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The Court of Appeal has made it easier for employers to be vicariously liable for whistleblowing claims

Posted on 13 December 2018

The Court of Appeal has made it easier for employers to be vicariously liable for whistleblowing claims

The Court of Appeal has upheld an Employment Appeal Tribunal ruling which irons out a quirk in the whistleblowing legislation. A whistleblower who is subjected to a detriment by a co-worker can claim damages from that individual. However, before this ruling, that right would not apply if the detriment that the employee had suffered was their dismissal. If dismissed, the employee could only bring a claim against their former employer. Strangely, they would no longer have the option of claiming against the individual.

In Timis & Sage v Osipov, the Claimant, Mr Osipov, was in the unusual position of wanting to claim against two directors at his former employer, rather than the employer itself. He had been CEO at International Petroleum Limited (IPL), an oil and gas exploration company. He was dismissed after making protected disclosures about the company's activities in Niger. Mr Timis and Mr Sage decided to dismiss Mr Osipov. They were also careless enough to accidentally send Mr Osipov a private email which made it clear that the reason for their decision was his protected disclosures. IPL was insolvent and would not be able to compensate Mr Osipov for his significant losses. Instead, he claimed against Mr Timis and Mr Sage, both of whom had significant personal wealth.

The detriment that Mr Osipov claimed was Mr Timis and Mr Sage's decision to dismiss him. The actual dismissal was brought about by the email communicating their decision to dismiss. Mr Osipov argued that any attempt to try and separate the decision and the mere communication of the decision felt artificial. They clearly formed part of the same detrimental act. As the legislation allowed Mr Osipov to make Mr Timis and Mr Sage personally liable for subjecting him to a detriment, he argued it did not make sense to limit that right now that it was clear that the detriment was the decision to dismiss him. Why have a regime that makes individuals liable for all sorts of detriments but not what is arguably the worst one, the dismissal?

The Court of Appeal found in favour of Mr Osipov, agreeing that, in this case, the decision to dismiss and the dismissal itself were one and the same and to prevent him from claiming against Mr Timis and Mr Sage simply because he had suffered dismissal rather than a less severe and isolated detriment risked producing an "incoherent and unsatisfactory result".

Considerations for employers

In practical terms, the ruling has brought whistleblowing protection closer to the protection granted by the discrimination regime. In both, a dismissal is now a form of detriment for which both employers and individuals can be liable. We have become used to seeing individuals named as a second respondent in discrimination claims. We should expect this to become a more common occurrence in whistleblowing claims as well.

Both regimes now enable claimants to bring proceedings relating to "Iago" co-workers who feed poisonous, tainted or untrue information to their employer, manipulating them to dismiss. Previously, if the decision-maker for the dismissal was oblivious to the fact that an employee had blown the whistle, an employer could escape liability for the whistleblowing claim because there was no causal link between the protected disclosure and the dismissal. Thanks to Osipov, this is no longer the case. The dismissed employee can bring a claim against "Iago" for manipulating the employer into the decision to dismiss and the employer could be vicariously liable for that act as well.

To escape vicarious liability for the conduct of its employees or workers, an employer must demonstrate that it took all reasonable steps to prevent the damaging behaviour. This is a high bar. At a minimum, there should be a policy in place to deal with whistleblowers. Line managers and HR should be fully trained and up to speed on whistleblowing. They must be able to quickly identify and respond to a whistleblower and understand their accompanying rights. A decision to dismiss a whistleblower should not be undertaken lightly or without careful consideration of the risks.

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