefore a reward.[122]  This may discourage workers from speaking out early, depriving employers the opportunity to address concerns at an early stage.[123]  In addition, offering monetary rewards could result in a negative portrayal of whistleblowers,[124] by creating suspicion that they only made the disclosure for financial purposes.[125]  Despite these concerns, Lewis argues that if a financial incentive is what is needed to encourage the disclosure of information which could prevent a fatal disaster, then it is in the public interest to offer such rewards.[126]  However, arguably there are alternative ways of rewarding whistleblowing, with less severe consequences.  For example, whistleblowers can be rewarded in the workplace via promotions or remuneration structures,[127] or can be recognised by society at large through the honours list.[128]  Furthermore, it is submitted that if the recommendations proposed by the PCAW outlined above are adopted, these will sufficiently incentivise whistleblowers to come forward, so that financial rewards will not be necessary.

Conclusion

It is clear that PIDA is a major step towards recognising the vital importance of those who draw attention to malpractice in the workplace.[129]  The Act has a remarkably broad scope, and the UK is accurately regarded as having one of the most far-reaching whistleblower laws in the world.  Furthermore, many of the Act’s initial deficiencies have been overcome by the reforms introduced by the ERRA.  The inclusion of a public interest test and removal of “good faith” ensures that the focus of the legislation is now firmly on the “message rather than the messenger”.  Moreover, the liability of colleagues who victimise whistleblowers, and the vicarious liability of employers who fail to prevent such behaviour, will remove social pressures which have previously inhibited employees from coming forward.[130]  However, significant issues remain.  Whilst PIDA offers generous compensation to an employee who is dismissed for making a protected disclosure, there is a real risk that whistleblowers will struggle to find future employment.  Regrettably, when “employment doors are pressed firmly shut”,[131] the current law does not provide a “wedge to force them open”.[132]  In addition, many individuals will find that there is not an appropriate forum in which they can raise their concern, since PIDA does not require employers to have reporting procedures in place.  Even where such procedures do exist, the whistleblower can reasonably expect that their concern will be ignored since there is no obligation for employees or regulators to give credence to, or respond to the allegations.  Effectively, the whistleblower will have risked their job, future career and financial stability for nothing.  In light of this, it is unsurprising that most individuals prefer to remain silent.  If the law truly wishes to promote whistleblowing, steps must be taken to make the road to whistleblowing a more attractive path for employees to take.  To achieve this, PIDA must be extended to cover job applications so that anyone who suffers detriment at the hiring stage, as a result of being a known whistleblower, will have recourse under the Act.  Further, a Code of Practice which encourages employees to have whistleblowing procedures must be put in place so that there is a proper forum in which employees can raise concerns.  These procedures should also facilitate the investigation of the allegation and feedback of its progress to the discloser.  Only when an employee feels safe in raising a concern through established mechanisms, and confident that something will be achieved by doing so, will there be any real incentive to “blow the whistle”.

Bibliography

• Gobert, J & Punch, M. (2000).  “Whistleblowers, the Public Interest and the Public Interest Disclosure Act 1998”, 63(1) The Modern Law Review, pp.25-54.

• Lewis, D. (2001). “Whistleblowing at Work: On What Principles Should Legislation Be Based?”, 30(2) Industrial Law Journal, pp.169-193.

• Lewis, D & Uys, T. (2007) “Protecting Whistleblowers at Work: A comparison of the impact of British and South African legislation”, 49(3) Managerial Law, pp.66-92.

• Lewis, D. (2010). “Combatting Corruption through Employment Law and Whistleblower Protection”, 39(1) Industrial Law Review, pp.52-81.

• Lewis, D. (2013).  “Resolving Whistleblowing Disputes in the Public Interest: Is Tribunal Adjudication the Best that can be Offered”, 42(1) Industrial Law Journal, pp.35-53.

• Lewis, J & Bowers, J. (1999).  “Protecting the Whistleblower”, 149 (6904) The New Law Journal, pp.1377-1382

• Ramsey, M. (2013).  “Blowing the Whistle at Work”, 37(5) Company Secretary’s Review, pp.33-34

• Smith, I & Baker, A. (2013).  Smith & Woods Employment Law, Oxford, Oxford University Press.

Other Sources

• BBC News Website.  Available at, http://www.bbc.co.uk/news/uk-england-stoke-staffordshire-21228820 [accessed 27th Feb 2014]

• Council of Europe, Parliamentary Assembly, ‘The protection of “whistleblowers” Report, Committee on Legal Affairs and Human Rights, Rapporteur: Pieter Omtzigt, The Netherlands (2009), Available at

http://fairwhistleblower.ca/files/fair/docs/ti/Council_of_Europe_Draft_WB_Resolution.pdf [accessed 27th Feb 2014]

• Department for Business, Innovation and Skills. (2013). The Whistleblowing Framework: Call for Evidence. London, HMSO.

• Public Concern At Work. (2007). A Guide to PIDA. Available from, http://www.pcaw.org.uk/guide-to-pida [accessed 27th Feb 2014]

• Public Concern At Work. (2013). The Whistleblowing Commission Report, Available from, http://www.pcaw.org.uk/files/WBC%20Report%20Final.pdf [accessed 27^th Feb 2014]

• Public Concern At Work. (2010). Whistleblowing: The Insider Story.  Available at, http://wwwpcaw.org.uk/cms/sitecontent/view/id/127/highlight/greenwich [accessed 27th Feb 2014]

• Report of the Mid Staffordshire NHS Foundation Trust Public Inquiry. (2013). London, TSO.

• Stilitz, D. (2013). “The New World of Whistleblowing: Bringing Back the Public Interest?”  Employment Lawyers Association, Annual Conference 22^nd May 2013, Available from, http://www.11kbw.com/app/files/Articles/ELA_Whistleblowing_May_13_Final_1_.pdf [accessed 27th Feb 2014]

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http://www.pcaw.org.uk/files/PRYouGovFINAL%202013.pdf [accessed 27^th Feb 2014]

Case Law

• NHS Manchester –v- Fecitt & Ors [2011] EWCA Civ 1190

• Parkins –v- Sodexho Ltd [2002] IRLR 109

• Street v Derbyshire Unemployed Workers’ Centre [2005] ICR 97

• Woodward v Abbey National plc [2006] EWCA Civ 822

Legislation

• Employment Rights Act 1996.

• Enterprise and Regulatory Reform Act 2013.

• Public Interest Disclosure Act 1998.

• Public Interest Disclosure (Compensation) Regulations 1999 SI 1999/1548.

• Public Interest Disclosure (Prescribed Persons) Order 1999 SI 1549.