The following article provides an overview of the whistleblowing regime applicable in the UK.
The Public Interest Disclosure Act 1998 (“PIDA”) inserted sections 43A to 43L and 103A into the Employment Rights Act 1996 (“ERA”).
Employers are not generally obliged to encourage whistleblowing or implement whistleblowing policies, apart from the financial services sector.
Instead, if an employee makes a “protected disclosure”, employers are prevented from subjecting the employee to any detriment, including dismissal.
A disclosure must meet a number of criteria to qualify as a “protected disclosure”, including the following:
- Has the whistleblower made a “qualifying” disclosure? Among other cases, a disclosure can be a qualifying disclosure if it meets the following requirements:
- Disclosure of information: The employee must make a disclosure of information. Just gathering evidence or threatening to make a disclosure is not enough;
- Subject matter of disclosure: The information must relate to a “relevant failure” such as miscarriage of justice, danger to health and safety or criminal offences;
- Reasonable belief. The employee must have a reasonable belief that the information tends to show a relevant failure; and
- In the public interest. The employee must have a reasonable belief that the disclosure is in the public interest.
- Is the disclosure “protected”? This depends on the person to whom the disclosure is made.
- Categories of eligible recipients of the disclosure include the employee’s employer, government ministers, legal advisers and the “person responsible” for the failure.
- Employer disclosure (internal disclosure) is strongly encouraged. PIDA does not state the suitable levels of authority, within an organisation, to make the disclosure to and there is no precedent on the matter. However, if a disclosure is made to a senior individual, rather than a junior colleague, it is likely to be regarded as being made to the employer.
- Disclosure to third parties (external disclosure) can be protected depending on the circumstances. For example, a disclosure to a government minister can be a protected disclosure if the employee is employed by an organisation such as the NHS or a utility regulator. Here, prior disclosure to the employer is not required.
- Disclosure to the person responsible for the failure can be protected if the employee reasonably believes the malpractice relates solely or mainly to either the conduct of that person or to a matter which is the legal responsibility of that person and not the employer.
- Wider disclosures, such as to the police or the media, can be protected in limited circumstances. These include where the employee has a reasonable belief that the information is substantially true and the disclosure is not made for personal gain. Additionally, the employee must generally have:
- disclosed substantially the same information to their employer before the wider disclosure; or
- reasonably believe that they will face detriment from their employer if they make the disclosure to their employer; or
- reasonably believe that the evidence will be covered or destroyed if they make a disclosure to their employer.
If an employee has made a protected disclosure, they have the right not to be subjected to detriment (section 47B(1), ERA). ERA has not defined “detriment” so tribunals have turned to case law for the meaning of that term.
The Whistleblowing Commission Code of Practice has provided examples of detriment, which include failure to promote, denial of training, ostracism, suspension and failure to investigate a subsequent concern.
If an employee has made a protected disclosure, they can bring a claim in the employment tribunal if they have suffered detriment by their employer.
If the detriment is a dismissal, the employee cannot bring a detriment claim against the employer. Rather, the employee can bring an unfair dismissal claim (section 103A, ERA).
SYSC 18 (FCA Authorised Firms)
Every FCA authorised firm must put in place internal whistleblowing arrangements that comply with SYSC 18 and include a term in any settlement agreement with an employee that makes clear that nothing in such agreement prevents the employee from making a protected disclosure.
A UK SMCR banking firm must allocate the FCA-prescribed senior management responsibility for acting as the firm’s whistleblowers’ champion in accordance with SYSC 18.4.
A UK MiFID investment firm, except a collective portfolio management firm, and a third country investment firm have whistleblowing obligations under the MiFID regime in accordance with SYSC 18.6. These obligations consist of having appropriate procedures in place for such firm’s employees to report a potential or actual breach of:
- any rule which implemented MiFID; or
- a requirement imposed by MiFIR or any onshored regulation which was previously an EU regulation adopted under MiFID or MiFIR.
Our firm FSREG provides a whistleblowing helpline, i.e. a confidential reporting service for employees to make whistleblowing reports about their employer.
Employees can notify us by calling our dedicated whistleblowing number. We then prepare an anonymous report and send it to the employer so they can investigate the complaint. We keep anonymous lines of communication open between the whistleblower and their employer if there are any follow-up questions.
Our whistleblowing helpline helps employers to:
- Create a culture of transparency;
- Demonstrate compliance with applicable law (including PIDA and the FCA rules in SYSC 18 if applicable);
- Ensure anonymity for employees; and
- Gain greater insight into their organisation.
Please contact our Managing Director Giuseppe Giusti (email@example.com) to find out more.
Disclaimer: This article provides general information only. It is not comprehensive and does not constitute the provision of legal, investment or regulatory advice. FSREG is not responsible for any action taken or omitted to be taken on the basis of the information contained in this article. © 2022 FS REG Limited (www.fsreg.com). All rights reserved.