Banking Standards

Submission from Public Concern at Work (S043)

1. I make this short submission on behalf of Public Concern at Work (PCaW) in response to the call for evidence by the Parliamentary Commission on Banking Standards. PCaW is an independent charity set up in 1993 to provide advice to individuals on how to raise a concern about malpractice in the workplace. To date, we have advised over 13,000 whistleblowers. We were also closely involved in setting the scope and detail of the law that protects whistleblowers, the Public Interest Disclosure Act 1998 (PIDA). In addition, PCaW provides expert advice and support to organisations seeking to embed good practice whistleblowing arrangements. To this end we drafted and published in conjunction with the British Standard Institution (BSI) PAS 1998:2008 Whistleblowing Arrangements Code of Practice (CoP) [1] which is step-by-step guide for all organisations.

2. Our submission relates specifically to 4b) and 5 of the call for evidence and will cover:

a) Statistics on the financial services sector, from our advice line

b) Our forthcoming research into financial services

c) An overview of best practice and current guidance for individuals and organisations in the financial services sector

d) The framework for whistleblowers under PIDA, including current weaknesses and suggested amendments to PIDA

3. Statistics from our advice line

Year

Financial services cases

Percentage of total cases to advice line

2006

48

5%

2007

53

6%

2008

68

8%

2009

93

9%

2010

51

4%

2011

76

5%

H1 2012

35

4%

4. While cases in financial services appear relatively static, this should be viewed in the context an overall increase in caseload: we have experienced a 30% rise in new cases in H1 2012 compared to H1 2011. We consider that some of this increase in cases is due to media stories in particular sectors, such as the Panorama expose of Winterbourne View Hospital in June 2011, which gave rise to a 63% increase in cases from the care sector. [2] It is therefore somewhat surprising that the media coverage of the banking crisis has not resulted in a comparable increase in cases. That said, the increase in cases in the care sector was specifically related to a failure that could have been averted if whistleblowers were listened to and the Care Quality Commission, the regulator of health and social care, was criticised for its weak handling of whistleblowing and whistleblowers as a result. It has since made substantial moves to strengthen the system. This requires proper resourcing of a hotline and a specific focus on the issue. It remains to be seen whether a similar increase in cases will follow the LIBOR scandal, where we understand concerns had been raised about the abuse of the inter-bank interest rate setting process. [3]

Forthcoming research - qualitative analysis

5. We are in the process of coding all cases we have received in the financial services over the last five years in order to "map out" the whistleblower’s journey to provide information on weaknesses in the system. This will include an analysis of the type of concerns individuals have, any barriers to raising a concern, to whom the concern was disclosed, how it was escalated, the response to the concern and the response to the individual. It will also include analysis of the seniority and profession of those raising a concern. We aim to complete this analysis in 2012 and are happy to share developments with the Commission as and when they are available.

Best practice whistleblowing arrangements in the workplace

6. In order for the Commission to consider best practice guidance for whistleblowing in the workplace, we highlight the BSI CoP. This was published by BSI and drafted by PCaW in conjunction with a large and widely drawn working group. It is a guide for all organisations seeking to establish, review and audit their whistleblowing arrangements. We would recommend using the CoP to all organisations.

7. In 2002 we worked with the Financial Services Authority (FSA) before the launch of their whistleblowing hotline to develop guidance for individuals. There has been considerable change at the FSA since this time and while we are aware that the FSA continues to run a dedicated whistleblowing hotline, we are not clear that this has had any additional resource allocated since we last worked closely with them in 2002.

8. We have made numerous attempts, post the financial crisis, to approach key players in the banking sector. We sent a number of letters to major British banks in 2009 including RBS, Barclays and HSBC, offering support to ensure their arrangements met best practice. Though we have had a long running relationship in supporting Lloyds Banking Group, we have not been able to engage with any of the other major banks.

9. We are aware that the British Banking Association issued guidance on whistleblowing for their members in 2010, as we were asked for our comments on the framework of this guidance. However despite outlining a number of concerns about the guidance, we were not consulted any further and we do not know if these concerns were reflected in the final guidance as this is accessible to members only. We would be happy to provide commentary on the guidance if made available.

