Small Business, Enterprise and Employment Bill

Lord Low of Dalston Excerpts

Monday 26th January 2015 Grand Committee

[Lord Wills (Lab)]

My Lords, the amendments in this group—I shall speak to them all together—seek to improve protections for whistleblowers. Twenty years ago, the Nolan committee highlighted the importance of,

“encouraging a culture of openness”,

in organisations to tackle and prevent malpractice. Since then, successive Governments have recognised the importance of this. The previous Labour Government brought in the Public Interest Disclosure Act and this Government have said repeatedly that they want to protect and encourage whistleblowing. The Prime Minister, for example, said:

“We will always back whistleblowers when they challenge poor standards, particularly in large organisations”.—[Official Report, Commons, 26/2/14; col. 257.]

However, there are still significant gaps in the current protections for those making disclosures in the public interest. These gaps in protection not only discourage individual cases of whistleblowing and damage individual whistleblowers quite unfairly; they also inhibit the creation of an effective culture in organisations that encourages transparency.

Large organisations that serve the public in both public and private sectors are powerful institutions. They are often driven by a potent internal culture and every case of whistleblowing challenges the powerful vested interests that run such organisations. As I have said in these debates, too often after a scandal is revealed, after the abuses have been tackled and the guilty punished, and after all the fine words about whistleblowers have been spoken, it is all too easy for those dominant interests in these organisations to revert to carrying on much as they did before. The powerful never like being challenged.

Repeated failures within the NHS, for example, have highlighted not only how important whistleblowers can be in protecting the public, but how difficult they can find trying to expose incompetence and wrongdoing. These problems are not confined to the NHS. For all the police wrongdoing after the Hillsborough disaster that has now been exposed, for 20 years no one blew the whistle. No one blew the whistle on the scandal of MPs’ expenses, even though the Fees Office in the House of Commons was well aware of the scams that went on. Whistleblowers need effective protection if the public interest is to be secured and there is clearly a need to do more. I hope that the Government will take advantage of a rare legislative opportunity to plug the gaps in protection for whistleblowers, which these amendments aim to do.

I am grateful for the support that I have received from my Cross-Bench colleagues, the noble Lord, Lord Low, and the noble Earl, Lord Lytton, and my noble friends on the Labour Front Bench. I am also grateful to the Minister and her officials for sparing the time to discuss these amendments with me in advance of today’s Committee. I hope that the Government will now respond to these amendments, to which I shall speak relatively briefly.

Amendment 66 simplifies the concepts of allegation and disclosure of information, and tackles the confusion that has arisen from the Employment Appeal Tribunal decision in Cavendish v Geduld, where an artificial distinction was made between a worker making a disclosure of information, which was protected, and the making of an allegation, which is not protected. It is unfair to expect non-legally trained workers to choose the precise wording to ensure that their disclosure is one of information rather than merely an allegation. The Cavendish v Geduld decision provides a convenient way for bad employers to ignore the concerns raised by claiming that the disclosure represents an allegation, as opposed to information. Moreover, the decision undermines one of the Public Interest Disclosure Act’s key policy aims, which is that protection should be most easily obtained for disclosures to the employer.

Amendments 63 and 67 seek to tackle the continuing problems of so-called gagging clauses. Even though the current law renders gagging clauses in any agreement void, there is evidence that further clarity is required. It is difficult to know exactly how extensive this problem is because of the confidential nature of severance agreements, but the experience of Public Concern at Work, the whistleblowing charity, suggests that many still feel gagged, even though these clauses may not be applicable in law. The National Audit Office also recently looked at this issue and concluded that many individuals believed they were gagged as a result of the events leading up to the signing of the agreement, including: the culture of the workplace; the attitude towards whistleblowing; the wording of the agreement itself; and because it was often not made clear to individuals that confidentiality clauses would not prevent them making disclosures on concerns of public interest. The National Audit Office looked at 50 agreements from the public sector, 49 of which were found to include a confidentiality clause which, in the end, prevented the individual discussing the terms of the agreement. It judged that none of the agreements would have legally prevented the whistleblower raising a concern, but its report gives several examples of how individuals nevertheless felt gagged.

Amendment 64 seeks to extend the protection for whistleblowers to student healthcare professionals. Students in these professions, with the fresh insights they bring to their work, are often well placed to make disclosures in the public interest. The case for extending whistleblowing protection to them has been extensively rehearsed. I do not intend to repeat it today, as I under- stand that the Government have already made a commitment to extending these protections. However, I would be grateful if the Minister could tell the Committee what progress they are making in doing this.

