Out-Law Guide 9 min. read
17 Dec 2019, 11:51 am
Employers operating in these sectors with global operations should have in place a clear, accessible policy setting out how they will handle reports from employees who 'blow the whistle' about corporate wrongdoing. They must also ensure compliance with local laws in every region in which they operate. It is unlikely that a single 'global' policy will be suitable for the workforce in every territory, and provisions will need to be tailored accordingly.
Reporting suspicions of wrongdoing by their employer will not usually be an easy choice for an employee to make. As a general rule, employers can encourage their employees to report their concerns by:
Here, we summarise some of the provisions governing whistleblowing in the UK, Australia and the Middle East.
Workers in the UK who bring information about wrongdoing to the attention of their employer or a relevant organisation are protected under the 1998 Public Disclosure Act. Blowing the whistle is more formally known as "making a disclosure in the public interest".
A worker who suffers a "detriment" - for example, dismissal - because they made a protected disclosure may have the right to bring a whistleblowing claim. There are two types of claim which can be raised under UK whistleblowing legislation:
Both of these rights are available from day one of employment, with no qualifying period of employment or work needed before the individual may bring a claim.
A protected disclosure exists where a worker makes a disclosure of information which they reasonably believe is made in the public interest. The disclosure must be a "qualifying disclosure" and be made in one of the protected manners.
Compensation for a successful unfair dismissal whistleblowing claim is unlimited and will be granted according to what the employment tribunal considers to be just and equitable.
Qualifying disclosures are disclosures of information which the worker reasonably believes tends to show that one or more of the following matters is happening, has taken place or is likely to happen in the future:
The state of mind of the whistleblower is an important aspect of the whistleblowing rules. The whistleblower must be able to demonstrate that they had a reasonable belief that the disclosure was in the public interest and also a reasonable belief that they are reporting a matter which falls into one or more of the above categories.
To attract the protection of the legislation, the disclosure of information must be made to an appropriate party such as the employer or another party responsible for the wrongdoing, a relevant regulatory authority or in the course of obtaining legal advice.
The same remedies are available in whistleblowing unfair dismissal claims as in other unfair dismissal claims: reinstatement; re-engagement; basic award; and compensatory award.
Successful claims for unfair dismissal are generally subject to a statutory cap which limits the amount of compensation which can be awarded. However, this cap does not apply where the principal reason for dismissal is that an employee made a protected disclosure, meaning that compensation for a successful unfair dismissal whistleblowing claim is unlimited and will be granted according to what the employment tribunal considers to be just and equitable.
In addition to a compensatory award based on the whistleblower's loss, the tribunal may also decide to make an award for injury to feelings. This will be assessed in the same way as an award in a discrimination claim.
Compensation awards can be reduced by up to 25% if the tribunal decides that a protected disclosure was not made in "good faith". A previous requirement that a protected disclosure must be made in good faith has not applied since 2013, but this can still be taken into account in relation to compensation even though it is no longer a prerequisite for whistleblower status.
It is possible for a whistleblower to bring a whistleblowing claim against a co-worker as well as their employer.
EU legislation was passed to strengthen the protection afforded to whistleblowers in certain sectors in October 2019. Member states must transpose this law into domestic legislation within two years.
The UK has confirmed that it does not intend to adopt the directive as it is preparing to leave the EU.
There is no definition of whistleblowing under United Arab Emirates (UAE) law, and until recently there were no laws specifically providing for whistleblower protection.
Employers are increasingly seeking to include provisions in the employment contract placing a contractual obligation on their employees to report any wrongdoing of which they may become aware during their employment.
Historically, the UAE Penal Code has always placed a positive obligation on all persons to report crime. However, this reporting requirement is difficult to enforce and does not address the sort of unethical practices or behaviours which are caught by whistleblowing laws in other jurisdictions. Recent changes to the law in the UAE go some way to encouraging employees to escalate and report corporate wrongdoing.
The Financial Crime Law (Dubai Law No. 4 of 2016) introduced for the first time a degree of whistleblower protection where the disclosure is:
Where a disclosure satisfies the above criteria, the individual making it will be protected against prosecution and disciplinary action, unless proven to be providing false information. The Financial Crime Law expressly states that the reporter will be protected at their workplace and must not be subject to mistreatment or discrimination. In addition, an employee who makes a report to the Centre will not be deemed to be in breach of any non disclosure or confidentiality agreement signed and entered into with their employer.
The Centre was set up to combat financial crimes including corruption, fraud, bribery, embezzlement, destruction of public property, forgery, counterfeiting, money laundering and financing of terrorism and illegal organisations. This, coupled with the wide possible interpretation of "an activity that may affect the economic security of Dubai", means that there is a real possibility that an employee could use the Financial Crime Law to escalate an activity undertaken by their employer to the Centre.
