Can individuals be liable for dismissal-related damages in whistleblowing detriment claims?
In International Petroleum Limited v Osipov, the Employment Appeal Tribunal unusually found that an individual was liable for losses flowing from dismissal. It is more usual for the employer to be held solely responsible for such compensation. This follows the 2013 amendment of section 47B of the Employment Rights Act 1996, which allows detriment claims to be brought against fellow workers and agents, not just the employer.
The claimant brought proceedings against five respondents after he was dismissed for making protected disclosures, the first respondent being the company, IP Ltd. The second and third respondents, Mr Timis and Mr Sage, were nominative non-executive directors. Two further individuals were Dr Lake, CEO of a separate company that provided services to IP Ltd and Mr Matveev, a consultant.
The claimant made a number of disclosures regarding IP Ltd’s business activities in Niger. Out of the 19 disclosures, four were found to be ‘qualifying’ disclosures which, under s43B ERA, relate to:
- A criminal offence committed or likely to be committed;
- A person failing to comply with any legal obligations;
- A miscarriage of justice;
- Endangered health and safety of an individual;
- Damage to the environment; and
- Deliberately concealing information relating to the above.
The qualifying disclosures were:
- Emails sent to Dr Lake relating to a proposed contractor;
- A letter sent to the Board of Directors;
- An email sent to Dr Lake regarding data; and
- Emails sent to Dr Lake regarding a meeting between Dr Lake and another company.
Employment Rights Act
Having made protected disclosures, the claimant was subjected to detriments contrary to section 47 of the Employment Rights Act and had been automatically unfairly dismissed under section 103A ERA, as whistleblowing was the principal reason for dismissal.
The detriments listed were, among other things, excluding the claimant from major parts of his role and undermining him, the final detriment being the instruction to summarily dismiss him.
Mr Timis instructed Mr Sage to dismiss the claimant at least in part because of the protected disclosures that amounted to a detriment, as per section 47B ERA.
The two non-executive directors and IP Ltd were jointly and severally liable for the losses flowing from dismissal, which amounted to £1,745,000 (the unfair dismissal cap does not apply in whistleblowing cases). It was significant that Mr Timis and Mr Sage were found personally liable, as IP Ltd was almost insolvent. They were also found to have gone beyond the usual role of non-executive directors and to have taken decisions relating to the business.
Dr Lake and Mr Matveev, who also subjected the claimant to detriments, were not workers or agents of the respondent and therefore not liable.
Mr Timis and Mr Sage tried to rely on Melia v Magna Kansei Limited  EWCA Civ 1547, arguing that damages arising out of dismissal could not be recovered in a detriment claim. However, this case was decided before section 47B was amended by the Enterprise & Regulatory Reform Act 2013, which enabled claims to be made against co-workers.
The EAT distinguished between dismissal in an unfair dismissal claim (section 47B ERA Part V) and dismissal that could form the basis of a detriment claim (section 103A ERA, Part X). The two non-executive directors were instrumental in dismissing the claimant and their instructions fell within the latter, so amounted to a detriment claim. Furthermore, there was no provision relieving their personal liability for losses flowing from the detriments and Mrs Justice Simler noted the purpose of the amended act was to “provide protection rather than deny it.”
The claimant challenged the finding that Dr Lake and Dr Matveev were not workers or agents and therefore not liable for detriments. The liability of Mr Matveev was remitted for reconsideration, as there was no obvious conclusion that he was not a worker.
As Mrs Justice Simler commented that this was “an unusual case” but a victory for claimants, who can pursue claims against fellow workers for whistleblowing detriment claims.
This offers an alternative route in pursuing dismissal-related whistleblowing claims, which is particularly helpful where, like this case, the employer has practically been dissolved.
The decision has the potential to have an impact on individual employees involved in disciplinary processes, as employees can claim for losses flowing from dismissal not only from the employer but individuals involved in the decision-making process.
It is also a reminder that employers can be liable for the actions of their employees. Employers should reinforce policies and training to reduce the risk of claims and strengthen the employer’s defence that it has taken all reasonable steps to protect whistleblowers.
For more information on any of the issues raised in this article or on employment matters in general, please the Leeds Employment team.
Posted on Jan 2nd, 2018 by Lyons Davidson