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Significant whistleblowing changes on the horizon

  • United Kingdom
  • Employment law

22-05-2019

Across Europe, many countries have enacted some form of legal protection for individuals who disclose wrongdoings in the work place i.e. those who “blow the whistle”. But what has also become clear in recent years is that such developments have arisen on a piecemeal basis, lacking any real consistency between nations. Legal focus of some countries is upon certain business sectors only, whilst in others there is no specific provision.

To strengthen enforcement of EU laws, the EU has recently agreed text for a “whistleblowing” Directive (the WBD) which, subject to imminent formal approval, will, for the first time, introduce common minimum standards across all Member States for the protection of persons reporting breaches of Union law. Although the UK has something of a pioneering history with its whistleblowing laws, implementing the provisions of the WBD will require some significant changes to UK law but, moreover, to employer obligations and workers’ rights.

When will compliance with the Directive be required?

Whilst the WBD sign off process is still underway, the final steps of approval by the European Council and then publication in the Official Journal of the European Union, are expected imminently. Once that happens, the implementation period for the WBD is 2 years, so Member States have until 2021 to make the necessary changes to incorporate its terms into domestic legislation.

Will Brexit exclude the UK from the changes?

Although resolution over Brexit and the terms of UK departure remain elusive at present, based on discussions between the EU and UK to date and expressions by the UK Government in support of workers’ rights, it seems most likely that the UK will be subject to or will voluntarily adopt EU laws that come into force before the date of actual departure. As a result, the WBD is likely to apply to the UK.

Principal areas of impact for current UK whistleblowing law

Current UK legislation for the protection of whistleblowers against retaliation, including harassment by colleagues, is contained within the Employment Rights Act 1996 (which incorporates the Public Interest Disclosure Act 1998 and subsequent amendments)(the ERA). There are similarities between the ERA and WBD but also fundamental differences.

Below are just a few of the ways in which the WBD varies from the ERA and could bring about significant changes for UK employers:

Far wider group of protected persons

The reach of those protected by the WBD is considerably wider than currently that of the ERA and would involve a significant extension of current UK provision.

Protection under the ERA is limited to employees and workers although, by extension, applies to a wider group including former workers, agency workers, many self-employed medical professionals or health service job applicants, the Police, those undergoing training, civil servants and LLP Members.

In contrast, the recitals to the WBD make clear that its focus is upon the nature and circumstances of disclosure, not the relationship between the whistleblower and the organisation they allege has breached the law. Protection under the WBD is therefore accessible not only to those currently protected by UK law but to suppliers and subcontractors of the business, shareholders and non-executive directors and also to many third parties, by association. As a result, where the disclosure requirements of WBD are satisfied, the ability to report potential legal breaches is available to a very wide group, beyond the workforce. Furthermore, legal entities, such as the business of a whistleblower, may be able to claim compensation where a commercial disadvantage has occurred due to his or her disclosure.

For many years, campaigners in the UK have argued for a widening of the group of persons receiving protection, the ERA categories being viewed as an artificial and an unnecessary obstacle to the reporting of legitimate concerns. Once the WBD is incorporated into UK law, businesses will need to be prepared to hear concerns from many sources, both internal and external, and to respond appropriately. For many, this will involve a change in mindset and much broader reflection on whether any subsequent actions, such as non-renewal of a supply contract, arose on genuinely commercial grounds or might have been influenced by a disclosure.

Clear reporting channels needed

To support disclosure to employers as a first port of call, the WBD goes further than ERA by requiring Member States to ensure public sector employers as well as private sector employers with 50 or more employees (this 50 employee limit does not apply in some sectors) establish confidential internal reporting channels. Outsourcing this function to an external provider is also permitted.

Many UK businesses already provide reporting mechanisms of various kinds, whether as part of internal processes or via outsourced phone lines, etc. However, this is not currently a legal requirement and making it so will present a challenge for employers in terms of resourcing and managing the process. Allocating appropriately trained staff to this function will be important, the WBD also requiring the appointment of an independent reviewer or department and diligent and timely (see below) feedback to the whistleblower. To ensure reporting channels operate consistently and appropriately in future, employers would be well-advised to set up protocols which explain how reporting will be handled and filter personal grievances. Communicating these, along with how whistleblowers can report concerns elsewhere, are also important aspects of the WBD.

