UK court rules employers not vicariously liable for employees who victimise whistleblowers

The UK Court of Appeal has ruled, in the case of NHS Manchester v Fecitt & Others, that an employer cannot be vicariously liable for acts of victimisation by its employees against whistleblowers. The Court also clarified the correct test for determining whether a worker has suffered a detriment on the ground of making a protected disclosure (ie. whistleblowing). The Court decided that to avoid liability under the whistleblowing legislation, the employer must show that the employee’s protected disclosure did not materially influence (i.e. more than trivially influence) the employer’s treatment of that employee.

The whistleblowing legislation provides protection in two ways. First, dismissal of an employee is automatically unfair if the principal reason for dismissal is that they have made a protected disclosure. Second, workers have a right not to be subjected to a detriment by their employer on the ground that they have made a protected disclosure. This case concerned the second of these protections. 

What happened in this case?

Mrs Fecitt and two of her colleagues raised complaints with Mrs Fecitt’s manager about a fellow employee, Mr Swift. They suggested that Mr Swift had been misrepresenting his professional qualifications to other members of staff at an NHS Walk-In Centre in Manchester. The complaints amounted to protected disclosures falling within the scope of the whistleblowing legislation. Mr Swift admitted that he had misrepresented his qualifications to his colleagues and apologised. As Mr Swift had not misrepresented his qualifications to the employer and had given assurances that he would not repeat his behaviour, Mrs Fecitt’s manager decided to take no action. Mrs Fecitt and her colleagues were not happy with the outcome and persisted with their complaint to successively more senior levels of management.

Relations within the Walk-In Centre deteriorated, with some members of staff siding with Mrs Fecitt and her colleagues and others siding with Mr Swift. Mrs Fecitt and her colleagues alleged that, as a result of raising their complaint about Mr Swift, they had been subjected to isolation and daily personal insults at work. Mrs Fecitt also alleged that she had received an anonymous telephone call in which the caller had threatened to burn down her house unless she withdrew her complaint against Mr Swift and a photograph of Mrs Fecitt has been displayed on Facebook which had caused her distress.

Management attempted to encourage the employees at the Walk-In Centre to work together, but without success. Eventually, Mrs Fecitt and a colleague were relocated while another colleague was no longer offered shifts at the Walk-In Centre, as management believed this was the only way to resolve the conflict at the site. 

Mrs Fecitt and her colleagues complained to an Employment Tribunal that they had been subjected to a detriment on the ground of having made a protected disclosure.

The Employment Tribunal rejected the Claimants’ complaints. It accepted that the Claimants had made protected disclosures and had been subjected to a detriment by their colleagues. However, it did not consider that the actions of NHS Manchester or its failure to act constituted a detriment on the ground that the Claimants had made a protected disclosure.

The Claimants alleged that management had failed to take proper steps to prevent victimisation, but the Tribunal disagreed, saying that a reasonable amount of pro-active engagement by NHS Manchester with a view to preventing such a situation continuing was required and NHS Manchester had provided that. The Tribunal said that although the employer was open to criticism for not protecting the Claimants more effectively than they did, their failure to act more robustly was not deliberate and was not because of the protected disclosure that had been made.

As regards the redeployment/ceasing to provide shifts, the Tribunal said that NHS Manchester acted in the way that it did because it appeared to management to be the only feasible method of resolving the breakdown in the working relationships in the Walk-In Centre. The employer had not acted in the way that it did on the ground that the employees had made protected disclosures.

The Employment Appeal Tribunal (“EAT”) overturned the Tribunal’s findings. The EAT said that, in order to escape liability, NHS Manchester would need to show that their actions/alleged failures to act were “in no sense whatsoever” on the ground that the Claimants had made a protected disclosure. As the Employment Tribunal had not applied the correct test, the matter was sent back to the Tribunal to make a determination using that test. Additionally, the EAT found that NHS Manchester was vicariously liable for the victimisation carried out by its employees against the Claimants. 

On appeal, the Court of Appeal restored the Tribunal’s decision.

In relation to the allegations regarding redeployment/ceasing to provide shifts and failure to act to prevent the victimisation and whether these actions/failures were “on the ground” that the Claimants had made a protected disclosure, the Court of Appeal held that the Tribunal had applied the right test. The Tribunal was clearly satisfied that the reasons given by NHS Manchester for doing what it did were genuine, and the fact that the Claimants had made protected disclosures had no influence on its decisions. It agreed with the Tribunal’s reasoning and ruled that the proper test was whether NHS Manchester had shown that the Claimants’ protected disclosures had not “materially influenced” (in the sense of being more than influenced to a trivial extent) the employer’s treatment of them. 