Internal arrangements – policy, practice and review

10. We see a great number of whistleblowing policies through our work assisting and training organisations. Many policies are too legalistic, complicated, fail to give options outside line management, do not provide adequate (or any) assurances to the individual, place the duty of fidelity above all else, and contain contradictory and/or poor reassurances on confidentiality.

11. Getting the whistleblowing policy right is a crucial first step. The Committee on Standards in Public Life has informed and influenced practice on whistleblowing across and beyond the public sector. The Committee has recommended that good whistleblowing policies:

a. provide examples distinguishing whistleblowing from grievances;

b. give employees the option to raise a whistleblowing concern outside of line management;

c. provide access to an independent helpline offering confidential

advice;

d. offer employees a right to confidentiality when raising their concern;

e. explain when and how a concern may safely be raised outside the organisation (e.g. with a regulator); and

f. provide that it is a disciplinary matter (a) to victimize a bona fide whistleblower, and (b) for someone to maliciously make a false allegation.

12. To be effective, the Committee has stated that it is important that those at the top of the organisation show leadership on this issue and ensure that the message that it is safe and accepted to raise a whistleblowing concern is promoted regularly.

13. A good policy will mean little if it is left to gather dust in a draw. A policy must be actively promoted and communicated, managers trained on their role and on how to handle concerns, arrangements reviewed regularly, trust and confidence of staff tested and arrangements refreshed. Buy-in at the top of the organisation is key and a good audit committee or board will want to know how the arrangements are working. The Institute of Chartered Accountants for England and Wales has devised a list of questions that a good audit committee might ask in order to sense check their arrangements [4] :

· Is there evidence that the board regularly considers whistleblowing procedures as part of its review of the system of internal control?

· Are there issues or incidents which have otherwise come to the board’s attention which they would have expected to have been raised earlier under the company’s whistleblowing procedures?

· Where appropriate, has the internal audit function performed any work that provides additional assurance on the effectiveness of the whistleblowing procedures?

· Are there adequate procedures to track the actions taken in relation to concerns raised and to ensure appropriate follow up action has been taken to investigate and, if necessary, resolve problems indicated by whistleblowing?

· Are there adequate procedures for retaining evidence in relation to each concern?

· Have confidentiality issues been handled effectively?

· Is there evidence of timely and constructive feedback?

· Have any events come to the (audit) committee’s or the board’s attention that might indicate that a staff member has not been fairly treated as a result of their raising concerns?

· Is a review of staff awareness of the procedures needed?

The framework for whistleblowers

14. PIDA protects the public by providing a remedy for individuals who are dismissed or suffer a detriment by any act or any deliberate failure to act by their employer for raising a genuine concern, whether it be a risk to the public, financial malpractice, or other wrongdoing. PIDA’s tiered disclosure regime promotes internal and regulatory disclosures, and encourages workplace accountability and self-regulation. Essentially, under PIDA, workers who act in good faith are given automatic protection for raising a matter internally. Protection is also readily available to individuals who make disclosures to prescribed regulators, such as the FSA or the Serious Fraud Office (SFO). In certain circumstances, wider disclosures, for example to an MP or the media, may also be protected. A number of additional tests apply when going wider, including:

· whether it is an exceptionally serious concern

· whether the matter has already been raised

· whether there is good reason to believe that the individual will be subject to a detriment by his employer if the matter were raised internally or with the appropriate regulator

· whether the disclosure was made for personal gain

· whether the disclosure was reasonable given all the circumstances.

15. We are concerned that PIDA needs substantial strengthening in a number of areas. At present the Enterprise and Regulatory Reform Bill (HC), currently before Parliament, contains an amendment to PIDA that we do not consider will provide better protection against abuse of the law and will only further complicate protection for whistleblowers. Please see Annex A for our full briefing on this issue and suggested amendments.

16. There have been a number of suggestions that an ombudsman be created for whistleblowing (whether this should be in the financial sector or more generally is not clear) or that rewards should be offered to financial service whistleblowers, such as those offered by the Securities Exchange Commission in the US. While we see it worthwhile exploring both concepts, in the financial sector there are already four organisations prescribed under S43F of PIDA that are relevant to the banking sector – the FSA, the SFO, the Financial Reporting Council and the London Stock Exchange . The former two already have specific programmes for whistleblowers. It would seem more sensible to examine the arrangements presently in place and whether they require strengthening before the creation of a further organisation, unless this organisation was specifically set up to examine the handling of whistleblowing concerns by the above bodies.

