The EU is considering paying whistleblowers a US-style bounty
Whistleblowing legislation is evolving in the wake of unprecedented global financial impropriety (the LIBOR scandal, for example, over fixing the inter-bank lending rate). Legislators want to ensure such scandals do not occur in the future.
Bounties
The US has recently introduced ‘bounty payments’ for whistleblowing in the financial services sector. Anonymous whistleblowers can claim a reward of between 10 and 30 per cent of any sanction successfully applied to those found guilty of breaches. It has been found to be hugely successful and since last October the European Commission has been considering whether such bounties should be paid within the European Union (which would affect the UK as a member state) in relation to the financial sector.
Motivation
In the UK, prospective reform of whistleblowing regulation has a remit wider than the financial services sector. It includes whistleblowing in a health and safety context, scandals over lapses in NHS care, and public concerns over gagging clauses. The introduction of bounties in general does not sit comfortably within the UK legal system. Defence lawyers could argue that witnesses were motivated to blow the whistle for financial gain, especially where the whistleblower could arguably be implicated in some aspect of the malpractice. After all, the most relevant whistleblowers are likely to be part of the unlawful activity on which they are blowing the whistle. It is unclear whether the UK would introduce regulation to apply bounties to a wider area to include, for example, the NHS.
Reform
The UK has specific protection for those who raise ‘protected disclosures’ but there is still a genuine fear of reprisal from genuine would-be whistleblowers - the introduction of a bounty should reduce this fear. There have also been cases where employees have misused whistleblowing protection by making a series of disclosures to distract attention from other issues - such as their own poor performance. The government has made some recent changes to UK law to ensure employees cannot blow the whistle on breaches of their own employment contracts and that the disclosure is made in the public interest. These changes are helpful, but they won’t be the last to be made to whistleblowing regulation. The Department for Business Innovation and Skills’ call for evidence on the UK’s whistleblowing laws has now closed and a response from government is awaited. At the very least there is likely to be a tightening of the whistleblowing process, and possibly a Code of Practice applying to employers in a variety of sectors.
HR role
Whether changes made to the whistleblowing regime over the next year includes bounties or not, any reforms will inevitably have an impact on employers. This is an opportunity for HR professionals to show real leadership by encouraging their businesses now to explore genuine and worthwhile mechanisms where whistleblowers can raise concerns anonymously. Many employers will have some form of whistleblowing policy but in high risk sectors, such as finance or healthcare, there must be a mechanism which truly protects genuine whistleblowers.
Training
HR should review their businesses to identify risk areas and put in place a robust internal whistleblowing process - perhaps an anonymous helpline, manned by an external provider to protect whistleblowers from fear of reprisals. If bounties are introduced, employers should ensure staff understand what constitutes an irregularity worthy of complaint. With greater legal protection and maybe financial incentive, there is a risk employees may inadvertently use the process to voice complaints that should be addressed in an internal grievance or in staff forums. HR needs to ensure grievance procedures and forums are available to staff that wish to raise complaints in order to avoid the misuse of whistleblowing provisions.
Vanessa James is joint head of employment law at SA Law
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