Court of Appeal clarifies “Public Interest” Test in whistle blowing cases

In Chesterton Global Ltd and anor v Nurmohamed, the Court of Appeal has held that an employment tribunal was entitled to find that an employee had a reasonable belief that his disclosures about his employer’s manipulation of profit and loss accounts were made in the public interest, despite his personal motivation in so doing (i.e. the effect this would have on his commission payments). The tribunal had identified a number of features that made it reasonable to regard disclosure as being in the public interest as well as in the personal interest of the worker – specifically, the number of employees affected; the nature of the wrongdoing, which involved large sums of money; and the fact that it was deliberate.

N was employed as director of the Mayfair office of CG Ltd, a firm of estate agents. On three occasions between August and October 2013 he alleged to senior managers that there were inaccuracies in the company’s accounts and that figures were being manipulated to the benefit of shareholders. He was concerned that costs and liabilities had been deliberately misstated, and that inaccurate figures were used to calculate commission payments to over 100 senior managers (including himself). N was later dismissed and brought claims of, among other things, automatically unfair dismissal for having made a protected disclosure, contrary to S.103A of the Employment Rights Act 1996.

An employment tribunal found that N had a reasonable belief that the disclosures were made in the public interest (as required by an amendment to S.43B ERA that came into force on 25 June 2013) and upheld N’s claim. Upon appeal, the EAT held that it was entitled to do so. Although N had a personal motivation in raising the allegations, the tribunal had been satisfied that he had the other office managers in mind, and permissibly concluded that they comprised a sufficiently large section of the public to engage the public interest. CG Ltd appealed, arguing that in order for a disclosure to be in the public interest, it must serve the interests of persons outside the workplace – mere multiplicity of workers sharing the same interest was not enough.

The Court of Appeal (Lord Justice Underhill giving the lead judgment) dismissed the appeal. It observed that that the 2013 ‘public interest’ amendment to the ERA was intended to reverse the effect of the EAT’s decision in Parkins v Sodexho Ltd 2002 IRLR 109, whereby a worker could bring a protected disclosure claim purely in respect of a breach of his or her own contract of employment. It disagreed with Public Concern at Work (which intervened in the case) that a disclosure of a breach of contract could be in the public interest if it was in the interests of anyone else besides the worker making the disclosure. The question whether a disclosure is in the public interest depends on the character of the interest served by it rather than simply on the number of people sharing it.

On the other hand, CG Ltd went too far in suggesting that multiplicity of persons sharing the same interest can never, by itself, convert a personal interest into a public one. The statutory criterion of what is ‘in the public interest’ does not lend itself to absolute rules and the Court of Appeal was not prepared to discount the possibility that the disclosure of a breach of a worker’s contract ‘of the Parkins v Sodexho kind’ may nevertheless be in the public interest, or reasonably be so regarded, if a sufficiently large number of other employees share the same interest. Tribunals should, however, be cautious about reaching such a conclusion – the broad intent behind the 2103 statutory amendment is that workers making disclosures in the context of private workplace disputes should not attract the enhanced statutory protection accorded to whistleblowers, even where more than one worker is involved.

The Court of Appeal went on to hold that where the disclosure relates to a breach of the worker’s own contract of employment (or some other matter where the interest in question is personal in character), there may nevertheless be features of the case that make it reasonable to regard disclosure as being in the public interest as well as in the personal interest of the worker.

In this regard, the following factors suggested by N might be relevant:
• the numbers in the group whose interests the disclosure served
• the nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed
• the nature of the wrongdoing disclosed, and
• the identity of the alleged wrongdoer.