17. As to rewards, the US have had the False Claims Act (FCA), in place for a number of years which allows whistleblowers to sue on behalf of the state if the Government has been defrauded. This provides that whistleblowers can receive between 15% and 30% of any monies recovered. This approach has been used in the Dodd-Frank Act, whereby whistleblowers who provide original information that leads to a successful enforcement action of at least £1,000,000 to the Securities and Exchange Commission (SEC) can receive between 10% an 30% of monetary sanctions collected. Recently the SEC released information that they had awarded the first individual under this scheme $50,000 [5] . The percentage of the total sanction awarded to the whistleblower may be influenced by whether or not the matter had been raised internally. Additionally it is likely that a fine would be larger if a whistleblower had been ignored internally. It is not clear how many individuals pass on information that does not lead to a fine, nor the protections in place if their identity is deduced during any subsequent investigation, including those that do not lead to a successful prosecution of at least £1,000,0000.

18. If rewards are to be considered we would flag the following points which we would suggest require close scrutiny before proceeding with such a programme:

· A rewards system should not be seen as a replacement for good legal protections for whistleblowers who raise information in good faith or the public interest.

· A rewards system should not be seen as a replacement for development of good practice.

· As with the provisions in the Dodd-Frank Act, consideration should be given as to how to encourage individuals to come forward at an early stage or there will be a risk that individuals will have an incentive to sit on information until it becomes "serious" enough to be eligible for reward, limiting the ability of organisations and regulators to detect malpractice early. Under PIDA internal disclosures are protected when an individual has "information which, in the reasonable belief of the worker making the disclosure, tends to show" one of the categories of wrongdoing. In layman’s terms, a genuine suspicion.

· Under PIDA, such rewards may come into conflict with requirement of all disclosures made under the act (bar those to a legal adviser under 43D) to be made in good faith.

· That consideration be given as to whether it is appropriate to have a separate system for the financial services. The clear example would be a nurse who raises serious concerns about patient safety. How would a reward to such an individual be calculated?

· We have provided advice to individuals in the US who have found it difficult to reconcile accusations that they blew the whistle for money, when ethical considerations have been their key motivation.

19. The current scandal creates an opportunity for the banking sector to revisit the issue of culture and how to ensure that this encourages individuals to raise concerns. For those working in the sector, where the criticism has been that many risky decisions have been made based on the profit motive alone, it is time to encourage and reward those who wish to act as good citizens in the workplace. There needs to be a clear move towards making it acceptable to have ethics and not only in circumstances where there is a monetary award if the concern is proved right. Ensuring that the question of ethics is included in the day to day decision making processes within the financial sector may prove more beneficial, particularly in deterring not just detecting malpractice, than any reward system and could perhaps be a consideration in appraisal or promotion programmes. Where appropriate this could impact on salary increases or bonuses.

20. We would be happy to provide further information to the Commission on any of the above and in relation to the analysis of our cases once the report has been finalised.

 
ANNEX A

Briefing on Enterprise and Regulatory Reform Bill:

Section 14 Disclosures not protected unless believed to be made in the public interest

Introduction

DBIS have announced that they will be introducing a public interest test in the whistleblower protection law known as the Public Interest Disclosure Act (PIDA) in order to overcome a legal loophole whereby individuals are able to claim protection for raising concerns about their own personal employment contract. We are deeply concerned that they are doing so without thorough public consultation, the amendment suggested will not overcome the problem and will result in a field day for lawyers and that this is a missed opportunity for addressing problems which have arisen in the legal protection for whistleblowers.

This loophole arose in an interim employment tribunal case, Parkins v Sodexho [6] , and has watered down the public interest purpose of PIDA. There have been concerns that PIDA is being abused by City Bankers who are using it to claim that raising concerns about their bonus payments are protected disclosures under PIDA [7] . This has led some to say that PIDA cases are being dominated by "pale stale males". This affects the reputation of this key piece of legislation and is a far cry from the original purpose of the legislation and the Parliamentary debates for the first and second bills.

DBIS are proposing to remove this loophole in the following way:

Public interest test proposed by DBIS

Enterprise and Regulatory Reform Bill

14. Disclosures not protected unless believed to be made in the public interest

In section 43B of the Employment Rights Act 1996 (disclosures qualifying for

protection), in subsection (1), after "in the reasonable belief of the worker

making the disclosure," insert "is made in the public interest and".

