In a significant landmark case that will send shockwaves through boardrooms across the country, two non-executive directors have been held personally liable for the unfair sacking of a whistleblower resulting in a record-breaking £2m award to the former chief executive of International Petroleum, Alexander Osipov, who was sacked in October 2014.
His dismissal came in the aftermath of a series of disagreements between Osipov and two non-executive directors of the company over International Petroleum’s operations and the award of contracts in Niger, during which Osipov had become omitted from decision-making.
Osipov had raised concerns regarding poor corporate governance and the need to avoid accusations of bribery and corruption, which had plagued businesses in Niger. He was then dismissed without a notice period. International Petroleum advised that as their HR department was small it was incapable of following the correct dismissal procedures.
Protection for whistleblowers such as Osipov is enshrined in UK whistleblowing legislation. The Public Interest Disclosure Act 1998 is seen as a vital piece of new legislation that should encourage workers to report serious wrongdoing and provides two key protections to workers who raise genuine whistleblowing concerns.
The law was enhanced in 2013 when the Enterprise Regulatory and Reform Act introduced vicarious liability on an employer for the act of subjecting a whistleblower to detrimental treatment when a whistleblower has made a protected disclosure. Likewise, whistleblowers, can also pursue individuals personally for liability arising from such detrimental treatment.
Osipov decided to pursue his two non-executive directors for personal liability and was awarded compensation in 2016 by an employment tribunal for unfair dismissal, injury to feelings and unpaid salary. The two directors took this ruling to the Court of Appeal, which has upheld the original tribunal and Employment Appeal tribunal decisions to award Osipov £2 million in damages.
This ruling should send out a clear message to business owners that individual directors taking the decision to dismiss someone for making a protected disclosure can, under whistleblowing legislation, be held personally liable. This ruling may see many other whistleblowers making similar such claims in the future.
Employers will have a defence against claims for vicarious or personal liability if they have taken all reasonable steps to prevent the detrimental treatment of their employees. Steps should include
If you would like information about implementation of an independent external whistleblowing service to provide your organisation with adequate protection and compliance with whistleblowing laws, please click here to visit our website or contact our sales team by dialing direct on +44 (0) 1224 625111
Whistleblowing, in its simplest form, is the reporting of misconduct within the workplace, which can range from minor issues, or to complex, corporate-changing deeds of bad behaviour leadership.
Whistleblowing is an essential tool that is necessary within businesses to protect their employees, customers, and the organisation itself. Many industries are now routinely implementing whistleblowing policies and codes of conduct within their workplaces, providing their employees with a clear structure and direction on the procedures as required.
In the UK, the Public Interest Disclosure Act 1998 provides the right for a worker who makes a disclosure to be protected from retaliation as long as they reasonably believe two things;
The wrongdoing disclosure must also fall into one or more of the following categories:
The legislation provides the right for a worker to take their case to an employment tribunal if they have been victimised at work or they have lost their job because they have ‘blown the whistle’.
Why is it so important?
In a busy workplace, it is easy for issues, which may be troubling individuals or teams, not to be brought to attention to the senior management, often due to fear of repercussions. This is especially true if there is not a clear process in place for reporting any inappropriate behaviour.
By being open and honest, following through on procedures, treating employees with respect, in confidence, and investigating the issue thoroughly, a positive whistleblowing culture can be created. This provides businesses with the opportunity to minimise fraud and other forms of misconduct and enables employees to focus on their core business needs, and the success of the organisation.
Here are our tips for promoting a whistleblowing culture:
Whistleblowing is an essential tool for any organisation. Without it, fraud and misconduct may harm their business. For more information on how SeeHearSpeakUp can help your organisation contact the team on +44 1224 625111
In my former role as a local government counter-fraud manager, one of my responsibilities was assessing the volume and sources of whistleblowing reports raised by staff. My analysis would naturally identify some areas of the business that was less likely to be prone to fraud and other forms of wrongdoing compared to others. On the surface, it was easy to see a correlation between the levels of concerns raised in certain areas where fraud and wrongdoing were more likely to be identified, in comparison to other areas of a business where the risk to the organisation was much smaller.
