Managers now face personal liability for whistleblowing claims
Last month the Court of Appeal confirmed that two directors were liable for over £2 million in compensation after the dismissal of a whistleblower in their organisation, writes David Mills, partner at Mills & Reeve LLP.
The former CEO had established that the directors concerned were behind the decision to end his employment because of protected disclosures he had made and were personally liable for his losses.
This claim would not have been possible before changes to the legislation in 2013 opened up the possibility of individuals being personally liable under whistleblowing legislation, in much the same as they have long liable been under our discrimination law.
The employer remains jointly liable, but in this case there was an added incentive to pursue the individual directors because the company had become insolvent.
In most circumstances, the employer will remain the main target for claims, but there are some situations where its officers and employees could also be in the firing line. In this case the two directors were covered by insurance, though this did not have any influence on the Court of Appeal’s final decision.
Businesses will now wish to review their insurance arrangements to ensure that appropriate cover is in place to cover liabilities of this nature.
It is likely to be a requirement of such cover that members of its senior management receive adequate training about their exposure to these claims, and the steps that should be taken to ensure that both they and their organisation are fully compliant with whistleblowing legislation.
• For more information, email David.mills [at] mills-reeve.com