Whistle while you work

16 April 2007

In the last few months, two separate cases have appeared before the EAT concerning the protections afforded to whistleblowers under the Public Interest Disclosure Act 1988 (PIDA) and its correct application to claims pertaining to the termination of a contract for services and a contract of service.

PIDA protects “workers” from detriment on the ground that they have made a protected disclosure. In addition, "employees" have the right not to be dismissed if the reason, or principal reason, for the dismissal is that they have made a protected disclosure. A termination in these circumstances will be automatically unfair.

In Croke v Hydro Aluminium Worcester Ltd the question before the EAT was whether Mr Croke was a worker of the end user Hydro who had contracted his services via an employment agency, Huxley Associates Ltd. PIDA expressly states that a worker can be:

An individual who works or worked for a person in circumstances in which
he is or was introduced or supplied to do that work by a third person, and
The terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them

Therefore, it is generally accepted that an agency worker is covered. However this case was unusual in that the contract between the employment agency and Mr Croke was not a direct chain and was made with Amerstar Ltd, a personal service company of which Mr Croke was the sole director and through which he provided his services as a consultant engineer. In particular in this case:

The individual had submitted his CV to the employment agency who forwarded it to the company, who subsequently interviewed and offered work to the individual
Two contracts for services where entered into. One between the company and the employment agency and another between the employment agency and the personal service company (the service provider)
The contract between the employment agency and the service provider defined the services to be provided by a named consultant - the individual, made provisions for the service provider to substitute the consultant and set out the fee rates
The individual could choose his own hours, although in practice, he attended during normal working hours, he had a company swipe card and used the company’s equipment. He was subject to the overall direction of an employee of the company, but was not subject to the company’s disciplinary processes or entitled to receive holiday or sick pay
The service provider sent a monthly invoice to the employment agency supported by a time sheet and the employment agency independently took to invoice the company. Payment to the individual was made by the service provider on an "as and when required" basis.

The EAT overturned the original decision of the tribunal and held that Mr Croke had satisfied the above definition of a worker. The EAT noted that the purpose of PIDA was to give workers protection from victimisation, a form of discrimination, and as such it was appropriate to construe those provisions to provide such protection rather than deny it.

Unless Hydro appeal to the Court of Appeal, this matter will now return to the Tribunal to decide whether or not Hydro subjected Mr Croke to a detriment as a result of him allegedly blowing the whistle on an alleged breach of a commercial contract between Hydro and a customer.Hydro deny this arguing that he was removed from the contract because he was very rude to staff.

In contrast, the case of Kuzel v Roche Products Limited concerned the termination of a contract of service (an employment contract). The tribunal had rejected the employer’s grounds for an SOSR dismissal and held that, as the employer had failed to establish a potentially fair reason for dismissal, the employee had been unfairly dismissed. However, as the employee had also failed to establish that the reason (or principal reason) for her dismissal was the fact that she had made protected disclosures, she had not been automatically unfairly dismissed under PIDA and accordingly compensation was capped. The employee appealed to the EAT who had to consider who was responsible for the burden of proof in claims for automatic unfair dismissal under the provisions in PIDA.

The EAT decided on the approach to be followed and issued the following guidance:

Failure by the employer to establish a potentially fair reason for dismissal does not automatically result in a finding of automatically unfair dismissal under PIDA
Rejection of the employer's reason, coupled with the employee having raised a prima facie case that the reason is a protected disclosure entitles the tribunal to infer that the protected disclosure is the true reason for dismissal
It remains open to the employer to satisfy the tribunal that the protected disclosure was not the reason (or principal reason) for dismissal, even if the real reason as found by the tribunal is not that advanced by the employer
It is not for the employee with qualifying service to prove the reason was the protected disclosure, however those with less than one year's service are required to first establish that the reason was a protected disclosure on the balance of probabilities

The risk for employers under PIDA is high given that it applies to both employees and workers, especially as many more self-employed consultants may now fall into the trap! Employees and workers need no qualifying period of service to bring a claim, and the amount of compensation that may be awarded is unlimited, and an injury to feelings award can be made in detriment (rather than dismissal) cases.

Clarkslegal were instructed in both of the above cases and will be happy to advise you too, but don’t just whistle – please pick up the phone!