Since the introduction of the Public Interest Disclosure Act in 1998 there has been much interest in what amounts to a ‘disclosure’ for the purposes of securing the protection of the whistle blowing legislation. The case of Parkins v Sodexho caused alarm in 2002 as it seemed to suggest that merely raising a complaint of breach of contract against the employer is sufficient to bring the whistle blowing legislation into play. However a recent decision of the Employment Appeal Tribunal in the case of Cavendish Munro Professional Risks Management Ltd v Geduld seems to suggest a more ‘common sense’ approach should be adopted. Anne Palmer explains more.
- Section 47B of the Employment Rights Act 1996 (the “ERA”) provides that a worker must not be subjected to any detriment by their employer on the grounds they made a protected disclosure.
- Section 47B(1) goes on to provide that a qualifying disclosure (i.e. a protected disclosure) is any disclosure of information which, in the reasonable belief of the worker making it, tends to show among other things, that a person has failed to comply with any of his legal obligations.
- Section 43F provides that a qualifying disclosure is made if the worker reasonably believes that the information disclosed, and any allegation contained within it, are substantially true.
In this case the Claimant, Mr Geduld (“G”) became a director, shareholder and employee of the Cavendish Munro Professional Risks Management Ltd Company (“C”) in March 2007. Unfortunately it was not a successful union and by late 2007 the relationship between G and the other directors of C had become hostile. A meeting took place between the directors on 3 January 2008 following which G was presented with 3 options:-
- Resign his directorship and involvement in day to day company matters with a reduction in his shareholding, whilst remaining an employee.
- Resign his directorship, maintain the same shareholding and have only a basic contract of employment.
- To agree an exit from C.
In response to these options G arranged for his solicitor to send a “without prejudice” letter (the “Letter”) to C which included the following wording:-
- “…We have given advice to our client regarding his rights as a shareholder, director and employee. Such advice includes the purported agreement between the parties signed immediately before the Christmas break but ‘back dated’. There are a number of issues regarding the validity of such an agreement and the unfair prejudice to our client, taking into account the events leading up to and immediately after the signature of the Agreement.”
- “…If it is not accepted in its entirety then our client will take all steps that are necessary to protect his position including issues regarding the purported shareholders agreement; the actions of the company’s accountant regarding the purported valuation and the various threats and circumstances surrounding the position our client finds himself in with the remaining two shareholders which has led to unfair prejudice upon our client as a shareholder by the company.”
On receipt of the Letter C dismissed G with immediate effect. G had less than a year’s service and therefore bought an automatically unfair dismissal claim in accordance with section 103 of the ERA which provides that if the principal reason for an employee’s dismissal is the fact they have made a protected disclosure, their dismissal will be automatically unfair.
G based his claim on the premise that he had been dismissed as a direct result of the Letter which contained a qualifying disclosure as it referred to legal obligations with which the other directors had failed to comply.
The Tribunal Decision
The Tribunal agreed with G and found that as the Letter did refer to legal obligations the test set out in section 47B(1) was met. They also found that G had a reasonable belief in the likely failure of C to comply with any legal obligations.
The Employment Appeal Tribunal
C appealed, arguing that section 43 of the ERA required a disclosure of information and that simply voicing a concern, raising an issue or setting out an objection did not satisfy this requirement. The Letter that G had sent had done nothing more than raise concerns and issues, it did not show that a legal obligation had been breached.
The Employment Appeal Tribunal (the “EAT”) agreed with C.
In their decision the EAT concluded that since the Letter had been written as part of an ongoing unresolved dispute between the parties, it did not disclose any facts and merely summarised the position G had adopted.
The EAT also acknowledged that legal advisers are frequently asked to write on behalf of aggrieved employees, setting out ultimatums for their employers that if the situation does not improve the employee will assert their rights for example by resigning and claiming constructive unfair dismissal. In these circumstances no protected disclosure has been made. Similarly, the EAT confirmed, if an individual employee met the employer and made the same points – there would be no protected disclosure by that employee to the employer.
This is good news for employers as it undermines an employee’s ability to retrospectively claim they have made a protected disclosure during grievance or settlement negotiations.
The case has been appealed and the appeal hearing is due to take place on 17 February 2010. We will keep you updated with any developments.
During the course of the EAT hearing the following example was given in an attempt to clarify the distinction.
“The wards have not been cleaned for the past two week. Yesterday sharps were left lying around” would be a qualifying disclosure as it communicates information.
However, “You are not complying with Health and Safety requirements” would not be a qualifying disclosure as it merely raises an allegation and does not convey information