knowledge | 31 March 2015 |
The Protected Disclosures Act 2014 – A Challenge or An Opportunity?
Discussion on the much-heralded introduction of the Protected Disclosures Act 2014 in mid-2014 has, to date, rightly focused attention on the protection given to workers. Clearly, the implementation of the Act will create significant challenges for employers and will break new ground in respect of claims that might be brought. But how, in practice, can employers best prepare to meet these challenges and, indeed, use these challenges as opportunities to create alternative reporting structures and to identify internal problems before they become public issues?
Summary of Key Principles
Details of the workings of the Protected Disclosures Act 2014 (the "Act") have been discussed in previous briefings, but it is worth remembering its key features:
- The Act extends its protections not only to employees, but to “workers”. In this regard, consultants, agents and workers, civil servants, interns, trainees and many others are entitled to the protections of the Act and, therefore, employers will need to consider how its policies can appropriately deal with non-employees
- To obtain such protections of the Act, a worker must make a disclosure of relevant information in one of the five routes set out in the Act. “Relevant information” is information which, in the reasonable belief of the worker, tends to show “relevant wrongdoing” and which came to the attention of the worker in connection with the worker’s employment. Relevant wrongdoing extends not only to offences under statute, but also other wrongs, including improper use of public funds, acts of discrimination and non-compliance with legal obligations (save for obligations towards the worker themselves)
- It is also notable that relevant wrongdoing includes acts outside of Ireland and also acts prohibited under foreign law and this will have a significant impact for multi-national organisations who are subject to worldwide regulatory obligations
- Once the person making the disclosure reasonably believes the disclosure shows relevant information, their motivation is irrelevant (although there may be a 25% reduction in damages in certain circumstances)
- The Act provides a ‘stepped disclosure’ regime, which is aimed at encouraging internal resolution of matters, wherever possible. Only where a number of conditions have been met may a worker make a protected disclosure to a person who is not their employer or other responsible person; one of the category of prescribed persons (72 categories have been set down); to a Minister (for public bodies only); or for the purposes of obtaining legal advice. In practice, as discussed below, the implementation by an employer of a well-considered whistleblowing policy can further encourage workers to first approach employers, before confidential internal issues become external matters
- There is a presumption that a disclosure is a protected disclosure and this is likely to make the defence of claims arising under the Act more difficult
- It is worth remembering that while the Act now provides broad-scope protection for workers in all areas and sectors, the pre-existing sectoral protections may still be relevant in some cases, particularly where a disclosure would not otherwise fall within the definition of ‘protected disclosure’
Remedies under the Act
The Act provides three principal remedies for workers who are dismissed, penalised or suffer detriment as a result of having made a protected disclosure:
- Unfair Dismissal - Where an employee who has made a protected disclosure is dismissed, this is deemed to be an unfair dismissal (it should also be remembered that there is a presumption that a disclosure is a protected disclosure). Compensation of up to five years’ remuneration (rather than the usual maximum of two years’ remuneration) can be awarded, as well as re-instatement or re-engagement. Furthermore, the usual twelve months’ service requirement in cases of Unfair Dismissal is set aside in the case of protected disclosures
- Penalisation - The Act also provides that an employer shall not “penalise or threaten penalisation against an employee, or cause or permit any other person to penalise or threaten penalisation against an employee, for having made a protected disclosure” and allows for a distinct claim for any such acts of penalisation (although it cannot also be brought if a case of dismissal). Such claims are currently (until the Workplace Relations Bill is passed) to be brought to the Rights Commissioner Service, who may: (a) make a declaration as to whether the complaint is well-founded; (b) require the employer to take a particular course of action; and/or (c) make an compensation of up to five years’ remuneration
- Remedy in Tort - A relatively new feature of the Act (a similar remedy was already found in the Central Bank (Supervision and Enforcement) Act 2013) is the introduction of a remedy under the law of tort where a person suffers “detriment” (which is broadly defined) at the hands of another person, if that detriment is in any way connected with the making of a protected disclosure.
Very importantly, this right is not confined to workers themselves. As such this right may be used by, for example, family members who suffer retaliation because of their relative’s protected disclosure. It might also give a remedy under tort for prospective employees if they were not hired where it was discovered they had made a protected disclosure in a past employment.
A new form of interim relief is also provided for in the Act, where an employee who claims to have been dismissed “wholly or mainly” for having made a protected disclosure may apply to the Circuit Court for interim relief within 21 days immediately following the date of dismissal. The Circuit Court may grant an order of re-instatement, re-engagement or an order for the continuation of the employee’s contract (ie a paying order), pending the outcome of the claim for Unfair Dismissal.
This remedy is likely to have a significant impact. Until now, employment injunctions were not directly linked with Unfair Dismissals actions and, as a result, employees would often choose either the High Court/injunction route or the EAT/Unfair Dismissal route but this interim relief remedy means that workers can attempt to obtain the benefits of both approaches.
