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Employment Law Cases
Whistleblowing: material influence
Watson v Hilary Meredith Solicitors Ltd
Because a whistleblower’s behaviour after he’d blown the whistle was separate and distinct from his act of whistleblowing, his subsequent dismissal was not automatically unfair.
Mr Watson invested £100,000 into a solicitor’s firm when he joined as the CEO. He brought in a new Finance Director. Mr Watson and the FD discovered, after four days, financial irregularities which they brought to the attention of the firm’s owner. This was a protected disclosure. Mr Watson and the FD resigned on notice at a board meeting and following this a non-executive director and another director also resigned. Mr Watson was placed on garden leave. The firm tried to persuade him to return to work to help resolve their problems. After those attempts and settlement negotiations failed, he was dismissed because of his post-disclosure conduct.
In his tribunal claim, Mr Watson alleged that he’d been dismissed because, in reporting the financial irregularities, he had been a whistleblower. The issue for the tribunal was whether the dismissal and associated detriments had been ‘materially influenced’ by the whistleblowing. If this were the case, the dismissal would have been a whistleblowing dismissal and therefore automatically unfair. However, had Mr Watson been dismissed because he had ‘run for the hills’ (as the firm claimed) rather than staying to help the business out of its difficulties, this would not have been a whistleblowing dismissal. The tribunal dismissed his claim and Mr Watson appealed to the EAT.
The appeal was dismissed.
The EAT agreed with the tribunal’s decision that the dismissal was not ‘materially influenced’ by the disclosures. Mr Watson’s actions after having made a protected disclosure could be severed from the protected disclosures themselves. His dismissal was not automatically unfair as the reason for the dismissal was not because he had made the protected disclosure but because he had, by immediately giving his notice, in a board meeting to alert others, acted in a way which had further destabilised the firm.
The EAT took note of the tribunal’s findings that the law firm’s owner did not at any stage criticise Mr Watson for making his disclosures; she did not try to cover up the disclosures and, for a period after they were made, she maintained an amicable relationship with him – which only began to change when she started to reflect on events and decided she was not happy about his decision to resign rather than to stay on to help resolve the problems that had been identified. Given his position it had been expected that he would help the firm deal with the problems rather than ‘running for the hills’. The firm had been entitled to regard this as a breach of his duties as a director and of the terms of his service agreement.
Link to judgment: https://www.bailii.org/uk/cases/UKEAT/2021/0092_20_1003.html
We know that any dismissal of an employee in a whistleblowing context must handled carefully. However, this decision highlights that in whistleblowing claims, causation is key. The reason for subjecting the whistleblower to a detriment or dismissing them must be because he or she made the disclosure – and not something else. Here the employee’s actions after making the disclosure were clearly separable from the disclosure itself, thus enabling action (lawfully) to be taken against him. It is also a useful reminder of the responsibilities placed on directors and that simply walking away at that critical stage was enough to justify immediate dismissal.
The case was also interesting because the firm waived privilege and disclosed its legal advice, primarily to explain why it had not dismissed Mr Watson straightaway.