Can an individual be liable for a whistleblowing dismissal?

Can an individual be liable for a whistleblowing dismissal, along with the employer?

Under UK legislation, an employee has the right not to be subjected to a detriment for making a protected disclosure, commonly referred to as “whistleblowing”.

Whistleblower

A whistleblower is a person who exposes any kind of information or activity that is deemed illegal, unethical, or not correct within an organisation that is either private or public.

Protected disclosure

A qualifying disclosure which is made by a worker and fulfils certain requirements under the Public Interest Disclosure Act 1998 (known as the whistleblowing legislation). Workers who make a protected disclosure are protected against dismissal and victimisation in respect of the disclosure, i.e. this protection applies to detriment by the employer as well as detriment by the employee’s colleagues.

In cases of detriments by co-workers, it will be treated as also having been done by the employer, subject to a reasonable steps defence.

Employees are prevented from bringing detriment claims where the detriment in question amounts to dismissal and are instead required to bring an unfair dismissal claim. However, a worker (who is not an employee and therefore not eligible to claim unfair dismissal) can bring a detriment claim in respect of their termination. Employees can also claim automatically unfair dismissal if the “sole or principal reason” they are dismissed is that they have made a protected disclosure.

What happens when the detriment is a dismissal?

The employee would need to bring a claim against the employer for automatic unfair dismissal, in which case the key issue will be whether the reason, or principal reason, for the dismissal is that they have made a protected disclosure. An unfair dismissal claim can only be brought against the employer.

The Court of Appeal has recently considered a case which bought the interrelationship between these two potential claims under closer inspection.

Timis v Osipov

In the case of Timis v Osipov, Alexander Osipov was employed by an oil exploration company called International Petroleum Ltd (IPL) as its CEO. He made a number of disclosures that were protected under whistleblowing provisions. Two Directors of IPL, Mr Timis and Mr Sage, took the decision to dismiss Mr Osipov.

A tribunal held that Mr Osipov had been unfairly dismissed contrary to section 103A of the Employment Rights Act. However, the employer became insolvent. Could Osipov go against the directors personally?

The Employment Tribunal went on to find that, by their conduct in relation to the dismissal, Mr Sage and Mr Timis had subjected Mr Osipov to a detriment. It found that they were jointly and severally liable with the employer to compensate Mr Osipov for the £1,744,575.56 losses suffered as a result of the dismissal. The Employment Appeal Tribunal agreed and upheld the decision.

Although Mr Timis and Mr Sage were not liable for the unfair dismissal itself, they were held personally liable with the employer for the losses that Mr Osipov suffered as a consequence of the dismissal. This was on the basis that the losses flowed from the instruction to dismiss him, which was a detriment.

Compensation as individuals

Paul Burton, Head of Frettens' Employment Team, comments on the ruling, saying "The key issue for the Court was whether it was open to the Employment Tribunal to award Mr Osipov compensation against Mr Sage and Mr Timis, as individuals, for the losses caused by the dismissal. This is the first case in which the Employment Appeals Tribunal has held that individuals can be liable for dismissal related damages in claims brought under section 47B of the Employment Rights Act."

Mr Sage and Mr Timis argued that compensation could only be awarded for unfair dismissal, and therefore only against the employer. The Court disagreed and found that Mr Osipov could claim against both men on the basis of their responsibility for the dismissal itself and upheld the Employment Tribunal’s decision.

In this case, the employer is insolvent and Mr Osipov was looking to recover compensation from Mr Sage and Mr Timis personally. The issue of personal liability was therefore an important one.

Personal liability

Paul concludes "This case serves as a reminder to employers and directors that individuals can be personally liable for acts of whistleblower detriment done by them, irrespective of the liability of the employer. The dismissed employee can bring a claim for automatic unfair dismissal against the employer; plus a claim against a co-worker for subjecting them to a detriment resulting in the dismissal i.e. for being a party to the decision to dismiss."

The employer may also be indirectly liable for the acts of the co-worker unless it has taken reasonable steps to prevent that co-worker from acting in the way complained of. The co-worker can be held personally liable for the losses flowing from the dismissal.

In a final warning, Paul reminds employers "An employee does not have to have 2 years’ qualifying service to bring a claim; and there is no cap on the compensation that can be awarded if the claim succeeds. Given the risk and potential costs involved, employers should be aware of their obligations and consider introducing or reviewing their whistleblowing policies and training. I am happy to assist should you need any guidance."

The full judgement of the case can be read here, on BAILII, where you can find British and Irish case law & legislation, Timis v Osipov.

 

At Frettens, all of our solicitors offer a free initial meeting or chat on the phone to answer your questions. If this article raises issues for you or your business, please call us on 01202 499255 and Paul or Kate will be happy to discuss it with you.