Unlike with a typical employment injunction, the application can be made to the Circuit Court, rather than the High Court and, as such, there are lesser costs consequences for employees in the event of an unsuccessful application. Furthermore, there is no provision made for clawback of amounts paid in the interim period where a tribunal ultimately finds that the dismissal was justified.
Why have a Whistleblowing Policy?
As the law is increasingly supportive of external whistleblowing, it is essential for organisations to have a credible internal whistleblowing policy. If a concerned worker does not think that he or she has a workable channel internally to deal with the issue, there is a greater risk that they will first go to an outside agency, which takes the matter outside the organisation’s control.
Employers should remember that workers can be very valuable eyes and ears for the employer, as they are often the first people to identify wrongdoing and can give employers an alternative risk identification alert for issues that may otherwise remain hidden, whether due to organisational constraints or, indeed, a rogue middle manager.
Having a robust policy can also aid in avoiding retaliation against whistleblowers by co-workers (which would have direct consequences for the employer in the event of a claim), by placing explicit prohibitions on any such behaviour like one would expect in a well-drafted Bullying or Harassment Policy. Such a policy can also underpin a transparency culture in an organisation.
From a claims perspective, having a well-drafted and well-considered whistleblowing policy makes external reporting by workers more difficult, as when a tribunal is assessing the reasonableness of a worker making a disclosure externally, whether or not a worker used an internal procedure will be a relevant factor.
It should be noted that there is an express obligation on public bodies to establish procedures for protected disclosures and, indeed, to publish an annual report about protected disclosures. Statutory guidance on whistleblowing is still awaited and expected shortly in Ireland. In the meantime Irish employers may be able to obtain some direction from guidance published by the Department for Business Innovation and Skills in the UK. However, caution should be exercised in relying on this guidance without consideration of the Irish regime, as some important distinctions exist between the Irish and UK protected disclosure regimes.
Whistleblowing Policies – Key Considerations
The first feature that employers should consider when considering implementation of a whistleblowing policy is the role that such a policy will play in the suite of employment policies that a prudent employer will already have. Clearly, integration with related policies, particularly disciplinary policies, is vital to ensure no mismatches or gaps in an employer’s procedures and to avoid confusion from workers as to what policy they should invoke (eg the Grievance Procedure vs. the Whistleblowing Procedure).
Given the wide breadth of the Act extending beyond an organisation’s own employees, it will also be necessary to consider whether it is appropriate to make the policy applicable to third parties, such as contractors, or to have a parallel process for such persons.
It is certainly very clear that a “one-size fits all” approach to such policies is likely to be ineffective. Employers must consider how a policy fits in their organisational structure, size, their own regulatory landscape and, indeed, their existing policies and procedures. Indeed, multinational employers will have to consider their regulatory footprint in all jurisdictions in which they operate due to the transnational nature of such obligations.
Employers should consider the avenues through which whistleblowing concerns can be raised. Workers should be very clear to whom they should go if they have a concern. Having an alternative whistleblowing reporting route, outside of the worker’s usual reporting structure can be very useful in this regard. In larger organisations, a ‘whistleblower hotline’ might be considered.
Workers should be given guidance on how disclosures will be handled. While it might be sensible to keep workers involved in the investigation process in some cases, there may be cases where it is not appropriate for the worker to remain involved beyond a particular point. In such cases, workers should have assurance of the process that is being followed, such that they have confidence that the issue is not simply being swept under the carpet.
The Policy should contain a commitment to protect the identity of the whistleblower, but this should not be a blanket guarantee, as workers should be aware that disclosure may be required in certain exceptional circumstances (eg if required for the purposes of the investigation). There should be an explicit prohibition on any retaliation, victimisation or penalisation against a whistleblower, with a strong and unequivocal statement that any such behaviour will be subject to disciplinary sanction.
Employer will need to consider their approach where mandatory reporting obligations exist, especially for the worker themselves. A pro-active approach to such issues may enable employers to retain a level of control over such reporting or avoiding unnecessary issues, if the worker’s concern is based on a misunderstanding.
Employers should consider providing workers with training on whistleblowing issues, perhaps in conjunction with or complementary to existing anti-money laundering training with which many employers will already be familiar.
Key Messages from the Act
The introduction of the Act is certain to have a profound impact on the protection of whistleblowers in Ireland. Although the Act will certainly present employers with important challenges, a proactive employer may look to turn these challenges into an opportunity to create an open and transparent culture and to alleviate the information gap that can sometimes exist in a hierarchical organisation between senior management and those on the ground.
The implementation of a well-considered and well-drafted whistleblowing policy will be crucial for employers in avoiding unnecessary claims, defending them where they arise, providing an early-warning mechanism for issues of concern, avoiding retaliation against whistleblowers and making third-party disclosures more difficult. The movement towards increased workplace transparency may also cause organisations to consider how their information management practices and arrangements operate.
It remains to be seen how quickly disputes under the Act arise, but what is clear is that, given the very weighty monetary penalties applicable, as well as the broad protections afforded to workers and others, employers must be prepared to proactively deal with whistleblowing issues.
This briefing is for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.