What will also prove a critical issue under these new requirements is to whom employers allow access to their internal reporting channels. Bearing in mind the very much wider group of potential whistleblowers under the WBD (including external contractors and suppliers) but also that a failure to offer reporting channels could allow the individual to make a disclosure direct to a third party, careful thought will need to be given to this. Some employers may choose to offer separate mechanisms for non-staff to report allegations or find it preferable to do so where existing mechanisms are integrated into staff policies and procedures, not suited to those outside the workforce.

Timely response to disclosures

A further respect in which the WBD is more prescriptive than the ERA is in the obligations it places upon employers (and, where applicable, upon regulatory bodies and other competent authorities receiving disclosures) to respond to disclosures. As well as requiring access to reporting channels, employers must acknowledge receipt of a disclosure within 7 days and provide follow-up information within three months, or explain any delayed timeframe and the reasons for it.

Whilst most employers will want to investigate allegations of wrongdoing promptly in any event, the fact that time limits are to be imposed will require diligent monitoring and diarising to ensure compliance. An even more significant impact is the extent to which employers will need to communicate with whistleblowers. One of the greatest frustrations expressed by whistleblowers (and a potential deterrent for would-be whistleblowers) is a lack of feedback as to whether their allegations have been taken seriously and looked into. Under the WBD, there will be an obligation for employers to furnish whistleblowers with this information and in a timely manner. A significant risk of not doing so is that the WBD allows disclosures to be pursued outside of the employer where internal reports have failed or are not responded to in time.

Public interest requirement removed

A clearly stated motivation for the WBD is the protection of public interests. Achieving that aim is also implicit in the scope of the WBD, which covers specified areas of legal breach from transport safety to environmental protection. Despite this, the Directive contains no express requirement to establish a public interest in order to attract protection in most circumstances (an exception being public disclosures of imminent danger).

In contrast, establishing a public interest has been an essential element of UK provision in recent years, albeit case law has interpreted the term more loosely of late. The origins of a public interest requirement here lay in concerns that individuals might use whistleblowing protection in pursuit of personal grievances or individual contractual disputes if this was not specified. Such concerns will no doubt resurface under the WBD. However, these are probably unwarranted when the WBD and conditions of protection are viewed as a whole and compared with current interpretation of the ERA in this regard. It nonetheless remains to be seen whether the UK Government will seek to retain a public interest requirement when implementing the WBD and whether they manage to do so in compliance with WBD aims.

How will the UK respond?

Now that the WBD is at the stage of imminent final approval at EU level, it remains to be seen how the UK Government will respond and what revisions it will propose to the ERA in the next 2 years. The UK approach to recent EU developments, such as the General Data Protection Regulations and Trade Secrets Directive, has been to substantially adopt EU wording. However, before specific drafting considerations are considered regarding implementation of the WBD, the UK Government has some wider strategic decisions to make, such as the role of UK regulatory bodies and the jurisdiction of the courts.

As regards the former, the ERA currently lists the prescribed bodies to which external (non-public) disclosures must be made in order to attract whistleblowing protection. A 2013 Call for Evidence considered the role of these prescribed persons and potential options to raise public confidence in their role, whilst respecting their independence. The outcome was the introduction in 2017 of mandatory annual reporting of the numbers and types of whistleblowing allegations received and action taken. The WBD goes further by requiring that competent authorities have whistleblowing reporting channels and adhere to various mandatory steps regarding communication with the whistleblower, response times and activity. Having shied away from greater intervention over the way in which prescribed bodies respond to whistleblowing allegations in 2013, the Government may be reluctant to do so now. The role and function of prescribed bodies in this context but also their funding, if these changes are to be adequately resourced, is nonetheless something that will once more need to be reviewed. Employers will also be concerned by the potential loss of control that greater external reporting by persons outside the business will introduce.

A further aspect of implementation of the WBD in the UK which will warrant review is how the various remedies it prescribes may be effected. The Directive provides specific examples of detriments in respect of which a whistleblower may seek remedy, from dismissal to damage to reputation or cancellation of a contract for goods and services. A limiting factor in the UK, currently, is that whistleblowing claims may only be brought in the employment tribunal, whose powers and available remedies are dictated by statute and do not extend to the full range of persons covered by the WBD, such as the self-employed. The relationship between the court and tribunal systems is already under review by the Law Commission but, if WBD requirements are to be fully met, will need to be hastened in the context of whistleblowing.

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