Two individual directors have been held personally liable for the unfair sacking of a whistleblower for the first time, in a case that will send shockwaves through boardrooms.

Appeal judges have upheld a record-breaking £2m award to the former chief executive of International Petroleum (IPL), Alexander Osipov, who was sacked in October 2014 on the grounds of lack of trust and confidence.

Osipov brought proceedings in the UK employment tribunal (IPL is based in Australia, but listed on the London Stock Exchange) for unfair dismissal and four counts of victimisation including for whistleblowing. The four co-defendants included two non-executive directors of the company: Frank Timis, the majority shareholder, and Anthony Sage, IPL’s chairman.

In 2016 an employment tribunal ruled that Osipov had been unfairly dismissed, primarily for making protected disclosures under whistleblowing legislation.

He was awarded compensation for unfair dismissal, injury to feelings and unpaid salary. The employment appeal tribunal (EAT) upheld the initial ruling and awarded the claimant £1,744,575.56 (now recalculated to be £2,003,972.35).

The second of two judgments made by the ET found Timis and Sage jointly liable for the award to Osipov. The two directors took this ruling to the Court of Appeal which has now upheld the original tribunal and EAT decisions.

The dismissal of Osipov in 2014 came at the culmination of a series of disagreements between the chief executive, Timis and Sage and other senior employees over IPL’s operations and the award of contracts in Niger, during which Osipov had become excluded from decision-making.

He was then dismissed without a notice period, and IPL claimed that because it only had a very small HR department it was unable to follow the correct dismissal procedures.

Osipov told the ET that his concern was good corporate governance and the need to avoid suggestions of bribery and corruption, which had blighted businesses in Niger. He also voiced concerns over the holding of data that may have breached Niger’s petroleum code.

The case is particularly notable because it has confirmed that individual directors taking the decision to dismiss someone for making a protected disclosure under whistleblowing legislation can be held personally liable.

The case is an important reminder for decision-makers to think more carefully than ever before about giving instructions to dismiss an employee for whistleblowing.

It’s vital that employers identify any potential whistleblower complaint at an early stage and isolate complaints from any other processes involving the whistleblowing employee, such as a performance or grievance process.

It’s advisable for employers to provide relevant training on whistleblowing to their staff, in particular line managers, decision-makers and those involved in internal HR procedures.  Especially when those who take the decisions can be held personally responsible if they are Directors.

A whistleblower is a worker who reports certain types of wrongdoing. The wrongdoing they disclose must be in the public interest. This means it must affect others, e.g. the general public.

Whistleblowers are protected by law – they shouldn’t be treated unfairly or lose their job because they ‘blow the whistle’.

Concerns can be raised at any time about an incident that happened in the past, is happening now, or is believed will happen in the near future.

A confidentiality clause or ‘gagging clause’ in a settlement agreement isn’t valid if you’re a whistleblower.

Complaints that count as whistleblowing are as follows:

 

  • a criminal offence, e.g. fraud
  • someone’s health and safety is in danger
  • risk or actual damage to the environment
  • a miscarriage of justice
  • the company is breaking the law, e.g. doesn’t have the right insurance
  • you believe someone is covering up wrongdoing

At Solve. we can provide training on whistleblowing procedures and assist in cases of whistleblowing.

A recent employment tribunal ruling is a useful reminder of the special protection afforded to pregnant employees facing redundancy.

In early 2016, the British Museum began a 5-year scheme to train Iraqi archaeologists on excavation techniques and site-management best practice. Ms Niki Savvides was hired for the role of training co-ordinator, initially on a one-year, fixed-term contract, with the expectation that her role would continue for the duration of the project. Towards the end of the first year, she informed the Museum that she was pregnant. Talks commenced with the Museum to secure maternity cover but soon afterwards she was informed that the emphasis of the role had changed, that a new post was to be created and that she was being made redundant. The role was then advertised externally and Miss Savvides applied. Unable to attend the interview due to pregnancy-related illness, the Museum withdrew her application.

In Savvides v The Trustees of the British Museum, Ms Savvides contended that the new role of project co-ordinator was similar enough to her current role that it should have been offered to her without having to apply when it was advertised externally. She claimed for automatic unfair dismissal and discrimination on the grounds of pregnancy.

A tribunal agreed and found in her favour. It held that the role change meant the Museum did in fact have a genuine redundancy situation, but as Ms Savvides had the requisite skills for the new role she should have been offered the job. Accordingly, the dismissal was automatically unfair.

