Should the UK consider a US-style approach to whistleblowing?

The US Commodity Futures Trading Commission (CFTC) recently announced that it had awarded nearly $200 million (approximately £148 million) to a single whistleblower. To date, this is not only the largest ever CFTC whistleblower award, but also the largest ever to a single whistleblower under any whistleblower programme. With substantial sums on offer as well as large fines faced by organisations for wrongdoing, this case is a timely reminder of the importance of the bounty claims available under the US whistleblowing protection and the ongoing absence of anything equivalent in the UK.

In this article, employment law partner Clive Howard compares the current US whistleblower awards programmes operated by the CFTC and the Securities and Exchange Commission (SEC) to the protections for whistleblowers available in the UK and considers whether a US-style approach would encourage more whistleblowers to come forward in the UK.

Public Interest Disclosure Act 1998

Whistleblowers in the UK are protected by the Public Interest Disclosure Act 1998 (PIDA), which amends the Employment Rights Act 1996. The PIDA protects employees and workers who blow the whistle about wrongdoing:

• The legislation protects workers from being subjected to any detriment on the grounds that they have blown the whistle by making a “protected disclosure” (essentially a disclosure alleging the employer has acted unlawfully), and the detriments can include refusal to offer promotion, denial of training or blocking access to resources.
• The dismissal of an employee who blows the whistle will be automatically unfair if the reason or principal reason for their dismissal is that they have made a protected disclosure.

US whistleblowing protection

The United States has wide-ranging whistleblower laws with key protections and incentives at the federal, state, and local levels. The laws are designed to encourage whistleblowers to come forward and include protections such as confidential handling of disclosures, financial awards, and independent reporting channels.

There are also industry-specific protections and incentives, such as the Dodd-Frank Act, passed in 2010 following the financial crisis 2008–2009. The Act created two whistleblowing programmes in the US, operated by the SEC and CFTC.

Financial remedies

These whistleblower programmes offer strong protection for whistleblowers in terms of legal remedy. Whistleblowers who voluntarily provide original information, which then leads to financial sanctions being imposed, will share in the proceeds from the sanctions. As a result, this means that the whistleblower receives between 10 and 30% of the total proceeds.

In contrast, in the United Kingdom, exceptionally, the Office of Fair Trading and HMRC have discretion to provide rewards for information. Payments, comparatively, will be nothing near those paid in the US.

Jurisdiction

Crucially, the US scheme applies to people in any jurisdiction. The SEC and CFTC whistleblower programmes have accepted tips from individuals in over 130 foreign countries. Many have come from the UK. Awards can be made to foreign nationals even where the whistleblower resides overseas, submits the tip from overseas, and where the misconduct complained of occurs entirely overseas. Essentially, the only requirement is that the company complained of must be a public company and have shares traded in the US. In contrast, UK whistleblowing legislation rarely applies to overseas workers.

Anonymity

The US scheme allows the person providing the tip to remain anonymous throughout. So, in essence, a claim can be pursued through the Dodd-Frank Act, as well as in addition to pursuing all other whistleblowing remedies in the UK and elsewhere.

Under the current UK law, anonymity is not possible when bringing an Employment Tribunal claim. The case will be heard in a public hearing.

A focus on the information, not the identity

The US scheme focuses on the information provided, not the identity or character of the person providing the tip. The information must be beneficial to the investigation. It is the proof of wrongdoing which needs to be known.

The prohibition of retaliation

In the event that anonymity is not achieved, the Dodd-Frank Act also expressly prohibits retaliation by employers against whistleblowers and provides them with a private cause of action in the event that they are discharged or discriminated against by their employers in violation of the Act.

Similarly, in the UK, employees who participate in whistleblowing must not be subjected to detriment. It is automatically unfair to dismiss an employee for whistleblowing. And there is no minimum qualifying period which applies in order for protection to arise. Is it is also unlawful for a worker to be victimised by colleagues for making a whistleblowing disclosure.

Since its introduction in the US, whistleblowing tips have led to monetary sanctions of over $2.5 billion. Clearly, the legislation has incentivised whistleblowers in coming forward with allegations. The US legislation has worked.

It is therefore perhaps surprising that in the UK there has been no attempt to mirror the US legislation. Instead in the UK there remains emphasis on the nature of the individual rather than the information they can provide. Crucially, there is no equivalent protection of anonymity, so resulting often in the whistleblower suffering hostility potentially throughout their career.