Amendment 65 seeks to tackle the problem of job applicants who find themselves denied employment opportunities because they have made a disclosure in the public interest. If an individual is labelled as a whistleblower, it can be difficult for them to get work because they can find themselves, in effect, blacklisted, not through a formal, central database but informally. This is a particular problem in small industries and within small communities. Unlike in other areas of discrimination law, job applicants are not considered workers under the Public Interest Disclosure Act, which provides protection where a worker secures a position and is then victimised, forced out or dismissed if the employer becomes aware of an instance of whistleblowing in a previous job. The amendment seeks to plug the loophole, which was identified in BP plc v Elstone, where the Court of Appeal stated that this situation was created because the drafting of the Act had not considered the situation of a job applicant being victimised for raising concerns in a previous job. The amendment addresses this anomaly. It might be helpful to the Committee to remember that an employer who is unaware that an applicant blew the whistle in a previous job would not be in breach of the Public Interest Disclosure Act. This is because, to succeed, the worker would need to prove not only that they had made a protected disclosure in a previous job and the prospective employer knew this—perhaps through a reference check or because the applicant informed the prospective employer of their whistleblowing past at interview—but also that this led to the decision not to recruit them. Without this causal link being demonstrated to the Employment Appeal Tribunal, there would be no case to answer. The amendment seeks to put this beyond argument.

Amendment 62 seeks to extend protection to those victimised for being falsely accused of whistleblowing. The Public Interest Disclosure Act does not protect a worker dismissed or victimised because the employer wrongly believes that they are a whistleblower. The worker cannot, therefore, link a disclosure to the dismissal or victimisation. This is an obvious anomaly and, in addressing it, the amendment follows the precedent of the Equality Act, under which legal protection for sexual orientation can still apply, even though an employer wrongly believes that someone is homosexual or heterosexual and discriminates on that assumption. Although the Equality Act is prohibitive legislation and the Public Interest Disclosure Act is not, other changes, such as the recent ones on vicarious liability, have borrowed from discrimination law. The amendment suggests a similar approach in relation to those who are wrongly identified as whistleblowers, without suggesting that being a whistleblower should be seen as a protected characteristic.

Amendment 68 seeks to embed a code of practice into statute, so that it will be taken into account by courts and tribunals. This was a key recommendation of the whistleblowing commission, chaired by the former Appeal Court judge Sir Anthony Hooper, which did invaluable work in this area in 2013. It drafted a 15-point code of practice, which provided practical guidance to employers, workers and their representatives and sets out guidance for raising, handling, training and reviewing whistleblowing in the workplace. A statutory code of conduct would send out to all organisations, in the public and private sectors, a powerful signal about the importance that Parliament attaches to providing adequate support for whistleblowers. This should help to drive the necessary cultural change within organisations to encourage whistleblowing.

Finally, I turn to Amendments 68ZA to 68ZF, which work together to set up a new office of a whistleblowing ombudsman. I am even more grateful than I usually am to the clerks for their invaluable help in drafting these amendments. Despite their length, they are essentially probing amendments, aimed at eliciting the Government’s attitude towards setting up such a whistleblowing ombudsman or some similar organisation. Establishing this was another important suggestion made by the whistleblowing commission. Its work, and the range and scope of the amendments that I have put forward today, suggest that providing adequate protection for those making disclosures in the public interest is a continuously evolving challenge.

Establishing an ombudsman, which need not involve expensive and elaborate bureaucracy, could provide an effective way of responding to this challenge. It could receive concerns and investigate retaliation against whistleblowers. It could also offer a form of alternative dispute resolution in whistleblowing cases. This would mean that whistleblowers would not always have to wait for such rare opportunities for legislation as this Bill to receive the protections that they deserve and the public need them to receive. It may also help to avoid the delays and costs of court and tribunal cases. I do not expect the Minister to make a pledge this afternoon, but I hope that she will at least feel able to commit to exploring positively and constructively the creation of such an organisation. I beg to move.

[Lord Low of Dalston (CB)]

My Lords, I have my name to most of these amendments. I was not able to get my name to those starting with Amendment 68ZA, which relate to the whistleblowing ombudsman, but I support those as well.

I support everything that the noble Lord, Lord Wills, has said about this group of amendments. Amendment 62, as we have heard, aims to give extra protection to individuals who are falsely accused of blowing the whistle because the employer erroneously assumes that they were the source of the disclosure, based on a previous incident or a reputation for challenging poor behaviour or malpractice in the past. It is wrong that employers should be able to penalise people when they have simply jumped to unsubstantiated conclusions, perhaps or perhaps not based on something that happened in the past. It would be the purpose of this amendment to avoid that possibility, or at least to give those who have been damaged by employers making such unsubstantiated assumptions a remedy.

