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Whistleblower disclosure about contractual rights

Can a disclosure by a whistleblower regarding a contractual right be in the public interest? Yes, according to the Court of Appeal in Chesterton Global Ltd v Nurmohamed.

In 2013 a specific ‘public interest’ requirement was introduced into the whistleblowing provisions of the Employment Rights Act 1996. The new law only protected a disclosure if, in the reasonable belief of the whistleblower, it was “made  in the public interest.”  To be protected, a disclosure must also tend to show at least one specific type of wrongdoing.

The purpose of the amendment to the law was to reverse the effect of Parkins v Sodhexo Ltd, where it had been held that a breach of a legal obligation in a contract of employment fell within the prescribed categories of wrongdoing.  The government perceived the effect of Parkins to be that individuals were relying on the whistleblowing provisions to enhance or protect their private contractual rights, which was not the purpose of the legislation.

Whistleblower protection

In this case, the claimant Mr Nurmohamed was the director of the Mayfair office of Chestertons, a large London estate agent. He alleged there were inaccuracies in the company’s accounts and figures were being manipulated to the benefit of shareholders. He claimed that costs and liabilities had been deliberately misstated and inaccurate figures were being used to calculate commission payments. His primary concern was ensuring that the commission payments to him were accurate; however, he also had in mind the 100-plus other senior managers affected.

The issue for determination by the Court of Appeal was “whether a disclosure which is in the private interest of the worker making it becomes in the public interest simply because it serves the (private) interests of other workers as well.” The answer was not a straightforward ‘yes’ or ‘no’ – as you might expect.

The court found that a disclosure relating to the whistleblower’s personal circumstances could be in the public interest, even if it did not relate to anyone else (e.g. a doctor’s working hours impacting on health and safety). Conversely, the mere fact that other workers are affected would not be sufficient to establish the public interest element. Each case will be fact-dependent and the tribunal will need to consider the purpose of the legislation, including the aforementioned amendment.

The following factors were said to be of assistance: (1) the numbers in the group whose interests the disclosure served; (2) the nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed; (3) the nature of the wrongdoing disclosed; and (4) the identity of the alleged wrongdoer.

Protected disclosures

The court found that the original tribunal had been entitled to conclude that Mr Nurmohamed’s disclosures were protected. The fact that such a large number of other people were affected and that he had them in mind when he made the disclosures was a significant factor. Other factors that demonstrated his reasonable belief that his disclosures were in the public interest were: the disclosure was said to be of deliberate wrongdoing; the sums of money involved (£2-£3,000,000); that misstatements in the internal accounts would feed into the statutory accounts; and that the employer was a substantial and prominent business.

This case demonstrates that courts and tribunals will take a purposive approach to interpretation of the whistleblowing provisions where possible: that usually means providing protection to the whistleblower. Caution must therefore be exercised where a worker or employee blows the whistle. If the matter appears to give rise to possible disciplinary issues, advice should be sought.

For more information about any of the issues raised in this article or on employment law issues in general, contact David Sillitoe, Partner in the Leeds Employment team, by emailing dsillitoe@lyonsdavidson.co.uk or calling 0113 368 7871.

 

Posted on Sep 19th, 2017 by Lyons Davidson