Blowing the whistle in the third sector

Earlier this month, OSCR - the Scottish charity regulator - reported that it received seven whistleblowing reports in the year 2017 to 2018, four of which led to inquiries using its powers in terms of the Charities and Trustee Investment (Scotland) Act 2005. The report is available online and OSCR has also published a guidance document with useful information for those operating in the charities sector.

In the words of OSCR: “Whistleblowing disclosures help… identify and prevent concerns within the sector and help charities to put things right, and supports OSCR to underpin public trust and confidence in the charity sector.”

There are also legal liabilities and possible claims which may arise from individuals who disclose information about alleged wrongdoing in certain circumstances (more commonly known as “whistleblowers”).

In particular, the Employment Rights Act 1996 provides protection from detriment and dismissal in certain circumstances. It is a very technical and fact sensitive area of employment law. For example, to gain protection the disclosure must be a ‘disclosure of information’ and must relate to one of six identified subject matters (including criminal offences, failure to comply with a legal obligation and/or danger to the health and safety of an individual).

Since 2013, the disclosure must also be in the reasonable belief of the worker, made in the public interest to be protected (although there have been cases where a reference to colleagues in a similar position as the whistleblower has been enough to satisfy the ‘public interest’ test). There are also certain rules about the way in which the disclosure is made and to whom. For example, a worker who discloses to their employer will have fewer hoops to jump through in order to secure protection than someone who discloses to a complete outsider such as the press.

Parliament has approved a list of prescribed persons to whom workers can make qualifying disclosures, provided the worker reasonably believes the failure is substantially true and concerns a matter within that prescribed person’s area of responsibility. OSCR is one such prescribed person, and here is the full list.

Since the abolition of employment tribunal fees, the number of employment-related claims has increased by over 165%. Claims are particularly important for those operating in the charity and third sector where the use of charitable funds is key and closely scrutinised.

The dismissal (including constructive dismissal) of an employee will be automatically unfair if the reason, or principal reason, is that they have made a protected disclosure. There is no qualifying level of service for this sort of claim (i.e. employees can bring this claim from day one of the employment relationship) and compensation is potentially uncapped. In addition to this, employees (and workers more generally) are also protected from being subjected to any detriment by an employer because he or she has made a protected disclosure. Detrimental treatment could include being disciplined, not being considered for promotion, being excluded from workplace matters or events.

Reputation can be everything in the charity and third sector, and so properly managing any such disclosures is crucial. Charities should ensure they take specialist advice at the earliest opportunity. Clear policies, and well trained staff, will also help in the meantime. Further, a recent English Court of Appeal decision held that an individual can be liable for a whistleblowing dismissal, along with the employer, under the detriment provisions of the Employment Rights Act. Liability may therefore extend beyond the charity itself, to any relevant managers and trustees.

Employment Law at MacRoberts

Our Employment Group is the longest established specialist team in Scotland, and our clients include some of the best known employers across Scotland and the wider UK.

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