Mon 29 Oct 2018

Personal liability for whistleblowing dismissal

A Court of Appeal judgement on personal liability for whistleblowing detriment leading to dismissal.

The Employment Rights Act 1996 protects workers and employees from both dismissal and detriment on the grounds that they made a protected disclosure.  Employees can claim unfair dismissal against their employer if they are dismissed, and for detriment if the action complained of is short of dismissal.  An employee cannot though claim for a detriment amounting to a dismissal - their only remedy against the employer, in those circumstances, is that of unfair dismissal.  Since 2013 it has also been possible to make detriment claims against co-workers (but not unfair dismissal claims). 

In Timis & Anor v Osipov & Anor Mr Osipov had made disclosures relating to IPL's corporate governance and compliance with Nigerian law, following which he was subjected to detriments. This included Mr Sage, a non executive director and Chairman of the company, dismissing Mr Osipov on the instruction of Mr Timis, another non executive director (and the company's largest individual shareholder). 

An Employment Tribunal found that the principal reason for the dismissal was the making of the protected disclosures and that IPL had unfairly dismissed Mr Osipov.  It also found that by their conduct, in relation to the dismissal, Mr Sage and Mr Timis had subjected Mr Osipov to detriments.  One of those detriments was the instruction given by Mr Timis to Mr Sage which culminated in the dismissal of Mr Osipov.  The Tribunal found IPL responsible for all of the detriments and Mr Timis and Mr Sage responsible for some of them, including the instruction which led to the dismissal. 

Both men were held to be jointly and severally liable with IPL to compensate Mr Osipov for losses suffered as a result of the dismissal.  The Tribunal awarded £1.745 million in compensation which included an award for "unfair dismissal and detriment for making protected disclosures" but it did not specify how much was attributable to the unfair dismissal claim and now much related to the detriment claim.  At a further Tribunal hearing to decide the final compensation the issue of liability for the award was addressed.  The upshot of that was that although Mr Sage and Mr Timis  were not held liable for the unfair dismissal, they were liable for the losses Mr Osipov suffered in consequence of the dismissal on the basis that those losses flowed from the pre-dismissal detriments for which they were liable, specifically the instruction to dismiss. 

Mr Sage and Mr Timis appealed to the EAT but were largely unsuccessful with only the basic award (which is awarded in unfair dismissal claims but not in detriment claims) being allocated to IPL.   The compensation figure was also corrected to be just over £2 million.

Mr Timis and Mr Sage appealed to the Court of Appeal arguing that section 47B(2), which prevented employees from making claims of detriment amounting to dismissal, meant that neither of them could be liable for the instruction to dismiss or the losses which flowed from the dismissal.  They argued that those should be met by IPL in consequence of the successful unfair dismissal claim.

The Court rejected that argument.  It concluded that it is open to an employee to bring a detriment claim against a co-worker for subjecting him to the detriment of dismissal and to claim vicarious liability for that act against the employer.   According to the Court, all that section 47B(2) does is exclude the employee from making a claim of detriment of dismissal against the employer.  Further, where a claim is made based on a distinct prior detrimental act done by a co-worker which results in a dismissal, the dismissed employee can recover losses flowing from that dismissal as long as they are not too remote. 

This decision should make those responsible for making decisions to dismiss in cases like this think twice about their actions. In addition, employers wanting to establish the defence that they took all reasonable steps to prevent the detriment occurring should consider tailored training for their employees to mitigate the risks.

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