Peters & Peters

Time to whistle another tune?

The UK’s approach to whistleblowing needs reforming. Currently, the Public Interest Disclosure Act 1998 (PIDA) offers the only legislative “protection” for those reporting wrongdoing. However, this is limited to employment situations, such as speaking out against an employer, and offers no protection to those raising concerns about clients, suppliers, contractors and other parties. Self-employed workers and volunteers are also left out.

For those protected, any redress is limited to what is achievable through an employment tribunal. Individuals who have been dismissed or believe they have suffered detriment because of a disclosure may bring a claim for unfair dismissal, potentially leading to their re-instatement, re-employment or compensation. The individual is also protected from other potential detriment, such as being denied promotion, for which compensation may be awarded. However, taking action in an employment tribunal can be costly – both in time and money – and any benefit obtained will rarely offset the often career damage caused. This is particularly problematic for those starting their careers.

PIDA does little to encourage whistleblowers: it provides no guarantee that a disclosure will be investigated, or any action taken, nor does it penalise an employer or public body for not doing so. Rather, those speaking out are often ignored and suffer retaliation from their employer and an irretrievably damaged relationship. Consequently, many are afraid to come forward, which undermines the tackling of corrupt and unethical behaviour.

Previous reforming attempts

As Baroness Jones of Moulsecoomb recently stated the current system offers whistleblowers “after-the-event protection” that does not resolve the underlying issue. However, the introduction of the Protection for Whistleblowing Bill (the Bill) in June 2022 by Baroness Kramer offered a glimmer of hope.

The Bill is not the first of its kind. A similar version introduced by Baroness Kramer in the in the 2021-22 parliamentary session made it to its second reading, and a private members’ bill titled ‘Whistleblowing Bill’ had its first, but both failed to make it further before the session ended. Clearly, an appetite for reform remained, as the latest Bill had its second reading in December 2022.

The Bill proposed repealing PIDA and introducing a new legal framework. Central to this would be the creation of an Office of the Whistleblower, which would be “setting minimum standards for whistleblowing policies and enforcing compliance of organisations with those standards”. The office would also monitor investigations to ensure that disclosures were followed by appropriate action.

Crucially, the office would have powers to protect whistleblowers. This includes the ability to issue an interim relief order, if a whistleblower were at risk of retaliation, or an order to pay compensation. In contrast to the employment tribunal, the office would offer swift resolution without cost to the whistleblower.

The Bill also recommended the creation of a criminal offence of subjecting a whistleblower to detriment, and the ability to impose civil penalties on persons who do not comply with obligations placed on them by the office.

Government response

Despite the Bill gaining widespread support, in the House of Lords and from other interested parties such as Whistleblowing UK, the government concluded that it is not currently the right solution. Concerns were twofold. Of practical concern was that the Bill precedes a planned review into the position of whistleblowers. More substantively, the government was also concerned with the approach taken to whistleblowing policy, such as that imposing overarching standards could “jeopardise the ability of regulators to develop whistleblowing frameworks that are responsive to the specific challenges in their particular sector”.

Bruised but not defeated, Baroness Kramer urged the government to pick up the Bill or proceed with its review urgently.

What next?

Although the Bill will now face a Committee of the Whole House, it is clear that the government is not convinced.

It is, however, undoubtedly interested in reviewing the whistleblowing framework. Their commitment was recently affirmed in a Lords Chamber debate on the Economic Crime and Corporate Transparency Bill, on 8 February 2023, although the scope and timing of such a review remain unknown.

A focus of the review is likely to be whether PIDA protections can be extended to a wider group of individuals, such as the self-employed, as is the case under the EU Whistleblowing Directive. Also, any review will need to consider the implications of departing from an employment tribunal system, and what – if not the Office of the Whistleblower – would replace it.

Perhaps the government will take note of the success that rewarding whistleblowers has had in the US, since the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (CPA 2010). For those who disclose information regarding securities violations or bribes paid to foreign officials, the CPA 2010 awards 10% to 30% of any money the Securities and Exchange Commission (SEC) recovers over USD$1million from an offending party. The SEC has awarded more than USD$1 billion to whistleblowers since the programme’s inception in 2011, proving how valuable disclosures are.

Despite the impressive figures, many whistleblowers will receive nothing. Accordingly, were the UK to adopt this approach, sufficient compensation and other forms of redress must also be available. Note that the Competition and Markets Authority currently offers rewards of up to £100,000, in exceptional circumstances, for information about cartel activity. Although an inadequate reward for the potential harm to someone’s career, the government should consider whether any elements of this scheme could apply to a UK-wide approach to whistleblowing.

Whatever legislative action may be taken, it is hoped that this will trickle down to organisations’ approach to whistleblowers. Creating a culture where individuals can speak out and be listened to has dual benefits: it stops issues escalating as wrongdoing can be addressed early and it also enables organisations to manage the extent of the harm caused. A whistleblower who feels ignored can report the issue to a regulator or prescribed body and, in this case, the organisation loses the ability to decide its approach to the disclosure, including whether it would benefit from self-reporting. Consequently, if wrongdoing is then identified, not having addressed or disclosed it may increase the penalty imposed.

What happens next remains to be seen, but change seems inevitable. Hopefully, the UK government will prioritise a review, without which it seems unlikely that any bill will succeed. In the meantime, those who are contemplating blowing the whistle must remain aware of the risks involved and be prepared for a rough ride.

This article was first published in the YFLA winter newsletter and is reproduced with permission.