The change would have the following effect:

Employment Rights Act 1996

43B.

(1) In this Part a "qualifying disclosure" means any disclosure of information which, in the reasonable belief of the worker making the disclosure is made in the public interest and tends to show one or more of the following-

(a) that a criminal offence has been committed, is being committed or is likely to be committed,

(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject,

(c) that a miscarriage of justice has occurred, is occurring or is likely to occur,

(d) that the health or safety of any individual has been, is being or is likely to be

endangered,

(e) that the environment has been, is being or is likely to be damaged, or

(f) that information tending to show any matter falling within any one of the preceding paragraphs has been, is being or is likely to be deliberately concealed.

We agree that something has to be done to address this loophole but we find we cannot support the DBIS amendment on three grounds:

1. DBIS’s failure to consult

First, DBIS propose including a public interest test in PIDA without considering the wider problems with the law and the need for a public consultation. The timing of an amendment to the law also does not seem prudent given the on-going Mid Staffordshire NHS Foundation and Leveson Inquiries, both of which will have important outcomes for the public interest and will likely have conclusions that will deal with whistleblowing. The failure to undertake a wider, comprehensive review, will be a ‘missed opportunity’ to address some of the legal loopholes that exist which include a gaping hole in protection if workers are victimised by co-workers for raising a concern (no vicarious liability mechanisms), making sure all workers are adequately covered, clarifying protection for GPs, and ensuring that workers who raise concerns with all statutory bodies including the police and professional regulators are readily protected. We set out case studies and examples of these problems under the heading of ‘a missed opportunity’ below.

We also argue that DBIS need not act with such haste in rectifying the Parkins v Sodexho issue without full consultation with trades unions and employers, as in 2009/10 10% of final judgments or just 40 cases involved an individual raising a concern about their private employment rights [8] . Moreover according to 2011/12 employment tribunal statistics less than 1% of claims involve whistleblowing allowing an opportunity for full reflection on the state of whistleblower protection in the UK.

2. ‘Field day’ for lawyers

Secondly, we are concerned that the above amendment will not address the legal loophole (see our suggested amendment below) and will instead become a field day for lawyers who will spend time arguing whether or not something is in the public interest, increasing litigation, costing employers and the taxpayer more; all of which the Government has sought to address in recent consultations on employment law reforms.

As it currently stands PIDA identifies broad categories of public interest issues- criminal offences, dangers to the environment, miscarriages of justice, health and safety concerns and breaches of legal obligations. The drafting suggested by DBIS is clumsy and nonsensical- the public interest test imposed will cut across all the categories of wrongdoing which means, for example, when raising a concern about a criminal offence an individual would have to show that it is in the public interest. It is common sense that issues that are criminal offences, dangers to the environment, miscarriages of justice and dangers to health and safety, are public interest issues and so should not be subject to an additional public interest test.

The purpose of PIDA is to prevent disaster and to encourage workers to speak up when they have suspicions. Issues that at one point seem trivial may in fact be indicative of underlying problems in an organisation and could be the tip of the iceberg. A public interest test may have the unintended consequences of focussing on how big the disaster is or was likely to be, and mean less focus on reporting early suspicions. Issues such as missed medication may seem relatively minor compared to a multi-million pound fraud such as that in the high profile Olympus case [9] but could be a matter of life and death.

We suggest the amendment below, which would have the effect of dealing with the Parkins v Sodexho issue without imposing an additional barrier for the genuine whistleblower, as an alternative to the one presently suggested by DBIS:

PCaW suggested amendment:

43B. - (1) In this Part a "qualifying disclosure" means any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following-

(a) that a criminal offence has been committed, is being committed or is likely to be committed,

(b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which that person is subject (other than a private contractual obligation which is owed solely to that worker),

(c) that a miscarriage of justice has occurred, is occurring or is likely to occur,

(d) that the health or safety of any individual has been, is being or is likely to be endangered,

(e) that the environment has been, is being or is likely to be damaged, or

(f) that information tending to show any matter falling within any one of the preceding paragraphs has been, is being or is likely to be deliberately concealed.