The Financial Crime Law provides that the Centre can coordinate with international institutions in order to access and monitor information and data relating to matters which it is investigating for the purposes of national security. It could therefore potentially monitor and discipline Dubai companies and organisations who contravene provisions of the Financial Crime Law when operating outside Dubai. Energy and infrastructure companies, which invariably have operations and assets in different locations worldwide, should therefore be particularly aware of the possible extra-territorial reach of the Financial Crime Law.
The Dubai International Financial Centre (DIFC) free zone operates a common law jurisdiction and its own court system that sits separately to that of 'onshore' Dubai. Significantly, the DIFC Operating Law (DIFC Law No. 7 of 2018) expressly includes a positive obligation to disclose wrongdoing as well as whistleblower protections.
The law protects an employee who, in good faith, discloses to the DIFC Registry of Companies and information relating to a "reasonable suspicion" that a person contravened the DIFC Operating Law from:
While the DIFC Operating Law does not extend outside of the DIFC's jurisdiction, it does put the concept of "whistleblowing" on the map and the majority of DIFC-based employers now have a whistleblowing policy and practice in place. Additionally, employers are increasingly seeking to include provisions in the employment contract placing a contractual obligation on their employees to report any wrongdoing of which they may become aware during their employment. However, these obligations are only useful if the employer has the necessary resources in place to support a whistleblowing policy.
The UAE has far-reaching privacy laws which may conflict with the whistleblower protections. While an employer might be able to assure its employees that they will not be disciplined or dismissed from their employment for blowing the whistle, the same cannot be said in relation to any potential liabilities that may attach to the employee under the UAE's criminal law.
If, in disclosing an unethical practice, the employee simultaneously shares company confidential information, this could among to a crime under the UAE's Penal Code or, where the disclosure is made online, Cybercrimes Law. Additionally, a reporting employee who brings an individual or a company into disrepute may be accused of crimes of defamation. Sanctions for a breach of the UAE's privacy laws can include fines and imprisonment.
The Financial Crime Law simply states that an employee who files a report to the Centre will not be deemed to be in violation of "the provisions of the legislation". However, no reference is made to the UAE's criminal laws. The DIFC Operating Law only protects the employee against contractual or civil liability, not criminal liability.
Therefore, while employers can and should encourage their employees to speak out and report illegal or unethical practices and behaviours, they cannot protect their employees from any liability that might attach under the UAE's criminal laws. Protection against employment dismissal is different to a defamation claim. Employers must ensure that this balance is carefully considered in the wording of their whistleblowing policies.
Australia has recently introduced new laws to enhance protections for whistleblowers. The requirements are extensive, and the consequences for failing to comply can be dire. The law came into force on 1 July 2019.
The new law covers "qualifying disclosures". This means the disclosure of information that the discloser has reasonable grounds to suspect concerns misconduct or an improper state of affairs in relation to a company. It includes conduct which might be unethical but not necessarily illegal.
A qualifying disclosure can be made by any past or present employee; office holder; supplier of goods and services and their employees; and individuals who are associates of the company. Relatives of those people are also included.
A qualifying disclosure can be made to officers, senior managers, auditors, actuaries or other persons authorised to receive disclosures, either within the organisation or within associated companies. Alternatively, a disclosure can be made to certain regulators in Australia. The law also allows for emergency disclosures to members of parliament and journalists, subject to certain preconditions.
The law requires the identity of the whistleblower to be protected, and also prohibits any victimisation or retaliatory treatment of the whistleblower.
Public companies and large proprietary companies in Australia must implement a written whistleblower policy by 1 January 2020, and must make that policy available to their officers and employees.
Breaching the new law carries serious risk. We recommend that officers and senior managers receive training so that they understand what constitutes a whistleblowing disclosure, who can make one, what to do and what not to do when they receive one.
Whistleblowers who are subject to detrimental conduct are entitled to claim compensation for any loss, damage or injury suffered as a result of that conduct.
Penalties also apply. A company that reveals a whistleblower's identity without consent, or which victimises or threatens to victimise a whistleblower, may be subject to a penalty of up to A$10.5 million (US$7.24m), three times the benefit derived or detriment avoided, or 10% the corporate body's annual turnover up to A$525m. These are also criminal offences and may be punishable by up to two years' imprisonment.
Katie Williams, Luke Tapp and Claire Scott are employment law experts at Pinsent Masons, the law firm behind Out-Law. They are based in Perth, Australia; Dubai, UAE; and Aberdeen, UK respectively. Additional contributions by Susan Mackay and Ruth Stephen.
11 Oct 2019
20 May 2019