Parrhesia Inc

Advancing Whistleblowing

Briefing to Ministers – Protect and Parrhesia

Paul Scully MP

Parliamentary Under-Secretary

Department for Business, Energy and Industrial Strategy Cc Lord Callanan

Date: 9th May 2022 Dear Minister,

Thank you and Lord Callanan for meeting with us to discuss the case for whistleblowing protection reform. This letter is in response to the requests you made for further information and represents the collective views of both Protect and Parrhesia.

You asked:

a) how a simple extension of the scope of whistleblowing protection could be made;
b) for some suggested regulators to add to the list of prescribed persons and;
c) for some international examples of a whistleblowing regulator akin to the proposed Office of the Whistleblower (OWB).

We suggest that the Irish model may be the closest to our system, and that the ‘House of the Whistleblower’ in the Netherlands has the most developed functions. The latter was established under the Dutch House for Whistleblowers Act in 2016 and modified to implement the European Directive for the Protection of Whistleblowers in July 2021 as the renamed Dutch Whistleblowers Authority Act.

We also set out below some key points for those aspects of the proposed OWB which we support. We believe that fundamentally any OWB should supplement rather than replace existing arrangements. It should not seek to do the work of the existing regulators, nor should it introduce a new tribunal system to run in parallel with the Employment Tribunals.

a) Extending whistleblower protection by regulation

Whistleblowing protection already extends to a wider range of workers than exists elsewhere in employment legislation (section 43K Employment Rights Act). However, one way in which the law needs updating to keep pace with international best practice, is to extend whistleblower protection to people in the workplace who are currently excluded. These groups include non-executive directors, trustees, job applicants, self-employed contractors, and volunteers. We would like to see protection extended to these and other groups (a wider list is available in Clause 1 – Extending the scope of whistleblowing of Protect’s draft bill. This could be achieved through secondary legislation, using the powers under Section 20 (7) (a) of the Enterprise and Regulatory Reform Act 2013: which reads:

“After subsection (3) insert—
“(4) The Secretary of State may by order make amendments to this section as to what individuals count as
“workers” for the purposes of this Part (despite not being within the definition in section 230(3)).”

b) new regulators to add to the list of Prescribed Persons.

It is easier for whistleblowers to gain legal protection if they disclose their concerns to regulators on the list of prescribed persons. Prescribed Persons are legally required to report annually on whistleblowing disclosures which increases the ability to hold these bodies to account in the way they handle whistleblowing concerns. Debates during the Economic Crime (Transparency and Enforcement) Act 2022 pointed to the role of whistleblowers in raising concerns with Companies House as the body overseeing the register of beneficial ownership. Given the plans to increase the powers of Companies House it follows that they should also be prescribed for the purposes of whistleblowing so that concerns about the misuse of companies for economic crimes can be reported more easily. However, there are a range of other new regulators which you might also consider adding to the list including the Office for Environmental Protection, the Building Safety Regulator, the Single Enforcement Body (when it is created – or until then the Gangmasters and Labour Relations Authority and the Employment Agency Standards Inspectorate), and the Digital Markets Unit within the Competition and Markets Authority. Local authority safeguarding boards should also be clearly prescribed for both adult and child safeguarding concerns.

c) Office of the Whistleblower (OWB).

We support the introduction of an effective body to oversee whistleblowing. In our view it should set standards for employers and regulators, ensuring that concerns are addressed and improving both employers’ corporate and director’s individual accountability. However, this should supplement, rather than seek to replace either our current regulators, or the employment tribunal.

There is limited research on similar “Offices of the Whistleblower”, many of which are only now being introduced in response to the EU Directive. Previous research found that where a whistleblowing central agency exists, it is often part of the Ombudsman service. (In the UK there is a model in Scotland for the health service there in the Independent Whistleblowing Office – INWO). Some such bodies (such as in Israel and Belgium) only investigate public sector concerns. In a study of 2016 (USBO-report: The Dutch Whistleblowers Authority in an international perspective, Publicatie Huisvoorklokkenluiders) only Belgium and the Netherlands investigated both wrongdoing and retaliation (but in Belgium only in the public sector).