3. A new barrier for honest whistleblowers

Thirdly, the perception will be that this test is a barrier to individual whistleblowers. When this is added to the fact that PIDA is little known and often misunderstood, we believe that the legislation will be undermined by this approach. It will also add to the idea promulgated in the media that if you are whistleblower, you will be burned and that the law is too complicated to protect you. In sectors such as health and care, where whistleblowing can save lives and taxpayers’ money, and where gagging clauses and hierarchical professions and workplaces impose real obstacles for the individual, such an amendment will be seen as another obstacle. The honest and reasonable whistleblower, faced with an increasingly complex piece of legislation to navigate should they be poorly treated, may choose not to speak up. This is a rather damning position, nearly two decades on from the Bristol Royal Infirmary Inquiry when the whistleblower, Dr Stephen Bolsin [10] , was forced to leave the UK to find work.

Furthermore, Parliament when it passed PIDA did not place a public interest test in the legislation, choosing instead to define the categories of wrongdoing under which disclosures in the Public Interest Disclosure Act should fit. Good faith was seen as the appropriate safeguard. Dame Janet Smith in her report on the Shipman inquiry commented that perhaps good faith should be replaced by a public interest test. If the public interest test is to be considered at all, it really should be considered in conjunction with the test of good faith. Any attempt to add a public interest test requires wider consultation and should not be placed in the Act as an additional hurdle by the back door.

‘A missed opportunity’ to protect whistleblowers

The lack of consultation means that this will also be a missed opportunity to deal with some of the problems that have arisen since PIDA’s introduction over a decade ago. These problems include:

1. Vicarious Liability Loophole

This loophole has arisen in the context of three nurses from Manchester who raised a concern about a colleague lying about his qualifications. The nurses raised their concern within the service and the Primary Care Trust. Their concern was upheld. However, the nurses were subject to bullying and harassment from co-workers. One of the nurses received a telephone call threatening her daughter and to burn down her home [11] . The case proceeded as far as the Court of Appeal, which found that vicarious liability does not exist in PIDA, as it specifically does in discrimination law. Shortly after the publication of the judgment, Lord Howe, the Health Minister, agreed that this area needs to be reviewed [12] . From the experience on our advice line, harassment and bullying by co-workers is not uncommon and for there to be no protection in this area is extremely problematic, as it means whistleblowers could be facing a cardboard shield in terms of the protection afforded by PIDA. It surely cannot be right that an employer can fail to do enough to protect a whistleblower from victimisation and yet altogether escape liability. To overcome this problem, we suggest transposing the existing tests from the Equality Act 2010 (sections 109-112 and section 40) into PIDA. This would also build a defence into the legislation for employers, as if they can show that they took reasonable steps to prevent the victimisation, they would not be liable.

It is bad news for whistleblowers everywhere if whistleblowers who are bullied by fellow staff members are not protected. Another example of this is the case of Helene Donnelly, a nurse who gave evidence to the Mid Staffordshire Inquiry and spoke of the bullying she experienced by other staff. Surely no one would suggest she should not have got protection [13] .

2. Widening the scope of PIDA to cover all GPs, student nurses, doctors, health care professionals, volunteers, NEDs (including public appointments) and prospective job applicants.

Recent employment law cases and media stories have highlighted the difficulties of the above groups such as students on vocational placements in health and care settings, all GPs (see Anne Milton’s answer to a Parliamentary question which highlighted the complicated nature of the protection of GPs at present [14] ), volunteers, non-executive directors (the reluctance of Royal Bank of Scotland non-executives to question Fred Goodwin [15] ), public appointments (the case of Kay Sheldon- a board member of the Care Quality Commission [16] ), members of LLPs (covered by the Equality Act 2010), priests (covered by the Equality Act 2010) and foster carers.

The lack of protection for job applicants was highlighted in an Employment Tribunal Appeal case, BP v Elstone [17] , where an employee was protected from victimisation by his current employer, having raised a concern with his previous employer. The tribunal commented that had the claimant been a job applicant he would not have been protected. On our advice line, discrimination at pre-employment stage is a worry for workers considering whether and how to raise a concern. It can be daunting for an individual who has raised a genuine concern about a danger, risk or malpractice in the workplace and has left the organisation, to know what to say about why they left their last job. This presents a very difficult dilemma for a whistleblower who has acted in the public interest and it is important to build some protection into the system so that whistleblowers are not fearful in such situations. In research that we have conducted for the Older People’s Commissioner for Wales, we found that the second most common negative response from an employer was refusing to provide a good reference.

