Case update (2): Whistleblowing detriment – is it personal?

whistle blowing

Summary:  Does someone need to be personally motivated by a protected disclosure in order to be found to have subjected a whistleblower to a detriment?

Yes, says the EAT in Malik v Cenkos Securities Plc available here.

Facts: The employee, Dr Malik, was employed as a senior research analyst by the employer, Cenkos Securities PLC, a specialist securities firm.

During his employment, Dr Malik had:

  1. made protected disclosures; and
  2. was the subject of disciplinary investigations into potential conflicts of interest.

The first potential conflict of interest was that Dr Malik’s dealings with a corporate client of the firm conflicted with his wife being a shareholder of that client.  Dr Malik received a written warning for this.  The second, later, concern in respect of conflict of interest, was that Dr Malik held shares in a company which he had not disclosed, in breach of FCA requirements and the firm’s rules.

The investigation into the alleged non-disclosure of shares was led by the Head of Compliance, who suspended Dr Malik. After some correspondence between the employer and Dr Malik’s solicitors, Dr Malik resigned, alleging that he had been subject to intolerable treatment amounting to a fundamental breach of contract. The resignation letter also suggested that he had been constructively dismissed on the basis that the sole or principal reason for his constructive dismissal was that he had made various protected disclosures.

Dr Malik brought a number of Tribunal claims including constructive unfair dismissal, automatic unfair dismissal and detriment on whistleblowing grounds. The Tribunal rejected all of these claims. On the point of causation in relation to the whistleblowing detriment claim, it found that the decision made by the Head of Compliance to investigate Dr Malik had nothing to do with the disclosures he had made.

Dr Malik appealed this decision to the EAT, arguing that the Tribunal had not considered that there may have been a “chain of command” leading the Head of Compliance to take detrimental action against Dr Malik, regardless of whether he had personal knowledge of the disclosures.

The EAT dismissed the appeal and held that personal knowledge of the disclosure and personal motivation were required in a detriment case. Therefore in cases of detriment, it would be unjust for an individual decision maker to be liable in circumstances where he or she personally was innocent of any discriminatory motivation.  This was the case even if the decision maker was acting on information tainted by another’s discriminatory motivation. As the Tribunal had made clear findings of fact that the Head of Compliance was the decision maker, and had nothing to do with the protected disclosures, that individual could not be liable for subjecting Dr Malik to a detriment for making protected disclosures.

The EAT noted, however, that where there was a claim for unfair dismissal on whistleblowing grounds (where liability for the dismissal will always lie with the employer) then it may be possible to impute the motivation of another in such cases (see our update on the case of Royal Mail Group Limited v Jhuti, available here). However, the same will not apply in a detriment case.

Implications:  This is helpful clarification that personal knowledge of the disclosure and personal motivation are required in a detriment case. The knowledge and motivation of others cannot be attributed to an innocent decision-maker who does not know about the protected disclosure.

Employers should keep written records of the decision-making process in these situations and carefully consider the make-up of any disciplinary panel before disciplining an employee who has previously made a protected disclosure.

 

whistle blowing