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EAT upholds whistleblowing claim against non-executive directors

In the recent case of International Petroleum and ors v Osipov and ors, the Employment Appeal Tribunal (EAT) has ruled that two non-executive directors (NEDs) of the petroleum company were personally liable for losses flowing from the dismissal of the CEO after he was dismissed for making protected disclosures.

Facts

O was dismissed after he made a number of protected disclosures relating to International Petroleum’s oil exploration activities in Niger. He was dismissed by an email from one of the company’s NEDs. O brought a claim for unfair dismissal contrary to section 103A Employment Rights Act 1996 on the basis that the principal reason for his dismissal was that he had made protected disclosures. He also claimed that the two NEDs had subjected him to detriments during the course of his employment as a result of the disclosures, excluding him from participation in the company’s operations in Niger and side-lining him from negotiations that he would ordinarily be involved in as his position of CEO.

The Employment Tribunal upheld O’s claims and held that the company and the NEDs were jointly and severally liable for the losses flowing from O’s dismissal, save for the basic award for unfair dismissal, for which the company was solely liable.

The NEDs appealed to the EAT arguing that their liability could only be for detriments occurring prior to O’s dismissal. A detriment amounting to dismissal had to be brought as part of an unfair dismissal claim which could only be brought against the employer.

EAT decision

The EAT dismissed the appeals, holding that the NEDs were personally liable for the losses suffered by O as a result of his dismissal. Section 47(B) ERA created a “framework for individual liability of a fellow worker for detriments without restriction." Although it may be unusual for an employee to pursue a claim against a fellow employee for whistleblowing detriment amounting to dismissal rather than the employer, there was no reason in principle why this should not be permitted.

What to take away

This decision confirms that liability in whistleblowing claims is similar to that for unlawful discrimination under the Equality Act 2010, namely that individuals are not protected from liability for the consequences of the most serious detriments to which they subject others.

This decision will have significant implications for VSMs of NHS trusts, and for non-executive directors, who are involved in disciplinary processes. Where an employee alleges that their dismissal was as a result of having blown the whistle, they will be able to claim for all losses flowing from the dismissal not only from the trust itself but also from the individuals involved in the decision-making process. NHS organisations will usually be vicariously liable for actions of their employees during employment processes, but not necessarily for those of their office holders. This case emphasises the importance of agreements between NHS bodies and NEDs setting out what NEDs will be indemnified for, and ensuring that office holders are supported with HR and/or legal advice when making decisions which could create large organisational and financial risk.

Our recommendations

We would recommend that if whistleblowing or discrimination proceedings are lodged against both the organisation and named individuals, trusts need to undertake an early assessment of whether there is a conflict of interest between the organisation and those individuals, and who will be responsible for any award made against the individuals arising out of them carrying out their NHS duties.

For further information on how this issue might affect your organisation, please contact Jacqui Atkinson, Victoria Watson or Ron Simms.

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