The Court of Appeal also overturned the EAT’s decision on vicarious liability. It found that because there is no provision making it unlawful for employees to victimise whistleblowers, then since the employees who had allegedly victimised the Claimants could not themselves be personally liable under the whistleblowing legislation, NHS Manchester could not be vicariously liable for their conduct. 

What does this case mean for employers?

It will be welcome news to employers that they cannot be held to be vicariously liable for their employees’ acts of victimisation against whistleblowers. However, this does not mean that employers can get away with turning a blind eye to this type of situation. While an employer may not be vicariously liable for its employees’ acts of victimisation against whistleblowers, it can be vicariously liable under other legislation such as the Protection from Harassment Act. Furthermore, an employer that does not do enough to prevent an employee being victimised by other employees for blowing the whistle can itself be liable if its failure to act can be shown to be on the ground that the employee has made a protected disclosure. In this case, the Tribunal considered that the NHS Manchester had done enough. If, however, the fellow employees who victimised Mrs Fecitt had been individuals to whom she had directly or indirectly reported, the outcome could have been different, as their actions in that event could have been held to be actions of the employer itself.   Also, a further point is that an employee who feels sufficiently aggrieved by an employer’s actions in a whistleblowing situation may argue that the employer has acted to destroy the relationship of trust and confidence and bring a claim for constructive unfair dismissal.

Public Concern at Work, the whistleblowing charity has now called for a Government review of the legislation to ensure that whistleblowers are protected in situations such as those which arose in this case. It is concerned that if an employer does not do enough to protect staff from retaliation, then workers may stay silent rather than blowing the whistle in the public interest. In the NHS, where this has been a particular problem of late, the Department of Health has announced changes for early 2012 to ensure that NHS staff will receive greater support if they raise concerns.

Financial Regulators Set Out to Get Their Man: Federally Mandated Bounties and Anti-Retaliation Provisions Designed to Regulate the Financial Services Industry

This post was written by David Krulewicz and Stephanie Wilson.

As stated in our previous blog posting, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or the “Act”) into law on July 21, 2010, with the objective of ushering in a new era of financial regulation and transparency. The Act’s range encompasses not only the usual group of financial services employers, but it extends to mortgage brokers and insurance adjusters as well. Portions of the Act, including those discussed below, went into effect immediately. However, portions of the Act have left more questions than answers as to what long-term impacts the legislation will have on the financial industry. 

A few of the Act’s highlights include bounty provisions, additional changes to the Securities Exchange Act of 1934 and changes to amend SOX’s anti-retaliation provisions in a number of ways. A brief list of actions that employers can take is also noted.

To read the full alert, please click here

Changes in Employment Law for April 2010

In force from today are a number of legislative changes which will be of interest to employers. These include the new right to request time off to train and the replacement of sick notes with “fit notes”. Also expected to come into force today are various regulations relating to additional paternity leave which will affect parents of babies born or expected to be born on or after 3rd April 2011 and parents who are notified of having been matched for adoption on or after that date. For the moment, however, they still appear in their draft form but will no doubt come into force shortly.

New right to request time off to train

From 6 April 2010 employees working for employers with 250 or more employees have a new right to request time off to train. As from 6 April 2011, the right will extend to all employees, regardless of the size of their employer. The right will be available to employees only (not to other “workers”) and is subject to a qualifying period of service of 26 weeks. Employers are required to consider all requests seriously and follow a prescribed procedure. They may only refuse a request if they think that one of a number of specified business reasons set down in section 63F(7) of the Employment Rights Act 1996 apply. An employee whose application is refused can bring a claim before an Employment Tribunal but their remedies are limited to compensation of up to eight weeks’ pay and/or an order for the employer to reconsider the application.

For more information see the Government’s business link website

Employers should review carefully the detail of the new rules and adapt their time off work policies accordingly.

“Fit notes”

A new system of “fit notes” comes into use from 6 April 2010, replacing the old form of medical certificate issued by GPs. The purpose of the new fit notes is to focus attention on how an employee can be assisted in his or her return to work by encouraging communication between the patient and the GP, as well as between the employer and employee. The GP is required to complete a form indicating whether they consider a phased return to work, altered hours, amended duties and/or workplace adaptations would enable the employee to return to work. The responsibility, however, will be on the employer to determine whether an employee is fit to return to work in light of the GP’s advice. The new fit note regime will not remove the desirability of obtaining special medical reports, particularly where the employer suspects that the employee’s condition may amount to a disability.

