Never a Dull Moment in Employment Law: Whistleblowing and More

by Dechert LLP
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The Supreme Court’s recent decision quashing the Employment Tribunal fee regime is not the only recent employment law news of which UK employers need to be aware. This OnPoint summarises some other recent developments.

Non-Executive Directors Personally Liable for Dismissal of a Whistleblower

In International Petroleum Limited and others v Osipov and others, the Employment Appeal Tribunal (“EAT”)  found that two non-executive directors were jointly and severally liable with the employer company for some £1.7 million of compensation awarded to a whistleblower in respect of his dismissal because of the protected disclosures which he had made.

Mr Osipov was CEO of International Petroleum Limited, an oil and gas exploration company. Shortly after his appointment he made certain protected disclosures about the company’s corporate governance and legal irregularities in relation to proposed government contracts. Following Mr Osipov’s disclosures, he was subjected to a number of detriments, including being cut out of key parts of his CEO role, and ultimately he was dismissed. Two non-executive directors, who were also significant shareholders, were effectively performing managerial and executive roles in the company and Mr Osipov sought to bring his claim of unfair dismissal on grounds of whistleblowing against them as well as his employer.

Since 2013 whistleblowers have had the right to bring a claim directly against fellow workers or agents of the employer who have subjected them to a detriment because of their whistleblowing. The employing company will be vicariously liable for that claim unless it can show that it has taken reasonable steps to prevent the individuals acting as they did. This might include, for example, providing appropriate training about how to treat whistleblowers.

In Osipov, the non-executive directors argued that, whilst they could be personally liable for pre-dismissal detriments, compensation relating to the employee’s dismissal was properly dealt with only by the unfair dismissal claim against the employing company and that they could not be liable for the part of the compensation award which related to the individual’s dismissal.

The EAT disagreed on the basis that otherwise individuals could escape liability for what is likely to be the most serious detriment that a whistleblower might suffer i.e. being dismissed from their job. It would also put employees in a less advantageous position than workers. Workers who are not entitled to unfair dismissal rights may bring a claim for detriment suffered by virtue of being a whistleblower. This includes all detriments including termination of their engagement. The compensation awarded to Mr Osipov included losses flowing from his dismissal and there was no reason, in the EAT’s view, to relieve the directors of that liability. The EAT considered that to interpret the whistleblowing legislation in this way would achieve Parliament’s aim in adopting the legislation - which was to protect whistleblowers from being subjected to unlawful treatment by fellow workers. 

Combined with the recent decision on what counts as the public interest for the purposes of a disclosure attracting the protection of the whistleblowing legislation, this decision increases the risks which employers face in the context of whistleblowing complaints. Given the possibility of whistleblowing claims being brought against senior executives involved in dismissal decisions as well as the employing company, this decision reinforces the need for employers to put appropriate policies and training in place in order to seek to reduce the risk of claims and to increase the chance of the employer being able to rely on the defence that it has taken all reasonable steps to ensure that whistleblowers are treated appropriately. 

Voluntary Overtime Must be Included in Holiday Pay

In Dudley Metropolitan Borough Council v Willetts and others, the EAT held that payments for voluntary overtime must be included in the calculation of holiday pay. 

The 56 claimants in Dudley were entitled to various payments in addition to their salary – including out of hours stand-by pay; a call out allowance; voluntary overtime and mileage or travel allowance linked to those items. On the facts of the case, the Employment Judge had concluded that these payments should be included in calculating the claimants’ holiday pay on the basis that they amounted to “normal remuneration”. The EAT agreed in a decision which is unsurprising given the direction of travel over recent years in relation to the calculation of holiday pay 

The EAT observed that the overarching principle (derived from EU law) in relation to the calculation of holiday pay is that “normal remuneration” should be maintained during holiday periods in order to ensure that the worker did not suffer a financial disadvantage which would deter him from exercising his holiday rights. The fact that pay may be split into different elements should not affect this right – and each element of pay must therefore be assessed to determine whether it is “normal”. The EAT indicated that to qualify for inclusion in the calculation of holiday pay the payment must have been made over a sufficient period of time on a regular and/or recurring basis to justify the description of being “normal”. So, whilst the principle that voluntary overtime should be included in the calculation of holiday pay has now been established, there may still be uncertainty about what specifically qualifies as voluntary overtime. This will be a question of fact which will need to be considered on a case by case basis. 

Also, interestingly, the EAT addressed concerns about how fluctuating levels of overtime should be dealt with in calculating holiday pay by noting that holiday pay would be calculated by reference to the 12 week period applied in the statutory definition of a “week’s pay”. Whether employers can argue for a reference period of longer than 12 weeks on the basis that that might be more appropriate in the context of their business remains a question which the case law has yet definitively to determine.

Paid Parental Bereavement Leave Proposal Announced

On 19 July 2017 the Parental Bereavement (Pay and Leave) Bill was introduced to Parliament. This is a Private Members Bill which has the support of the Government and will establish a new right for employed parents to statutory paid leave to grieve on the death of their child. The Bill is expected to have a second reading in October but is unlikely to become law until 2018 at the earliest.

Although the proposal is only in its early stages, it is likely that the amount of leave will be at least two weeks and attract the same rate of pay as other types of family leave such as maternity, adoption paternity and shared parental leave. This is currently the lower of 90% of an employee’s gross weekly earnings and £140.98 per week. 

At present (save in relation to stillbirth or miscarriages in respect of which maternity or paternity leave may still apply), the law only allows for “reasonable” unpaid time off to deal with an emergency relating to dependants, including his or her death, and it is down to each employer to determine what is ”reasonable” in the circumstances. ACAS has published guidance on Dealing with Bereavement in the Workplace but this is a good practice guide and not mandatory for employers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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