Liability for Individuals (as well as employers) in Whistleblowing Cases

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26 October, 2018

The recent case of Timis v Osipov [2018] EWCA Civ 2321 is sure to have created uncertainty and worry in boardrooms throughout the country. The Court of Appeal held that two individual directors must pay out £2 million in a landmark whistleblowing decision.

The judge held for the first time that individuals can be responsible for dismissal related detriments which they inflict on whistleblowing claims.

How did this come about, you ask?

The facts

In Timis and Sage v Osipov, Mr Osipov was an employee of International Petroleum Limited (IPL), an oil and gas exploration company. Alexander Osipov alleged that he was dismissed on the ground that he had made a number of protected disclosures. This was on the recommendation of two directors at the company, Mr Timis and Mr Sage. Mr Osipov brought a claim for unfair dismissal against IPL and for detrimental treatment against Mr Timis and Mr Sage. The employment tribunal held that he had been unfairly dismissed as a result of making protected disclosures ('whistleblowing') and awarded him over £1.7m in compensation to be paid by IPL, Mr Timis and Mr Sage jointly.

IPL became insolvent which brought up the question, could Osipov go against the individual directors personally? The tribunal held that he could. Due to their conduct in relation to his dismissal, the directors had subjected Osipov to a detriment contrary to section 47B(1A) of the Employment Rights Act. This section prohibits whistleblower detriment by workers working for the same employer, as well as by the employer itself. Accordingly, the directors were jointly and severally liable, along with the employer, to compensate for the losses suffered as result of his dismissal. This was upheld by the Employment Appeal Tribunal.

Mr Timis and Mr Sage appealed again to the Court of Appeal. They argued that the whistleblowing legislation does not permit an employee to bring a detrimental treatment claim where the detriment relied on is dismissal. Instead the employee can only bring an unfair dismissal claim against the employer. The Court of Appeal dismissed the appeal.

What does this case mean for individuals making decisions for an employer?

This case highlights significant risks for individuals making decisions for an employer as a claim for whistleblowing detriment can include dismissal and result in significant awards in compensation. As a result of this outcome we may find more and more claims being brought against individual decision makers, such as the non-executive directors in this case, for tactical reasons and to secure compensation awards against both the decision maker and also the employer.

Given that there is now an increased risk of claims, both against individuals who the employer is vicariously liable for and the employer, companies need to make it a priority to ensure that they have appropriate and effective whistleblowing procedures in place. This includes, identifying any potential whistleblower complaints at an early stage and also isolating the complaints from any other processes which involve the employee in question such as a grievance or disciplinary process.

Companies now need to ensure that directors or managers who will be involved in the internal HR processes and decision making are well trained in recognising whistleblowing issues and are aware of how to effectively and efficiently deal with them.

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