Sunday 28 December 2014

Why firms could pay a heavy price if they fail to prepare for new whistleblowing law

Duncan Inverarity

Published 12/07/2014 | 02:30

Whistleblower Garda Sgt Maurice McCabe
Whistleblower Garda Sgt Maurice McCabe

IRELAND'S new whistleblowing legislation, the Protected Disclosures Bill, was passed by the Seanad on July 1, has gone to the President for signing and will be enacted this summer. It will protect workers from being penalised for "whistleblowing" – disclosing information about criminal offences, failure to comply with the law, miscarriages of justice, the destruction or concealment of information and other alleged wrongdoings.

Whilst there is existing Irish legislation protecting whistle-blowers in certain sectors, this new legislation will cover all sectors and provide more protection. However, the Bill also raises serious questions about how prepared Ireland is for such a radical legislative change.

Recent high-profile media stories have served to highlight the absence of a strong whistleblowing culture in Ireland and this Bill certainly appears to be an attempt to address this.

Perhaps one of the most striking features in this respect is the maximum award of five years' remuneration for dismissal on grounds of having made a protected disclosure. When compared with the two years' remuneration maximum award under existing unfair dismissal legislation, this sends a clear message to Irish employers that firing employees for whistleblowing will not be tolerated.

The retrospective nature of the legislation is also a key challenge for businesses as they seek to become "whistleblowing ready". Although the law is coming into effect this summer, where an employee has made a protected disclosure earlier this year, or even last year, they will be entitled to protection under the legislation. So in essence, some Irish businesses may already be in breach of the new legislation before it has even been enacted.

The Bill does, however, contain key elements that employers will welcome. It provides a tiered disclosure regime, where whistleblowers must first make an internal disclose to their employer (the first tier), before escalating externally to regulators (the second tier) or the media (the third tier). Clearly, this is the preferred route of disclosure for employers as it allows them to retain control over both the investigation of allegations made to them by a whistleblower and the outcome of that investigation.

An additional challenge for employers is that the motivation of the whistleblower will be irrelevant when a disclosure is made to them and protection is sought under the Bill. In order to seek this protection, whistleblowers only need to demonstrate "reasonable belief" in a wrongdoing having been discovered.

This mirrors the current situation in the UK, where the so-called good faith requirement in whistleblowing cases was removed from its legislation. This followed a series of cases where employees had made valid disclosures but failed in their unfair dismissal claims because their employers were able to show that the whistleblower's primary motivation was to discredit their employer.

The UK government viewed these failed claims as contrary to the purpose of the legislation, which was to encourage whistleblowing. It argued that it should not matter whether an employee held a grievance against the subject of their allegation.

Clearly, the Irish Government feared a similar concern for employees here in a culture already unused to whistleblowing. So this good faith requirement only applies to disclosures made to regulators and wider disclosures, such as to the media.

The least desirable disclosure for employers is media disclosure, given the enormous long-term damage such disclosures can cause to an employer's business and personal reputation.

It is therefore unsurprising that whistleblowers to media must follow more stringent requirements. Specifically, they must demonstrate that it was not possible to make their declaration to either their employer or the appropriate regulator before whistleblowing to media.

To avoid this unnecessary escalation, it is therefore critical that employers make it easy for employees to whistleblow internally, and that they have the policies and procedures to enable this.

Anonymous reporting of whistleblowing is permitted under the new legislation. However, this makes investigation difficult. It also makes it impossible to go back to the employee and let them know the outcome.

Thorough investigation and careful management of issues raised by employees, including grievance resolution, is critical to ensure the smooth operation of a business. This will become even more so when the new legislation is enacted.

It is likely that we will begin to see straightforward unfair dismissal claims relabelled as 'whistleblowing' by those seeking to characterise historical grievances as topics covered by the legislation, thus bringing them into scope for the maximum award.

Unresolved or badly handled investigations followed by a dismissal (for unrelated reasons) will form fertile ground for whistleblowing claims under this legislation and businesses need to be prepared.

Duncan Inverarity is a partner with A&L Goodbody

Irish Independent

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