In order to overcome this problem we propose the definition of worker in section 43K of PIDA is extended to include:

· Student nurses, doctors, healthcare professionals and social workers

· General Practitioners in the health service , regardless of their contractual arrangements

· Volunteers and interns

· Non-Executive Directors

· Public Appointments

· Members of LLPs

· Priests

· Foster carers

· Job applicants

· All categories covered in the Equality Act 2010

3. Extending the categories of wrongdoing

Gross waste, gross mismanagement and abuse of authority are not included in PIDA but are included in equivalent US legislation. At a time of austerity and the abolition of the Audit Commission, we suggest that these categories should be included, particularly as what may be deemed as a waste of money may not in fact be illegal but we would still hope that such concerns are raised. For example it could be a way to encourage workers to raise concerns about mass over-expenditure in public spending projects such as the waste of public money in the NHS IT system [18] . We suggest a public interest category would be useful to cover these types of wrongdoing which may not be covered by the other categories. This also ensures that PIDA evolves and covers serious ethical concerns that fall short of a breach of legal obligation.

4. Gagging clauses

Little attention has been paid to the provision in PIDA section 43J which outlaws any contractual clause that prevents workers from raising a public interest concern. The cases of Dr Kim Holt and Great Ormond Street Hospital, and former inspectors at the Care Quality Commission [19] giving evidence to the Mid Staffordshire Inquiry highlight the need for greater attention to be drawn to section 43J of PIDA and for there to be tougher enforcement. We recommend a positive requirement is placed on lawyers advising in the settlement of claims, that they advise claimants about their rights under the Public Interest Disclosure Act and that any such gagging clauses are void.

5. Disclosures to all statutory bodies are protected

PIDA identifies a list of prescribed regulators and protection is relatively easy for individuals who raise concerns with them. Given that statutory bodies are changing we would suggest that the specific provision in PIDA dealing with this point (section 43F) be widened to cover a disclosure to a relevant statutory body whether or not it is prescribed. An amendment along these lines has been suggested by the DTI (as was) as it is administratively cumbersome to have to prescribe new regulators. The amendment includes not only regulators such as the HSE or FSA but also the relevant local authority enforcement authorities. Given that there are changes to the regulatory activities in financial services, it may be prudent to allow this change and to ensure protection can flow seamlessly. This also means that individuals who raise concerns with professional regulators such as the Nursing and Midwifery Council, General Medical Council and the Health Professions Council would be more easily protected. More importantly this would be a smart way to deal with international criticism from the OECD that disclosures to the police have to satisfy higher tests than disclosures to prescribed regulators. We recommend that the power to prescribe persons as this is something HMG may wish to use (e.g. in 1997/8 the Minister Ian McCartney MP suggested union officials might be prescribed at some point).

6. Tackling the good faith test

Dame Janet Smith in the Shipman Inquiry stated that good faith was a barrier to whistleblowers. This is being borne out by recent reports in the Mid Staffordshire and Leveson Inquiries.

We have proposed three options for addressing the good faith point. Option (i) is to remove the test altogether. Options (ii) and (iii) both clarify the purpose of PIDA protection is that wrongdoing can be addressed. Option (ii) follows the approach taken by the Court of Appeal in Street v Derbyshire UWC [20] that (a) good faith means with the honest purpose of raising the concern so it can be addressed, but (b) that an ulterior predominant motive can negate good faith. Our suggested amendment clarifies this by stating that a predominant ulterior motive should only negate PIDA protection where it is malicious. This reflects the meaning the Government intended the term ‘in good faith’ in PIDA should have, as confirmed by the DTI in its comments of 31 August 2001 on the report into the Bristol Royal Infirmary that ‘in good faith’ in PIDA "simply means that the disclosure was made honestly, not maliciously." In clarifying the honesty of purpose on the face of the Act, this amendment helps reduce the risk (increased by the abolition of the register of employment tribunal applications) that an employee might be tempted to make an internal disclosure to blackmail the employer by offering to keep the wrongdoing secret if he is given an undue benefit. While Option (iii) includes a public interest test which means that the worker would have to show that the predominant motive for raising their concern is in the public interest.

