The recent Court of Appeal decision in the case of Timis v Osipov serves as a reminder for company directors of the potential for the courts and tribunals to hold them personally liable for paying awards of compensation in whistle blowing cases.

The facts

The Claimant in this case (Mr Osipov) was employed by an oil exploration company called International Petroleum Ltd (“IPL”) as its CEO.

Two of IPL’s directors were Mr Timis and Mr Sage. Mr Timis was IPL’s largest individual shareholder. Mr Sage was, at the material time, its Chairman.

In late October 2014, Mr Timis, with the agreement of Mr Sage, decided that the Claimant should be summarily dismissed, and the dismissal was effected by an e-mail from Mr Sage sent on 27 October 2014.

An Employment Tribunal (“ET”) found that the principal reason for Mr Osipov’s dismissal was that he had made protected disclosures – that is, that he was a whistleblower. The ET also held that Mr Timis and Mr Sage had subjected Mr Osipov to a detriment, or detriments, contrary to section 47B of the same Employment Rights Act 1996 (“ERA”). The tribunal then went on to find that both directors were jointly and severally liable, with IPL, to compensate Mr Osipov for the losses suffered as result of his dismissal.

Mr Osipov’s losses amounted to £2,003,972.35.

Mr Timis and Mr Sage took the case to the Court of Appeal arguing that the compensation award effectively related to his dismissal and that they should not have been made jointly and severally liable alongside IPL for paying the award on that basis. Their reasoning being that the relevant whistleblowing provisions contained in the ERA only make co-workers personally liable where the complaint is one of a detriment (or series of detriments) which fall short of a dismissal. They argued that the wording contained in s.47B(2) ERA meant that co-worker liability did not apply where the detriment complained of was dismissal.

The Court of Appeal decision

The Court of Appeal rejected the notion that individual co-workers could not be held personally liable in circumstances where it was being alleged that the detriment or detriments that they subjected the individual to effectively resulted in their dismissal. The Court also went on to confirm that claims for pre-dismissal detriments (i.e. detriments which fall short of the act of dismissal itself) do not preclude recovery of consequential losses flowing from a subsequent dismissal (although the Court noted that the usual rules on the remoteness and quantification of such losses would continue to apply).

Commentary

One outcome of this case is that the extent of individual liability under existing whistleblowing legislation now mirrors the level of protection afforded to claimants who allege that they have been subjected to discrimination related detriments under the Equality Act 2010. Additionally, the ability to pursue dismissal related detriment cases against co-workers under s.47B ERA (and vicariously against the employer in addition to a claim for automatic unfair dismissal under s.103 ERA) will enable claimants to take advantage of the wider test for causation contained in s.47B ERA and also enable them to seek additional damages for injury to feelings.

Action points

Employers should review their existing policies and procedures in order to ensure they are taking all reasonable steps to prevent their staff from subjecting co-workers to whistleblowing detriment. They should also ensure that adequate whistleblowing training is provided to managers and directors in order to help protect against the prospect of having to deal with time consuming and costly whistleblowing disputes.

Please contact Nathan Combes on nathan.combes@luptonfawcett.law or 01904 561449 for more information about whistleblowing policies and/or whistleblowing training, support and advice that we are able to provide.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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