12 May 2015

In the public interest: What does that mean for whistleblowing claims?

This article was written by Carl Richards (partner), Nicola Kerr (partner) and Jeremy Consitt (manager, KWM Employment Bridge).

It may seem strange that even though the whistleblowing legislation in the form of the Public Interest Disclosure Act (‘PIDA’) originally came into force in 1998, the question of what ‘public interest’ actually means has never really been fully defined.  Only now, has the first authoritative judgment as to what constitutes “public interest” been handed down from the Employment Appeal Tribunal ('EAT') in the case of Chesterton Global Ltd (trading as Chestertons) -v- Nurmohame

This had not been an issue before because, despite the title of the Act, PIDA never referred to 'public interest' at all. It simply legislated what would constitute a "protected disclosure", and case law subsequently evolved redefining what sort of disclosures would qualify as a protected disclosure. In the Parkins v Sodexho case, the EAT held that, where an employee had brought a disclosure of information involving a breach of a legal obligation in his or her contract of employment, this was capable of being a protected disclosure, triggering the protection attached to whistleblowers.  This was highly controversial as it meant an essentially private dispute about an employment contract fell under the whilstleblowing legislation.  This seemed a far cry from the original aims of PIDA, to encourage people to speak out in the public interest without fear of reprisal.  

In response, the Coalition Government amended the legislation in 2013.  The position set out by the ERA now is that the qualifying disclosure must be "any disclosure of information which, in the reasonable belief of the worker making the disclosure, is made in the public interest  ..." The section then goes on to define the various situations in which the disclosure can be made and the content (such as where a crime is being committed, etc).  At the same time, the requirement in the legislation that any protected disclosure must be made in good faith was removed.

The Chestertons case is the first case at appellate level to explore what is meant by the words "in the public interest". In this case, Mr Nurmohamed claimed to have made a protected disclosure and to have been automatically unfairly dismissed for doing so. He was a senior manager at Chestertons, the estate agency. During his employment, there had been changes made to the company's commission structure. Mr Nurmohamed made three disclosures to his supervisors complaining about the manipulation of the company's accounts. Specifically his complaint was that the company was deliberately supplying inaccurate profit and loss accounts which had the effect of making the company appear more profitable to its shareholders but also resulting in lower commission payments for Mr Nurmohamed and his colleagues of a similar level.

Chestertons argued unsuccessfully both in the Employment Tribunal and EAT that this disclosure was not in the public interest. Mr Nurmohamed had claimed that the "public interest" requirement was satisfied because his disclosures were made in the interest of 100 senior managers (as well as himself). Chestertons argued that this was not in the public interest and a disclosure should be “of real interest to the public in general or a sufficient section of the public”. Chestertons seems effectively to have been arguing that their case was similar to the Sodexho case, because it arose from a dispute between employee and employer over the terms of Mr Nurmohamed's personal contract of employment. The EAT rejected this argument noting that, while Mr Nurmohamed was more concerned about himself, he did have the 100 other managers in mind when making his disclosure and this was enough to satisfy the public interest test.

This interpretation of what can constitute a disclosure being made "in the public interest" is far wider than many commentators had expected.  It is now clear that a whistleblower will need to have people other than him or herself in mind for a disclosure to be capable of being deemed made in the “public interest”.  But does that mean 100 others, or could it be 10, or even just one other person?  The position remains unclear. It is likely that other cases will test the limits further, especially if they reach the Court of Appeal or Supreme Court and so this judgment is unlikely to be the final decision on the point.  

What does this mean for employers?

Employers must continue to treat any disclosures of wrong doing made by its staff with care, ensuring that they are dealt with under the employer's whistleblowing policy and that whistleblowers are not subjected to any detriment for bringing wrongdoing to the employer's attention.  This case, with its wide interpretation of the types of disclosure which are protected, underlines the courts' protective approach to whistleblowers.

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