If the legislation is to include a public interest test then it would be appropriate to consider this in conjunction with the good faith requirement in PIDA, rather than placing an additional hurdle on would be whistleblowers. To address this finely nuanced issue properly requires consultation and the current proposed amendment would need to be reversed.

Where is the Bill?
First reading
The bill was published and first reading took place on 23 May 2012.

Second Reading
The bill received its Second Reading on 11 June 2012, where Katy Clark MP (Labour) spoke in favour of a public consultation and voiced concerns about the proposed public interest test.  Shadow Secretary of State for Business Innovation and Skills Chuka Umunna also expressed concerns over the introduction of a public interest test.

Committee Stage
The Committee Stage of the bill started on 19 June 2012 with a number of scrutiny sessions where the Public Bill Committee heard evidence experts and interested parties. Our Chief Executive Cathy James gave evidence to the Committee.

On 3 July 2012 Labour Shadow Minister Iain Murray proposed our amendment (see above). Unfortunately this was rejected. 

Early Day Motion
Outside the consideration of the bill, Katy Clark MP has put forward an Early Day Motion (EDM). The EDM (359) calls for a public consultation and the wording is as follows:

"That this House believes greater protection should be provided to whistleblowers in the workplace; is alarmed at the Court of Appeal's decision in NHS Manchester v Fecitt & Ors which indicates that employees are no longer protected from harassment of co-workers; believes that this is just one of a number of issues, including the implementation of the Shipman Inquiry's recommendations to remove the good faith test, and the use of gagging clauses which requires serious debate; believes that the changes put forward in the Enterprise and Regulatory Reform Bill will make it more difficult for individuals to rely on the Public Interest Disclosure Act  and calls on the Government  to hold a wider consultation on possible reforms to ensure a meaningful strengthening of the protection of whistleblowers."

7 September 2012


[1] Available for download here: http://www.pcaw.org.uk/bsi

[2] In H1 2011 we advised 96 whistleblowers in the care sector, in H1 2012 this increased to 156.

[3] Paragraph 37, The Treasury Select Committee report into LIBOR on 18 August, 2012 following its inquiry into the Final Notice issued by the Financial Services Authority with respect to Barclays on 27 June, 2012.

[4] Institute of Chartered Accountants in England and Wales (ICAEW) Guidance for Audit Committees: Whistleblowing arrangements (2004) www.icaew.com .

[5] San Francisco Chronicle, 21 August 2012

[6] [2001] UKEAT 1239_00_2206

[7] A report in the Financial Times on 18 September 2007 quoted the city firm Nomura warning that "The whistleblowing legislation was designed to protect employees who, in good faith, raise legitimate concerns of wrongdoing in the workplace. Its growing use by white men as a litigation tactic when in dispute with the City employers, suggests the legislation is being abused."

[8] Whistleblowing: Beyond the law, Oct 2011 http://www.pcaw.org.uk/files/PCAW_Review_beyondthelaw.pdf

[9] http://www.independent.co.uk/news/business/news/olympus-settles-claim-with-exboss-michael-woodford-7800965.html

[10] http://news.bbc.co.uk/1/hi/health/532006.stm

[11] http://news.sky.com/home/video/15385116

[12] http://www.independent.co.uk/news/uk/home-news/whistleblowers-not-protected-from-bullying-court-rules-6255015.html

[13] http://www.nursingtimes.net/nursing-practice/clinical-specialisms/accident-and-emergency/whistleblowing-mid-staffs-nurse-too-scared-to-walk-to-car-after-shift/5036466.article

[14] HC Deb, 9 March 2011, c66WS

[15] http://www.ft.com/cms/s/0/3776f564-02de-11de-b58b-000077b07658.html#axzz1tp9gA7M2

[16] http://www.guardian.co.uk/society/2012/jan/24/kay-sheldon-whistleblower-care-quality-commission

[17] [2010] IRLR 558, [2010] UKEAT 0141_09_3103

[18] http://www.guardian.co.uk/society/2011/sep/22/nhs-it-project-abandoned

[19] http://www.telegraph.co.uk/health/healthnews/9170951/Health-regulator-gagged-own-staff-against-speaking-of-failures.html

[20] [2004] EWCA Civ 964

Prepared 22nd September 2012