Employees reporting wrongdoings can seriously damage the reputation of your brand. Here, Chaman Salhan, chief executive of legal firm 2ndOpinionNow, says directors can mitigate such risks right away
Whistleblowing is a word we’ve become accustomed to in recent years. The media would have us believe whistleblowing has a vestige of espionage-style glam – think about those lone defenders of truth Edward Snowden or Chelsea Manning – but the reality for business leaders is more prosaic. For them a whistleblower is an employee within the organisation reporting apparent wrongdoings at work.
Previously, such whistleblowers would have been considered ‘snitches’, treacherous turncoats grossly betraying the company that employed them. However, the 1998 Public Interest Disclosure Act ensures they are now protected from being disciplined or mistreated by their employers.
Whistleblowing can happen all too easily. An employee could expose a weak IT policy after cyber-hacking has resulted in false invoices being sent out. You could be a manufacturing firm accused of turning a blind eye to health and safety regulations, when a staff member suggests production should be stopped because you’re not enforcing the use of proper safety procedures. Bank managers, who may be liable under the new Code of Practice, may whistleblow on the bank to avoid personal liability for events such as Libor rigging. When such things happen, the fallout can be disastrous: blemished brand reputations, expensive tribunals and legal minefields.
If you do have whistleblowing problems, you need to ascertain the discovery is a genuine qualifying disclosure, rather than allegations (say, a hospital employee overhearing a story about unclean wards). The Enterprise and Regulatory Reform Act 2013 states that whistleblowers have to show they “reasonably believe” the disclosure they’re making is in the “public interest”. This isn’t defined by legislation, but an example of classic public-interest whistleblowing could be a company that kills the bats it has discovered in a building it is renovating, without realising they are protected by conservation legislation. The firm might not be happy if a builder suggests the development should be halted because of bats in the roof, but it would be committing a criminal offence if work proceeded.
Whistleblowers can do untold reputational damage to your firm, by bad-mouthing you to clients or telling the media. Take the Winterbourne View hospital scandal in 2011. After management ignored a nurse’s concerns that patients were being abused, he alerted the BBC whose undercover footage resulted in a review of the care system. Had Winterbourne implemented an effective whistleblowing policy, the assaults and resulting brand damage could have been halted. Indeed, a coherent whistleblowing policy is essential for firms, because you’d want to deal with such issues in-house rather than having people outside the company hearing about them. Sadly, many companies use HR teams to draft their whistleblowing policies rather than legal experts.
After the whistleblower’s disclosure has been revealed, companies must ensure they take a measured response, treating individuals without prejudice. The Public Interest Disclosure Act aims to protect whistleblowers, so you could end up with a costly tribunal if a person claims constructive dismissal because they feel they’ve been discriminated against post-disclosure. This could be about being overlooked for a promotion, denied a bonus or ostracised by staff.
At 2ndOpinionNow, we are asked to visit companies with whistleblowing issues, acting in a mediating capacity and ensuring the whistleblower is seen by external individuals. By doing that, they’ve shown a clear intent to protect both business and whistleblower alike, as well as diffusing the situation and preventing it from over-escalating.By having an external lawyer consider the detriment claim, the greater the likelihood that a tribunal will conclude that the company has done all in its power to prevent the same from occurring.
Should you have a problem within your company – or need to draft a whistleblowing policy – 2ndOpinionNow can help. We look at things from a reputational damage and contractual standpoint, making sure your business can progress in a positive way.
We are the UK’s only legal firm with a website that allows users to get a barrister’s written opinion on any legal problem (the site has a panel of 10,000 lawyers ready to advise). Just like cyber-risk or health and safety laws, the sooner you get whistleblowing procedures right, the better.
Do you have a whistleblowing problem or need to draft a whistleblowing policy?
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Chaman Salhan is a member of IoD Central London
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