Whistle Blowing

WORD COUNT 2650

INTRODUCTION

In order to answer the question; After the Snowden debacle is whistleblowing an unworkable anachronism in terms of Corporate Governance?

We will firstly look at what whistle blowing is and the protections available in the UK at present, secondly some considerations will be given to how the Public Interest Disclosures Act 1998 (PIDA) compares to the American provisions contained in the Sarbanes Oxley 2002 and Dodd-Frank Wall Street Reform and Consumer Protection Act  (Dodd-Frank), Further comments will then be made in relation to these provisions allowing us to draw conclusions whether the Edward Snowden case has aided the whistle blowing processes or made these difficult to achieve.

Whistleblowing in the UK

In light of high profile scandals, financial scandals and the work of the Committee on Standards of Public Life^[1]. These and other public inquiries and various financial scandals linked to the 2007 global financial crisis also the 2011 European financial crisis exposed the fact certain physical or financial disasters could have been avoided in some significant way or substantial risks reduced should workers have had opportunities’ to disclose their concerns prior to any serious impact. It would be prudent to say that workers experience great difficulties, as they are torn between institutional loyalty and moral conscience to report wrongdoings; while for the employers, they have other considerations to make between the protection of institutional reputation and the pursuit of transparency and openness for more effective internal controls^[2].

Whistleblowing Legislation

The UK provides provisions to whistle-blowers in the Employment Rights Act^[3] as amended by the Enterprise and Regulatory Reform Act as from 25th June 2013^[4], the aforementioned Public Interest Disclosure Act (PIDA) ^[5]. Whistleblowing occurs when an employee or worker^[6] makes an allegation about a company on the basis that there has been a violation of a law^[7] or regulation by the company; or an injustice; financial malpractice; or the company have posed a danger to public health or safety.

COVERED INDIVIDUALS                                                                                                         PIDA provides provisions to cover employees, including workers^[8], contractors, trainees^[9], agency staff, homeworkers^[10], police officers^[11] and every professional in the NHS^[12]. The usual employment law restrictions on minimum qualifying period and age do not apply to this Act. It does not cover the genuinely self-employed (other than in the NHS), volunteers, the intelligence services or the armed forces^[13].

CONFIDENTIALITY

In certain circumstances an employee may not be able to make a disclosure as the duty of confidentiality is upon them, this may be an express term of a contract or implied by common law. This could result in the employee to be in breach of the duty should they disseminate confidential information acquired during the course of his employment^[14]. This breach could justify dismissal. It has been known that in certain circumstances, i.e. information in relation to trade secrets, the duty may be continuous after the employment relationship has ended^[15].

If the disclosure is a imminent breach of the Official Secrets Act or another secrecy offence, the whistleblower will lose the protections of PIDA (a) he has been convicted of the offence or (b) an employment tribunal is satisfied, to a high standard of proof approaching the criminal one, that he committed the offence.

It would seem that this would deter a whistleblower from exposing wrongdoings and volunteering information, as without the protections of PIDA an employee has nothing to aid them in such a difficult situation.

The Obligation of Whistleblowing Procedures in Workplace                      Companies are encouraged to have relevant whistle blowing procedures in house to address the concerns of the whistle-blower. Although PIDA does not impose specific duties on organisations to force implementation of appropriate arrangements for staff to raise concerns safely and responsibly it is strongly recommended. In terms of providing protection against unjustified treatment or retaliation, there are a number of strong policy and legal reasons for public and private bodies in the UK to do so and some of these are listed below. Whistleblowing arrangements pose great importance regardless of law, protection would be instant, and good practice in the workplace.

The UK Corporate Governance Code states further safety measures to allow the whistleblowing provisions to run smoothly by recommending that the audit committee should review whistle-blowing arrangements. ^[16]

Qualifying Disclosure

The disclosure made by the employee must be one regarded as a qualifying disclosure made in reasonable belief^[17]and good faith^[18] and provisions for this can be sought in the legislation.^[19]

PIDA provides provisions to allow a disclosure to be made to a range of individuals and organizations; the whistleblower’s employer^[20] the second is the authorized regulator or governing body directly associated within the sector^[21] and the local sector, media, police and MPs.^[22]

Public Interest test

The public interest test developed following the amendments to the ERA, as described heretofore has aided the implementation of two tests effectively reversing judicial decisions on the correct interpretation of the whistleblower provisions.

The first test with the amendment of s.43B of the ‘public interest’ test so as to avoid the sort of situation that arose in Parkins v Sodexho Ltd^[23]whereby the EAT held that ‘failure to comply with a legal obligation` could apply to a failure to comply with the individual’s own contract of employment. This test is favourable to the employer. The second test with the amendment of s.43B in the light of the Court of Appeal decision in Fecitt v NHS Manchester^[24]whereby it was held an employer can be held vicariously liable for detrimental treatment meted out by work colleagues, though subject to the employer’s statutory defence^[25]. However one must give consideration to the inadequacy of the protection against dismissal. As the EAT recognised in Virgo Fidellis Senior School v Boyle^[26], subjecting a whistleblower to a detriment is a form of discrimination and should be treated as such by an award of compensation injury of feelings. The Court of Appeal held that s.47B would be infringed should the public disclosure materially influence the employer’s treatment towards the whistleblower, applying the test for causation under the Equality Act.^[27]