Employment Law Cases

Chesterton Global Ltd v Nurmohamed

To base the test of whether a whistleblowing disclosure is ‘in the public interest’ purely on the numbers affected would be ‘too mechanistic’ says the Court of Appeal. The question of whether a disclosure is in the public interest depends on the character of the interest served by it, rather than simply on the numbers of people sharing that interest.

Background

When the Public Interest Disclosure Act was passed in 1998, following a number of financial disasters and rail crashes, the intention was that employees who knew that their employers were for example driving out of the harbour with the ferry doors open or taking money from the pension funds of workers, could come forward with their concerns and be protected. However, despite the name of the legislation, there was no actual reference at all to ‘public interest’ or any definition of what it meant.

Subsequently lawyers started to use the legislation to further claims of individual employees, often to circumvent the qualifying period to bring a claim of unfair dismissal. The turning point was the case of Parkins v Sodexho where Parkins succeeded in his claim for whistleblowing when he said his employer were not complying with his individual contract of employment in terms of supervision on site and he was then dismissed.

In 2013, in direct response to the Sodexho case, the law on whistleblowing was changed so that protection is now afforded only to those raising whistleblowing allegations which they reasonably believe involve an issue of public interest. However, ‘in the public interest’ was again not defined.

Tribunal and EAT decisions

Mr Nurmohamed, a director at estate agency Chestertons, raised allegations with two of his senior managers that he believed the company had deliberately manipulated its accounts to reduce bonus and commission payments to its managers, including him and about 100 other managers. When he was dismissed he brought claims of unfair dismissal and detriment arising from his allegedly protected disclosures.

The question was, were his complaints a personal grievance about his pay (which the 2013 changes sought to exclude from whistleblowing protection) or did he reasonably believe there to be a wider public interest involved?

Mr Nurmohamed believed his disclosures were in the public interest and a tribunal agreed with him. Where only a section of the public would be affected, rather than simply the individual concerned, the tribunal found this must be sufficient for a matter to be ‘in the public interest’. The 100 or so senior managers represented a sufficient group of the public to support a public interest. And the tribunal found that Mr Nurmohamed had this extended group in mind when raising his allegations, not merely his own interests. His employer appealed.

Rejecting Chesterton’s appeal, the EAT said that an individual contractual dispute would not normally satisfy the public interest test (following the 2013 change) but a disclosure relating to a relatively small group of people may do so – whether it does is a question of fact in each individual case.

The EAT pointed out that the public interest test introduced in 2013 was intended to do no more than prevent a worker from relying upon a breach of his own contract of employment where the breach was personal in nature and there were no wider public interest implications.

Chestertons argued that 100 senior managers were not a sufficient group to constitute the ‘public’, and the fact they all worked for Chestertons added to this. The EAT disagreed. Despite the fact Mr Nurmohamed himself was adversely affected by the subject matter of the protected disclosures, the EAT upheld the tribunal’s decision that 100 senior managers at the same employer formed a sufficient group to satisfy the test. Chesterton appealed to the Court of Appeal.

Court of Appeal decision

The Court of Appeal has not only upheld the decision of the EAT but raised the possibility of individual contracts of employment still qualifying for the protection of the whistleblowing legislation.

They said that to base the test purely on the numbers affected would be too mechanistic and the question of whether a disclosure is in the public interest depends on the character of the interest served by it, rather than simply on the numbers of people sharing that interest.

Lord Justice Underhill said he was not prepared to rule out the possibility that the disclosure of a breach of a worker’s contract of the Parkins v Sodexho kind may nevertheless be in the public interest, or reasonably be so regarded, if a sufficiently large number of other employees share the same interest, although he warned tribunals to be cautious.

He concluded that each case turns on its own facts and that a useful tool were four factors raised by counsel for Mr Nurmohamed:

1.The numbers in the group whose interests the disclosure served

2.The nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed – a disclosure of wrongdoing directly affecting a very important interest is more likely to be in the public interest than a disclosure of trivial wrongdoing affecting the same number of people

3.The nature of the wrongdoing disclosed – disclosure of deliberate wrongdoing is more likely to be in the public interest than the disclosure of inadvertent wrongdoing affecting the same number of people

4.The identity of the alleged wrongdoer – the larger or more prominent the wrongdoer (in terms of the size of its relevant community, i.e. staff, suppliers and clients), the more obviously should a disclosure about its activities engage the public interest– although this should not be taken too far.

Here not only 100 people were affected but it was said to be a deliberate mis-statement of internal accounts of £2-3 million and these accounts fed into the statutory accounts of a ‘very substantial and prominent business in the London property market’ and therefore it qualified as protected disclosure.

Link to judgment: http://www.bailii.org/ew/cases/EWCA/Civ/2017/979.html

Comment

Whilst this would appear to be a backward step in terms of the intention of the protection offered by the whistleblowing legislation, the factors identified by the Court of Appeal mean that complaints about workers’ individual contracts are unlikely to qualify as whistleblowing unless the complaint is something significant such as the working hours of junior doctors. Here not only were 100 employees affected but there was said to be deliberate and large-scale wrongdoing which fed into statutory accounts and it was done by a big player in the London property market.