Co-workers can be personally liable to whistleblowers for post dismissal losses

Co-workers can be personally liable to whistleblowers for post dismissal losses

In the recent case of Timis and another v Osipov, the Court of Appeal has considered whether two non-executive directors (NEDs) could be personally liable for losses suffered by a whistleblower after his dismissal (amounting to approximately £1,745,000). The Court of Appeal found that the NEDs could be liable jointly with the employer.

Facts

Mr Osipov was hired as CEO of International Petroleum Ltd (IP Ltd). Very shortly after his appointment he made a number of allegations about corporate governance and compliance with foreign law. These allegations constituted protected disclosures for the purposes of the whistleblowing protection regime. Mr Timis (a NED of IP Ltd) instructed Mr Sage (also a NED) to dismiss Mr Osipov, which he duly did.

Mr Osipov brought a claim for unfair dismissal by reason of whistleblowing against IP Ltd and detriment claims on the grounds of whistleblowing against the two NEDs and vicariously against IP Ltd .

The Tribunal found in Mr Osipov’s favour and awarded him compensation of approximately £1,745,000 for losses flowing from his dismissal. His employer and the NEDs were held to be jointly and severally liable for this amount. Given the employer was insolvent, the NEDs were solely responsible for this sum (although they had the protection of D&O insurance). They appealed to the Court of Appeal.

Decision

The NEDs appealed on the basis that the wording of the Employment Rights Act 1996 (ERA) appears to make it clear that an employee cannot bring a detriment claim against a co-worker where he has been dismissed by reason of whistleblowing. They argued that Mr Osipov was limited to bringing an unfair dismissal claim against IP Ltd.

The Court of Appeal rejected this. The intention of Parliament, when it legislated to entitle employees to bring whistleblowing detriment claims against co-workers, could not have meant to deprive them of this right where the detriment amounted to a dismissal. If the NED’s analysis was correct, this would mean that employees who were subject to a detriment short of dismissal would have a claim against co-workers, but those who had been actually dismissed would not. Furthermore individuals can be personally liable for discriminatory acts under the Equality Act 2010 and the whistleblowing protection should mirror this.

Comment

The result of this case is that employees who are dismissed by reason of whistleblowing can bring the following claims:

  1. A claim for automatic unfair dismissal by reason of whistleblowing against their employer;
  2. A claim for detriment on the grounds of whistleblowing against co-workers; and
  3. A claim for vicarious liability against their employer for the actions of the co-workers.

This decision makes sense and means that employees have a complete range of protection in the whistleblowing arena in same way as in discrimination cases.

Employees often seek to join co-workers to claims for whistleblowing or discrimination as co-workers may have deeper pockets than small or new businesses (especially when a co-worker is backed by D&O insurance). Co-workers may also provide a financial source when the employer is insolvent.

Training should be provided to employees on the risk of personal liability for whistleblowing claims as well as discrimination claims. This could be particularly relevant to senior managers with the power to take decisions, but with no D&O insurance backing.

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