In addition, the tribunal found that by withdrawing Ms Savvide’s application when she was unable to attend the interview due to the pregnancy-related illness, the Museum had discriminated against her and awarded an undisclosed financial settlement.

A spokeswoman for the British Museum said: “The British Museum values its employees highly and takes its responsibilities as an equal opportunities employer seriously; we aim to create a family friendly environment for all employees, through enhanced packages and flexibility and by consulting regularly with staff and representatives.

“The employment tribunal considered a case regarding the law on pregnancy discrimination, and came to its decision based on legal technicalities that were specific to this case.”

Notes to employers facing redundancies affecting staff who are pregnant, or on maternity leave.

Genuine redundancy situations do not mean that employers can lawfully dismiss pregnant employees or staff already on maternity leave. It is important to understand and correctly apply the law, most notably Regulation 10 of the Maternity and Parental Leave Regulations 1999 (MPLR) which covers the employees mentioned above.

In brief, Regulations 10 states: “This regulation applies where, during an employee’s ordinary or additional maternity leave period, it is not practicable by reason of redundancy for her employer to continue to employ her…Where there is a suitable available vacancy, the employee is entitled to be offered… alternative employment…”

Essentially an employee selected for redundancy whilst pregnant or on maternity leave, must be offered a suitable alternative role, if her employer has one. Furthermore, this employee should be offered the role in preference to other at-risk employees, even if the other employees were better suited for the role. Without adhering to the legal provisions of suitable alternative arrangements as set out in Regulation 10, any dismissal is automatically unfair and does not need a minimum length of service (normally two years) to recover unfair dismissal losses.

Additionally it is unlawful, due to Section 18 of the Equality Act 2010, for an employee to be treated unfavourably because of her pregnancy or maternity or any illness suffered due to the pregnancy. For a Section 18 claim, no comparator needs to be identified, making proving the case at tribunal easier. Compensation would then be payable for actual loss of earnings (capped), and also for injury to feelings (uncapped).

To be confident of compliance with the regulations, an employer who does not offer any alternative role should be able to show exactly why the new role is not suitable, ensuring that the failure to offer an alternative role is not due to the employee being on maternity leave.

In the case of Ali v Torrosian and others (t/a Bedford Hill Family Practice), Dr Ali was on long term sick absence following a heart attack, which was accepted as a disability.  A medical report stated that it was unlikely he would be able to return to work on a full-time basis but that he could return on a phased, part-time basis.  Dr Ali was then signed off work for six weeks due to a shoulder injury.  On the expiry of that certificate his employer dismissed him on grounds of capability.

Dr Ali claimed that he was unfairly dismissed and discriminated against due to his disability.  The Employment Tribunal (ET) found that his dismissal was unfair due to this employer’s failure to consider a return to work on a part-time basis, but rejected his discrimination claim, finding that his dismissal was justified by the employer’s legitimate aim of ensuring that it provided the best possible care to patients.

Dr Ali appealed to the Employment Appeal Tribunal (EAT) in relation to the rejection of his disability discrimination claim.

The EAT ruled that the employment tribunal had been wrong to find that dismissal was justified, without considering whether part-time working was a less discriminatory means of the employer achieving its legitimate aim.  Having found that the employer’s failure to consider part-time working meant his dismissal was unfair, it should have taken this factor into account when considering whether dismissal was proportionate.  Although the tests for unfair dismissal and disability discrimination are different, the factors that are relevant for determination are likely to be substantially the same.

At the date of dismissal, Dr Ali’s last sick certificate had ended and the medical advice indicated that he should be able to return on a part-time basis.  The ET should have considered whether the employer’s failure to consider part-time working as an alternative to dismissal meant that his dismissal was not objectively justified.

The EAT submitted the case to the same tribunal to reconsider this issue.

For advice and support on absence and discrimination, contact us at Solve.

Settlement Agreements, Protected Conversations

In 2013 ‘Protected conversations’ were introduced under the Employment Rights Act s 111A to allow employers and employees to have confidential discussions about ending an employment contract where there is no dispute about the termination.  Protected conversations do have limitations as discussions will not be treated confidentially in cases of automatically unfair dismissal, breach of contract or discrimination.   In cases where there is an existing legal dispute, the ‘without prejudice’ rule may apply to prevent statements made being used in court.  The following 5 points should be considered when conducting ‘protected conversations.