For further information click on the link to the HSE website.

Employers are advised to revise their sickness policies to provide for return to work interviews following the issue of a fit note. The return to work interview will be for the purpose of discussing with the employee any additional measures that may be needed to facilitate their return to work, taking account of their doctor’s advice.

Regulators to be informed of whistleblowing claims

Where a claimant makes a whistleblowing allegation in his or her Employment Tribunal Claim Form (ET1), the Tribunal has, from 6 April 2010, the power to pass on the ET1 to the appropriate regulators provided the claimant consents (by ticking the relevant consent box on the form). The regulator will then be able to investigate the malpractice which has been referred to in the claim form. New ET1s containing the new tick box should be available as from 6 April 2010. The explanatory memorandum on the relevant new regulations explains that the new procedure will enable the whistleblowing allegation to be assessed by Tribunal administrative staff and, where appropriate, acted upon “without involving the release of unsubstantiated allegations into the public domain”. 

Employers should be aware that claimants may be tempted to tick the box indicating their consent to passing on relevant information to the appropriate regulator as a bargaining tool in negotiations in order to force a settlement of their claim. Another point to note is that where the claim is settled or withdrawn, there appears to be no mechanism for the regulator to be informed so presumably the regulator’s investigation may continue independently of the claim.

The Employment Tribunals (Constitution and Rules of Procedure) (Amendment) Regulations 2010

Employment Tribunal “Fast Track” Scheme introduced

A fast track scheme to help successful claimants recover compensation from their employer is introduced from 6 April 2010. If an employer fails to pay any Tribunal award, employees will have access to an extended service from the High Court Enforcement Officers. There will be a £50 court fee payable by the employee which will be added to the amount owed to them by their employer. 

For information see Ministry of Justice press release.

Additional Paternity Leave and Pay

Regulations introducing Additional Paternity Leave (APL) and pay are expected to come into force on 6 April 2010. For the moment they are still in draft form.  Once in force, the new regime will entitle eligible employees to take up to 26 weeks’ APL if the mother (or adopter) returns to work before using his/her full entitlement to 12 months’ statutory maternity/adoption leave. Eligible employees will usually be fathers but in the case of same sex couples, for example, it could include the partner of the mother or adopter who has not taken adoption leave. The father will need to have been continuously employed for 26 weeks or more by the end of the fifteenth week before the child’s expected week of birth (or being notified of having been matched for adoption). The earliest that the father (or adopter) will be entitled to take APL is twenty weeks after the child is born (or placed for adoption) and there is no further right to take leave after twelve months after the child’s birth (or placement). APL may be paid if taken during the mother or partner’s statutory paid maternity leave or paid adoption leave period;   leave taken after that period will be unpaid. Employees taking APL will qualify for Statutory Paternity Pay if they have average weekly earnings equal to or greater than the current lower earnings limit for National Insurance contribution purposes. Statutory Paternity Pay will be paid at the same rate as the standard rate of Statutory Maternity Pay. These new rights apply in respect of parents of babies born or expected to be born on or after 3 April 2011 or who have been notified of being matched for adoption on or after 3 April 2011.

For more information click on the BIS link.

Employers are advised to review carefully the new rules relating to Statutory Paternity Pay and Leave and to introduce new policies dealing with any employee who is expecting a baby on or after 3 April 2011.

Maternity, Paternity and Adoption Pay increased; SSP to remain the same

As from 4 April 2010 the standard rates of Statutory Maternity, Paternity and Adoption Pay will increase for £123.06 to £124.88. Statutory Sick Pay will remain unchanged at the current rate of £79.15 per week.

New anti-slavery laws

A new law protecting vulnerable workers from slavery and forced labour comes into force on 6 April 2010. The new criminal offence, which will help protect migrant workers from abuse by unscrupulous employers is made under section 71 of the Coroners and Justice Act 2009 and carries a maximum penalty of 14 years in prison. The offence will apply to anyone who holds a person in contravention of the Act, not just employers. We thought slavery had already been abolished but it would appear that the current law only covered trade in slaves and trafficking people for labour exploitation. However, the new law applies even if there is no trafficking. The Government has said that factors that may point to forced or compulsory labour include withholding the worker's documents, such as a passport; the worker being forced to live or remain in a particular area, perhaps in poor accommodation; and the employer not paying agreed wages.