Good morning and welcome back to your weekly case law update. Last week we had our monthly employment law round up with articles on the Parliament Bullying Report, Family Friendly Policy Reporting and the Morrison’s data leak.
Prior to that, our last case law update was about an employer’s vicarious liability for its staff on a post-night-out fracas. This week’s case focuses on liability too, but in relation to liability for whistleblowing claims.
Protected disclosures are defined in Section 43B Employment Rights Act 1996, the worker must reasonably believe that the disclosure is in the public interest and the disclosure should relate to; criminal offences, failure to perform legal duties, miscarriages of justice, endangerment to health and safety, endangerment to the environment and the concealment of any of the former.
Section 103A states that any dismissal in relation to protected disclosures will be automatically unfair. Meanwhile, Section 47B(1B) says the employer is liable for any detriments to the whistleblower done by its employees or workers. Section 47B(2) states that S47(1B) does not apply if the detriment was dismissal.
In light of that, today’s question is:
Can the Directors of the Company be personally liable for the award made to a Claimant if the Company is insolvent?
Mr Osipov, the Claimant was the CEO of International Petroleum Ltd. The International Petroleum’s Directors included Mr Timis, the majority shareholder, and Mr Sage, the Chairman. Timis and Sage, whilst sounding like a sub-par 90s comedy double act, are actually the Respondents in this claim.
The Claimant made several protected disclosures in relation to International Petroleum and the Respondents relating to corporate governance and compliance with Nigerian Law, where the Company had interests. The Claimant was subsequently excluded from business meetings, foreign trips and management decisions. This included the Respondents’ decision to dismiss him.
The Claimant was dismissed and initiated ET proceedings, naming the Company and Messrs Timis and Sage as Respondents. The ET and EAT allowed the claim, they held that the Claimant made protected disclosures. They found he suffered detriment and was dismissed because of the disclosures.
The ET (upheld at EAT) awarded the Claimant nearly £2m in damages – there is no cap on whistleblowing claims. The Company is now almost insolvent and it was held that the Respondents were personally liable for the entire award.
The Respondents appealed claiming they should only be personally liable for the detriments – exclusion from trips and meetings – that were pre-dismissal as per S47B. These detriments were a considerably smaller element of the award.
The Court of Appeal dismissed the appeal, it held that there is nothing in the act that excludes the individual for being liable for their own wrongdoing.
The takeaway point:
Yes, individuals can be liable for awards in whistleblowing claims. Normally, as the employer is vicariously liable for its employees and workers, naming an individual will mean the employer still pays any award. However, if the employer is almost insolvent as in this case, the individual could be liable for the entire award.
The same already applies to discrimination claims and extending it to whistleblowers is a logical move. Employers should note that like discrimination, whistleblowing claims are usually high value and the risk to the individual is far greater than if they were liable for a unfair dismissal claim.
It also highlights the need for individuals to be trained on the handling of whistleblowers. If a detriment claim against an individual is upheld but an automatic unfair dismissal claim against an employer is not then the employer would still be liable for the actions of the employee.