Here are some examples of international offices which might be worth further investigation:

In Ireland the Office of the Protected Disclosures Commissioner (OPC) will sit in the existing Office of the Ombudsman and support the raising of whistleblowing concerns to external bodies outside a whistleblower’s place of work (e.g. to regulators, law enforcement etc.). This is being introduced as Ireland updates its Protected Disclosure Act 2014 to extend protection to a wider group of people, and to set standards on employers, as in Netherlands these reforms are being introduced to be compliant with the EU Directive. The Irish example is worth considering as it bears close similarities with the UK. In Ireland there is a similar tribunal system, and a prescribed list of regulators. The new OPC will help whistleblowers by directing their concerns to appropriate regulators, only dealing with them itself where there is no obvious prescribed person. The Commissioner is backed-up by legal expectations on how whistleblowing concerns should be addressed by prescribed persons in terms of response times, diligent follow up of the concern, and timely feedback to the reporting person.

In the Netherlands the Dutch Whistleblowers Authority Act came into effect on 1 July 2016 and formally established the House for Whistleblowers (i.e. the Dutch Whistleblowers Authority). This independent body advises whistleblowers on their rights, provides them with psychosocial support, investigates malpractice and victimisation, and has a preventative role in raising awareness and promoting good practice among employers. It has been supported in its role by the introduction of standards on employers – all those with

50 or more staff have to introduce whistleblowing arrangements. It has worked hard to develop clear demarcations between the “advisory” and “investigation” functions. Initially it could only consider concerns about malpractice after whistleblowers had reported them internally first. Criticism also has been made about the lack of remedies for whistleblowers in the Netherlands, where a damages-based compensation system is not included. However, to comply with the EU Directive, the law is now being amended to introduce a range of new “competent authorities” such as the Financial Markets Authority and Dutch Central Bank who can also receive concerns, and the requirement to report internally first is being removed.

Those proposing to introduce an Office of the Whistleblower (OWB) often make comparisons with the US whistleblowing bodies, including the OWB within the Securities and Exchange Commission (SEC) but this only deals with whistleblowing about financial matters, in particular violations of federal securities laws. Parallels with the USA are difficult as there is no central employment law or system of protection for whistleblowers. Instead, there is a patchwork of protections across different sectors and industries with an emphasis on rewarding the whistleblower with a proportion of fines levelled at their former employer as a way of incentivising whistleblowers.

We would be happy to elaborate further on whether rewards are appropriate in the UK context, but we do not wish to see the current tribunal structure replaced with a rewards or ‘bounty’ based programme issued by a central regulator or body. As the International Bar Association notes of the US system: “The glitz and glamour of large government financial recoveries resulting from whistleblower disclosures and occasionally high rewards given to them in exchange for information distracts from volumes of cases that go uninvestigated, unclosed or unsubstantiated.” The rewards system would not be appropriate for most whistleblowers in the UK. Indeed, only the Republic of Korea and the US have developed rewards systems, and as many countries develop new whistleblowing laws, the emphasis is on remedies and compensation. Improvements in our compensation system can, and should, be made through the tribunals, and individual regulators can supplement this if gaps remain. Fiscal rewards are not necessary if proper compensation is available to reflect the broad range of post hoc detriments which whistleblowers frequently suffer in both their professional and personal lives.
To conclude,

• Any new whistleblowing body should be in addition to, not a replacement for, the existing legal protection for whistleblowers as set out in the Public Interest Disclosure Act 1998 (PIDA) and subsequent amendments. Removing employment protections from whistleblowers would create uncertainty and we would not want to see two separate processes that whistleblowers had to follow for example, one for unfair dismissal and another to obtain redress for reprisals suffered from whistleblowing.
• We would like stronger standards on employers and on regulators. A new whistleblowing body could set standards and hold employers, directing individuals and regulators to account for how concerns are investigated, and whistleblowers protected. However, we would not wish to see a duplication of the work of existing regulators.
• The extension of the scope of protection to more groups of people and widening the list of prescribed persons are simple changes that could be introduced quickly, through secondary legislation, pending a more thorough review of whistleblowing law. Such a review should be clearly defined now through a specified scope and timeline with suitable resources allocated to it to allow it to be concluded in the near future.

We hope this letter answers the questions you asked at our last meeting, and please don’t hesitate to
contact either of us for further details.

Yours sincerely

Elizabeth Gardiner, Chief Executive, Protect

Ian Foxley, Chief Executive, Parrhesia