The ability for staff to blow the whistle is always a very contentious issue.
The Public Disclosure Act 1998 has been in force for two years and a number of employment tribunal cases are now starting to filter through. The main provisions of the act protect individuals who disclose information about certain kinds of wrongdoing against dismissal or detriment at the hands of their employers. For an employee to receive protection, the following three questions must be answered positively:
Has the individual made a qualifying disclosure?
Has the individual followed the correct disclosure procedure?
Has the individual been dismissed or suffered a detriment as a result of making the disclosure?
Section 103(a) of the Employment Rights Act provides that the dismissal of an employee will be unfair if the reason for the dismissal was that the employee made a protected qualifying disclosure. It is important to bear in mind that an employee does not require one year's service to be able to bring a claim and that the normal £51,700 limit on compensatory awards for unfair dismissal does not apply to Public Interest Disclosure Act dismissals.
This should be enough for employers to consider the act very carefully and implement a public interest disclosure policy which details how and in what circumstances an employee can make a protected disclosure to their employer. It is also worth bearing in mind that an employee has the right not to be subjected to any detriment by their employer on the grounds that they have made a protected disclosure. Disciplinary action would constitute a detriment.
Development of the law
None of the claims brought under the act have as yet reached the employment appeal tribunal and, therefore, case law is based on decisions of the employment tribunal.
In the case of Stephens v Hall and Others Trading in Partnership as English Coombe House Residential Home, Ms Stephens was employed as a night supervisor by the employer, a partnership which provided beds for mentally confused elderly people. After working for the partnership for just three months, Ms Stephens left its employment and contended that she had been dismissed as a result of making two protected disclosures covered by the act.
First, she had informed management of her concerns that casual employees might be paid cash in hand and, second, after a resident had fallen and broken his hip, Ms Stephens had complained to management that senior staff had been ineffective in obtaining quick and effective treatment for the residents.
The employment tribunal found the cash-in-hand issue was not a qualifying disclosure and she had simply responded to information given to her by expressing her disapproval. However, the tribunal did agree with Ms Stephens in relation to her report about the inadequate treatment of a patient.
The tribunal found that her complaint that medical treatment had not been administered properly amounted to a complaint about health and safety and was, therefore, a qualifying disclosure under Section 43(b) of the Employment Rights Act.
However, a finding of the making of a qualifying disclosure was not sufficient to result in a finding of dismissal as a result of the disclosure. The tribunal, in fact, found that Ms Stephens had not been dismissed but rather had resigned on discovering that her colleagues were no longer willing to work with her because she took frequent cigarette breaks, leaving others to do the required work. Ms Stephens was not, therefore, dismissed as a result of making her disclosure.
With the right of an employee to disclose and be protected by the act, IFA practices need to beware.
The tightening regulatory regime, money laundering regulations and the general higher level of scrutiny mean that IFA practices employing staff need to make sure they protect themselves by having a clear policy on disclosure. You have been warned.
Gareth Fatchett is principal at financial services lawyer Armstrong Neal Financial Solicitors and a director of ProAct If you have any questions for Money Marketing's legal surgery, please email them to firstname.lastname@example.org.
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