UK: Non-Executive Directors Can Be Liable For A Detriment Suffered By A Whistleblower

In the recent case of Timis and another v. Osipov, the Court of Appeal confirmed that an individual employee, along with the employer, can be held liable for the detriment of dismissal arising from making a protected disclosure (commonly known as whistleblowing).

Facts

Mr Osipov was the CEO of International Petroleum Ltd (IP Ltd). During his time as CEO he made a number of disclosures related to corporate governance and compliance with Nigerien law. He was subject to detriment and then dismissed by two non-executive directors of IP Ltd, Mr Sage (a non-executive director with managerial functions) and Mr Timis (a non-executive director and the company's largest individual shareholder). Mr Sage acted on instructions from Mr Timis when dismissing Mr Osipov.

Mr Osipov brought a claim to the Employment Tribunal alleging that he had been unfairly dismissed and subjected to detriment for having made protected disclosures. He succeeded with both claims and Mr Sage and Mr Timis were held jointly and severally liable for his losses amounting to over £1.7 million. IP Ltd and both directors appealed the decision to the Employment Appeal Tribunal (EAT). The directors' appeal was based on the fact that they should not be liable for the losses flowing from the dismissal. They were unsuccessful and subsequently appealed the EAT decision to the Court of Appeal.

Decision

The Court of Appeal has agreed with the previous decisions of the tribunals and backed the original award made to Mr Osipov. In making the decision the court considered whether an individual worker can be held liable for a detriment which takes the form of dismissal on the ground of making a protected disclosure despite the provisions of the Employment Rights Act (ERA), which excludes a detriment claim if the detriment "amounts to dismissal itself".

The court held that there is nothing in the wording of the ERA that "excludes from individual liability detriments amounting to termination of the working relationship". In other words, there is no reason for fellow workers to be relieved of liability if they subject another worker to a detriment which results in a dismissal.

Comment

This decision has far-reaching consequences. It confirms that individual employees can be liable for their actions towards whistleblowers. In practice this may result in a new trend, where the whistleblowing claims are brought against both the employer (unfair dismissal claim) and the individual who decided to dismiss the employee (detriment claim). It is paramount therefore that, in mitigating the risk of such claims, employers are prepared to provide adequate training to the managers and directors investigating and making decisions relating to protected disclosures and that they have clear whistleblowing policies in place to ensure that the appropriate procedures are followed.

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