In the instant case, the tribunal had identified other features, aside from the number of employees affected, which might be said to render disclosure in the public interest – specifically, that the disclosure was of deliberate wrongdoing, and that it allegedly took the form of misstatements in the accounts to the tune of £2-3 million. The Court observed that if the accounts had been statutory, the disclosure of such a misstatement would unquestionably be in the public interest (even if it involved a private company). The fact that the accounts in question were only internal made the position less black and white. However, internal accounts feed into the statutory accounts and C Ltd is a very substantial and prominent business in the London property market. It was debatable whether the tribunal, which was navigating uncharted waters, fed those factors into its assessment that it was reasonable to regard disclosure as being in the public interest. But, even if it did not, the Court considered that they would only have reinforced its conclusion, based on the numbers alone, so that any error of law in its reasoning was immaterial.

Link to transcript: http://www.bailii.org/ew/cases/EWCA/Civ/2017/979.html

Tribunal under duty to consider stigma future loss claim in whistleblowing claim

In Small v Shrewsbury and Telford Hospitals NHS Trust, the Court of Appeal has held that an employment tribunal ought to have considered whether to award compensation for long-term loss of earnings to a claimant whose employment was terminated because he had made a protected disclosure, even though the claimant, a litigant in person, did not expressly advance such a claim. In the Court’s view, given that the tribunal had acknowledged that the consequences of the termination were ‘career-ending’ for the claimant, it should have recognised and raised the issue itself.

S began working for the Trust in May 2012 at the age of 56. He was engaged through an agency on a temporary assignment but understood that there was a prospect of full-time employment in due course. However, two months later the Trust terminated his engagement. S successfully argued before an employment tribunal that the reason for the termination was that he had made a protected disclosure and the tribunal found that the termination constituted an unlawful detriment under S.47B of the Employment Rights Act 1996. At the remedy hearing, S, who was unrepresented, claimed compensation for, among other things, loss of earnings up to his anticipated date of retirement in 2022. This was on the basis that a permanent appointment would have followed but for the unlawful termination. S also put in evidence to show that, since his dismissal, he had been unable to obtain work in the same field despite numerous applications. He asserted that his search for employment had been hampered by the fact that he was dismissed and by the lack of a reference from the Trust.

The employment tribunal awarded compensation of £54,126, including £33,976 for loss of earnings. It calculated loss of earnings on the basis that S would not have been given the permanent employment which he said he had been led to expect but that he would have been retained until November 2013. The tribunal made no award for loss of earnings beyond that point. However, in its reasoning on injury to feelings it observed that S’s career was dependent on the outcome of his last job, that the lack of a reference was indeed a hindrance and that the termination had been ‘career-ending’. S appealed to the EAT, where he had the benefit of representation by counsel for the first time. He argued that the tribunal should have awarded loss of earnings beyond November 2013 on the basis of the Court of Appeal’s decision in Chagger v Abbey National plc (Brief 893), where the Court held that, in principle, a claimant can recover for loss of earnings beyond the date on which employment would have otherwise terminated and can, in principle, claim for the ‘stigma’ that he or she suffers in the labour market. The EAT dismissed the appeal. While it accepted that there are some principles that are so well established that a tribunal might be expected to consider them as a ‘matter of course’, it could not accept that the Chagger basis of claim was in this category. S appealed to the Court of Appeal.

The Court allowed the appeal, holding that, in the particular circumstances of the case, the tribunal ought to have considered whether S had a claim in respect of his loss after November 2013, which would, in principle, include a stigma claim. Lord Justice Underhill, giving the only judgment, pointed out that S’s evidence to the tribunal made clear that he was suffering a loss extending into the indefinite, and probably long-term, future, and that the tribunal had itself recognised the ‘career-ending’ consequences of the termination for S. Although a Chagger claim will not always be a ‘matter of course’, it was so in the particular circumstances of the present case. Underhill LJ rejected the Trust’s argument that, because S had put his claim for future loss on the basis of long-term permanent employment with the Trust, the tribunal was under no obligation to formulate a different future loss claim and consider that. The Chagger claim was an obvious alternative or fallback to the very specific and rather ambitious claim that S was advancing. He should not be regarded as having given up the right to have that alternative considered by the tribunal simply because both types of claim could be labelled as ‘future loss’.

Link to transcript: http://www.bailii.org/ew/cases/EWCA/Civ/2017/882.html