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.