Amendments 63 and 67, as we have heard, will help to alleviate some of the misconceptions around the protection afforded to whistleblowers under Section 43J—the anti-gagging provision—which was inserted in the Employment Rights Act by the Public Interest Disclosure Act. As has been said, the legal principles on which Section 43J is based are not the problem; it is that the section could be drafted more clearly. Instead of providing an oblique defence, the new provision in the amendment would act as a shield, preventing information that may point to malpractice, wrongdoing or a health and safety risk being buried in secret settlements. Clearer wording that could be understood by an individual who is not legally trained may well break down this potential barrier for the worker and be of benefit to the employer, as their duties and obligations in this area will be rendered all the clearer.

--- Later in debate ---

[Baroness Neville-Rolfe]

My Lords, I am glad that the noble Lord intervened to register his concerns, which to some extent I share. That is why the Government have committed to reviewing the introduction of fees. We are considering the scope and timing of the review, and will bring forward our plans in due course. We need to understand what is going on here, of course, but I was trying to make a general point about trying to improve things. The provisions in the Bill are another example of our efforts to do just that—to ensure that there are fair results and that people who are given awards receive them in due time.

I turn to each of the amendments, acknowledging the spirit of them, but obviously, as is usually my wont, looking to make sure that we do not have any perverse effects. I will start with Amendment 68ZG, which is designed to include costs in the calculation of the money that is considered to be owed for the purposes of the penalty. It is worth noting that “costs” or, sometimes, “preparation time” awards—where people are not paying for attorneys—are made in only a tiny proportion of cases. Costs awards are not related to the compensation for the breach of employment rights—for example, in a case of discrimination—but to the way in which one of the parties has behaved during the tribunal process. A good example would be the deliberate, repeated late disclosure of documents. Indeed, last year only 242 costs orders were made to claimants—in the context of more than 42,000 claims. The Government do not believe that adding costs to the calculation will add a significant additional incentive to pay. But I am sympathetic to the noble Lord’s intention and will consider further whether we need to make a change ahead of Report.

Turning to Amendment 68ZH, we are clear that a penalty regime must incentivise prompt payment in full and not inadvertently reduce the likelihood of individuals gaining their full award. Allowing the penalty to be used to offset the award, as proposed in the amendment, would not, we fear, incentivise prompt payment of the award in full, which is our objective. The point of the penalty is to act as a deterrent and a sanction for non-payment. Conflating money owed to the claimant with a civil penalty would cause confusion and might raise questions about which liability had been met when money was paid. We believe it would be better to keep the civil penalty separate from the money owed to the individual. The clause already encourages an employer to make full and prompt payment to avoid a penalty altogether. As I have explained, the only way in which an employer can avoid a penalty is to pay up in full once they receive a warning notice. This seems to be the most effective approach.

Amendment 68ZJ seeks to introduce a naming scheme. As the noble Lord will be aware, there is already a scheme for the national minimum wage. We are considering naming as part of the Government’s overall approach to increasing the full and prompt payment of tribunal awards. We need to carefully consider the options to ensure that we find the most effective response. I would be happy to update noble Lords on our thinking ahead of Report.

Turning to Amendments 68ZK to 68ZM, I reassure the noble Lord that unpaid awards are already recoverable through the county court, or the sheriff court in Scotland, as they are treated as judgment debts. There is also a fast-track scheme in England and Wales where a court enforcement officer can pursue the money on the claimant’s behalf. Furthermore, interest accrues on those unpaid tribunal awards at 8% per annum. So there is an incentive to pay promptly and in full.

Finally, in response to Amendment 68ZMA, I hope I can provide further reassurance. As I have outlined, there are already a range of mechanisms by which an individual is able to enforce their tribunal award. In addition, under Clause 145, a government-appointed agent will impose penalties for non-payment. The penalty scheme we are introducing through this clause offers an alternative, cost-free way to ensure that the claimant gets the money they are owed. Therefore, the Government do not consider that there is a need to set up a further mechanism at this stage, but we shall continue to monitor the situation following implementation of the new penalty provision.

I hope that my explanations, including about our wider plans, have provided reassurance to the noble Lord and that he will be content to withdraw the amendment.

[Lord Low of Dalston]

Before the noble Lord, Lord Young, replies, I wonder if I might be permitted to say a word or two about Amendment 62ZMA. I am afraid I was not quick enough on the draw before the Minister rose to reply. I thought that more noble Lords would intervene on some of the earlier amendments so I missed my cue.

Since I am speaking slightly out of turn, I will not make all the points that I might have made in support of the amendment. I am very grateful to have heard what the Minister had to say but there is a considerable amount of concern about the effectiveness of regimes for enforcing the payment of awards. A number of suggestions have been made for addressing this problem. I wonder if the Minister might be prepared to meet me before Report to talk through some of the options and to see if we cannot slightly firm up the provisions that are already there and find a formula or mechanism which might be slightly more likely to deliver results than what is in place at the moment and, indeed, what is proposed by the Minister.