My findings led me to undertake awareness presentations across those Departments with fewer whistleblower reports in order to encourage staff members to speak up and raise concerns should they be aware of any wrongdoing.
I can recall during one awareness presentation, a staff member advised me that they had decided to stop raising concerns. When I asked the staff member why they no longer wished to come forward, they advised me that despite initially willing to come forward and speak up, they had never received any feedback from their employer regarding the issues that they had raised. In fact, the staff member advised that their concerns had never even been acknowledged, which certainly did not encourage them to come forward again and continue to report concerns.
This simple example demonstrated one of the most common failings of many organisations when trying to encourage their staff to speak up about wrongdoing – failure to implement an effective feedback process for whistleblowers.
Clearly there should always be clear and prompt communications between the whistleblower and their employer. Feedback is a simple and powerful tool that can provide whistleblowers with an understanding of how their disclosure has been handled and dealt with. It also provides assurances that it is perfectly acceptable to speak up.
Feedback can also be motivating and a positive factor in employee satisfaction. Many employees naturally like to feel involved and be recognised within their organisation. Providing whistleblowers with effective feedback can help achieve this.
Whistleblower feedback can also have a positive impact on an organisation’s culture. If employees hear about a work colleague’s positive experience, it is likely to encourage other employees and instill confidence in how their organisation challenges unethical behaviour.
The importance of whistleblower feedback is now being demonstrated in key whistleblowing law. In Europe, the new whistleblower protection directive will shortly introduce legislation in 2019, which will contain legal obligations on organisations to follow up on concerns and keep whistleblowers informed about their disclosure. This includes providing feedback about the follow-up to a whistleblowing report within a reasonable timeframe likely not to exceed three months.
SeeHearSpeakUp delivers whistleblowing services to companies globally and can assist organisations in fulfilling their legal compliance. For more information, please visit our website here or contact our team on +44 (0) 1224 625111.
It takes a great deal of hard work by many people to make a company prosper. Yet it takes only one disgruntled employee to taint a company’s reputation and cause irreparable damage. In this digital age where almost everyone carries a smart phone, it is easier than ever for employees to voice concerns through social media and expose businesses to the glare of bad publicity.
Underestimating the power of social media can be a fatal mistake. Employees have access to sensitive information. A tweet or a post could bring an organisation into disrepute, infringe data protection and cause untold reputational harm. The internet can be unforgiving and sensitive information may keep circulating to the perpetual detriment of a business.
There are a number of measures businesses can implement to avoid disputes or leaked information. Measures can include -
Whilst putting measures in place to mitigate against the risks of leaked information may go some way to keeping businesses safe it is also vital that businesses consider the reasons why their employees wish to voice their concerns externally and speak up about matters that affect their workplace. Many employees may not feel comfortable raising concerns internally for fear of retaliation.
Employees without the means to raise concerns can have a detrimental impact on a business and can lead to an unhappy workforce. Failure to create an environment for employees to raise their concerns may also make it more likely that employees will voice their concerns through other alternative means such as social media regardless of policies a business has put in place.
Providing a safe and supportive environment for reporting concerns can balance the dilemma a business faces between keeping sensitive information in house and at the same time allowing employees an effective outlet to raise their concerns in a safe, transparent and supportive environment.
Many businesses are increasingly seeking the services of specialised and trusted external whistleblowing service providers to encourage their staff to raise concerns. Not only does this provide staff with a safe environment to speak up, this will also provide the business with assurances that information is gathered in a secure and controlled environment without the risk of sensitive information being leaked.
If you would like a cost effective quote for an external and independent whistleblowing service please contact Sean McAuley, SeeHearSpeakUp Senior Manager by contacting him directly on 01224 049449.