1. Different types of discussions will protect different types of claim.  The ‘without prejudice’ rule applies to a wider range of claims than discussions under the ‘protected conversation’ rule

2. The ‘without prejudice’ rule may protect pre-termination discussions, but will only apply if there is a genuine attempt to resolve an existing dispute

3. In cases of unfair dismissal, even if both parties wish to disclose contents of discussions, confidentiality cannot be waived under the ‘protected conversation’ rules, unless either party has engaged in ‘improper behaviour’ such as harassment, intimidation, bullying or undue pressure

4. The details and existence of a ‘protected conversation’ discussion may be protected and inadmissible as evidence in relation to an ordinary unfair dismissal claim

5. In cases where there is an unfair dismissal claim together with a discrimination claim, discussions in relation to the unfair dismissal claim must be ignored by tribunals, but not the discrimination claim

In the case of Dove v Brown & Newirth Mr. Dove was awarded £63,391 for age discrimination.  He had been a salesperson with the jewellery manufacturer, Brown & Newirth since 1990 during which time there were no issues with his work until a restructure in 2010 that resulted in younger team members being introduced and a younger Sales Director.  This is when the situation started to deteriorate as the Sale Director nicknamed Mr. Dove ‘Gramps’.

Mr. Dove continued to work within the sales team and did not complain about the ‘Gramps’ nickname.  In 2015 he was informed that his traditional approach to sales was out of touch with their business needs and customers found him to be old fashioned or long in the tooth.  The Company informed him that as a result of this his customers were being transferred to other sale persons and that as no alternative work could be found for him he was dismissed.

Mr. Dove lodged a case for unfair dismissal on the grounds of Age Discrimination which the tribunal upheld.  The tribunal found that he had been treated less favourably because of his age. The vocabulary used to describe customer views related to age.  The employer then acted on these discriminatory and stereotypical attitudes.  Having his customers transferred to a younger salesperson also reinforced this less favourable treatment. The employer had failed to have a proper performance process and had not investigated or challenged customer views.

Do all your employee’s have contracts of employment? When certain types of work come to an end, some employees face redundancy. They may actually suit a fixed term position available within the company. Are you aware a new contract of employment would then be required? If you are unsure whether this may affect you or you have not followed correct procedure contact Solve who can help from the outset.

When an employee commences work, it should be made clear by the Employer what happens when work comes to an end.

If particular types of work become redundant, the employees who are involved then become at risk of layoff. They may actually have skills that could be useful to their employer and in this instance employers will be more willing to find substitute employment for some of the employees potentially facing redundancy. If this is the case, they should not jump to the conclusion that the employees in question will not be interested, just because the positions available are temporary and not permanent.

If an employee who was facing redundancy, was to show interest in a fixed term position e.g. a vacancy which will only last a few weeks or months until the project ends, the employee and employer could come to an agreement to defer the redundancy until the end of the available fixed term contract. If the employee was asked to work their notice within the new role, they would be less likely to agree to this arrangement. Payments in lieu, enhanced severance payments, retention bonuses etc., are some ways both the employee and employer could make a commercial deal to suit them both.

The right to turn down an offer of a fixed-term role is reasonable on the basis it is not ‘suitable alternative employment’. If an employee was to do this, the employer needs to make them aware that redundancy is anticipated if there is not another role that suits.

What happens if an employee takes a fixed term role that will end in a year?

If a fixed term contract expires and is not renewed, this will be taken as dismissal. If an employee has two years continuous service, they are eligible for protection from unfair dismissal. If you are an employer and are faced with this issue, you should follow a fair termination procedure and also look at the availability of other suitable employment. The Employee may accept another fixed term contract again, especially if they have already done so in the past.

Is an employee entitled to a redundancy payment when a fixed term contract ends?

It is all down to the individual circumstances. If an employee who has been employed to work on a project for a fixed period, and it comes to an end, and the employer has no need for the particular skills used to complete the job, and lastly there is no alternative employment, the employee will then be eligible for statutory redundancy payment. This is a classic redundancy situation to be faced with.

If an employee covers a job while another person is absent on leave; maternity, parental etc. will they be made redundant on their return to work?

This would not be classed as a redundancy. When the employee on leave returns to work there will still be a need for this work to be carried out. If an employee is faced with this situation, their employer should ask them to sign a new contract. This will state that the employment will end on the return to work of the absent employee they are providing cover for. There is no likelihood of any arguments arising over whether this is a redundancy or not if this position ends to allow the absent employee to return to work, procedure is followed correctly and the correct contracts are issued. The law shows this as dismissal for ‘some other substantial reason’, if a fair procedure is followed.

Solve would highly encourage employers to speak with the employee when commencing a fixed term contract. This allows the awareness of what exactly will happen at the end of it, even more so if it is an alternative to being made redundant. Should you require any help with contracts, redundancies or information on any of the above situations please get in touch.