Employment Lawyers Association. Annual Conference. 22 May 2013 THE NEW WORLD OF WHISTLEBLOWING: BRINGING BACK THE PUBLI C INTEREST?

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1 Employment Lawyers Association Annual Conference 22 May 2013 THE NEW WORLD OF WHISTLEBLOWING: BRINGING BACK THE PUBLI C INTEREST? Daniel Stilitz QC, 11KBW INTRODUCTION 1. The enactment of the Public Interest Disclosure Act 1998 ( PIDA ) was designed to introduce important protection for those blowing the whistle to draw attention to wrongdoing discovered in the workplace. During the passage of the Bill in the House of Lords, Lord Nolan commended those behind it for so skilfully achieving the essential but delicate balance in this measure between the public interest and the interests of employers. Fifteen years on, the verdict is less effusive. Significant gaps had been identified in the legislation, for example in failing to impose vicarious liability on employers for acts of victimisation carried out by their employees or agents 1. In other respects, however, PIDA has come to be seen a blunt instrument, enabling disgruntled employees to seek unlimited compensation despite having done nothing to further the public interest The Enterprise and Regulatory Reform Act 2013 ( the ERRA ) is an attempt by the Government to re-cast the whistleblowing legislation so as to remedy its more obvious defects and shortcomings. Whether it has achieved this objective remains a moot point. 3. The relevant provisions are due to come into force on 25 th June The new provisions will not apply in respect of disclosures made before that date: see section 24(6) of the ERRA. 1 See NHS Manchester v Fecitt [2011] EWCA Civ 1190 per Elias LJ at [61] 2 See Parkins v Sodexho Ltd [2002] IRLR See sections 24(6) and 103(2) of the ERRA

2 4. In this paper, I shall consider the impact of the changes brought in by the ERRA, and examine whether they are likely to improve the way the legislation works. I will also consider other recent developments in the law and practice in this area. CHANGES TO THE LEGISLATIVE FRAMEWORK The new public interest test 5. One of the striking features of PIDA was that, despite its title, it included no public interest test. Nor, strictly, did it require disclosure, since it expressly applies to information being brought to the attention of a person who is already aware of it: see section 43L(3). 6. Section 17 of the ERRA will provide for the first time that a disclosure will not be protected unless it is made in the public interest. Section 43B(1) of the Employment Rights 1996 ( the ERA ) will now read: In this Part a qualifying disclosure means any disclosure of information which, in the reasonable belief of the worker making the disclosure, is made in the public interest and tends to show one or more of the following (a) that a criminal offence has been committed, is being committed or is likely to be committed, (b) that a person has failed, is failure or is likely to fail to comply with any legal obligation to which he is subject [Emphasis added] 7. This amendment is presumably intended to deal with two perceived problems with the whistleblowing legislation. First, the definition of protected disclosure is currently so wide that many disclosures which have nothing whatsoever to do with the public interest nonetheless attract protection. For example, a disclosure of information in relation to a stale, historic failure to comply with a legal obligation would qualify, even if it there was no ongoing public interest in it being disclosed. 8. Secondly, and more specifically, the Employment Appeal Tribunal s decision in Parkins v Sodexho Ltd [2002] IRLR 109 has been interpreted as permitting alleged breaches of the whistleblower s own contract of employment (or other individual rights) as falling within the definition of a protected disclosure. In that case, Judge Altman said at [16], we can see no real basis for excluding a legal obligation which arises from a contract of 2

3 employment from any other form of legal obligation. It seems to us that it falls within the terms of the Act. Parkins v Sodexho was followed by the EAT in Fincham v H M Prison Service (EAT /0925/01/RN, 19 th December 2001) and Kraus v Penna plc [2004] IRLR 260 per Cox J at [30]. Although Parkins v Sodexho was always considered a controversial decision (although difficult to fault on the express wording of the statute), and many an employer reserved the right to contend on appeal that it was wrongly decided, it remained unchallenged and became the received wisdom. 9. The decision in Parkins v Sodexho, supra, thus brought entirely personal disputes within the scope of the protection of the legislation, without any requirement of a public interest element. This is plainly not what the framers of the legislation had in mind. 10. However, the new statutory wording, which introduces for the first time a requirement of public interest, is likely to give rise to a number of its own difficulties. Indeed, it is doubtful whether it will materially limit the scope for workers to claim that they have made a protected disclosure. 11. Significantly, the public interest is not defined. This is perhaps unsurprising, given the inherent difficulty in defining such a subjective and versatile concept. However, the consequence is that it will simply be left to the tribunals and, in all likelihood, the appellate courts, to come up with a workable definition, or, at any rate, guidelines on the meaning of the term. There will inevitably be a period of uncertainty, therefore, before the meaning of public interest in this context has been satisfactorily interpreted. This is assuming that the appellate courts do not further duck the issue by saying that it should be question of fact for the tribunal in each case to determine the public interest. 12. The range of potential available meanings is very wide. Interpreted narrowly, the public interest may require that a disclosure is of demonstrable benefit or advantage to the public generally, or to a significant part thereof. At the other end of the spectrum, a disclosure in the public interest may be held merely to be something which is of interest to some members of the public 4. Between these extremes, a range of intermediate definitions are in principle available to the courts and tribunals. For example, it might be held that a disclosure is made in the public interest if it is calculated to prevent, 4 This is the interpretation generally favoured by the press. However, Griffiths LJ noted in Lim Laboratories Ltd v Evans [1984] 2 All ER 417 at 435 that, There is a world of difference between what is in the public interest and what is of interest to the public. 3

4 ameliorate or reveal one or more of the categories of wrongdoing set out in section 43B(1) of the ERA. However, the difficulty with that approach would be that, since the categories of wrongdoing include breach of a legal obligation (see section 43B(1)(b)), it might simply take the law straight back into Parkins v Sodexho, supra, territory. 13. The problematic nature of defining the public interest is all the more concerning when seen in the light of the overall test imposed by section 43B of the ERA. The new language does not require the tribunal to determine for itself whether a disclosure has been made in the public interest, however that term is properly to be interpreted. Rather, the tribunal must ask itself the far more subjective question of whether the disclosure of information in the reasonable belief of the worker, is in the public interest. It follows that it will not be for the tribunal merely to determine objectively whether a disclosure is in the public interest. Rather, the tribunal must also assess whether the worker reasonably believed that the disclosure was in the public interest. There is thus an element of subjectivity inherent in the introduction of the concept of public interest at two separate levels i.e. in the concept of the public interest and in the assessment of the reasonableness of the belief of the worker. 14. The courts have already given detailed consideration to the meaning and effect of the phrase in the reasonable belief of the worker in section 43B of the ERA, because that phrase already qualifies the question of whether the information disclosed tends to show one or more of the species of wrongdoing identified in section 43B(1) of the ERA: The Court of Appeal held in Babula v Waltham Forest College [2007] EWCA Civ 174 [2007] ICR 1026 that the test of reasonable belief involves both a subjective test of the worker s belief and an objective element in determining whether that belief could reasonably be held: see Wall LJ at [82]; The worker may hold a reasonable subjective belief, even if it turns out to be wrong: see Babula, supra, per Wall LJ at [41], [75]; What is reasonable will depend on all the circumstances, assessed from the perspective of the worker at the relevant time, not with the benefit of hindsight: see Darnton v University of Surrey [2003] ICR 615 per Judge Serota QC at [33] and Babula, supra, per Wall LJ at [41]; and 4

5 14.4. The burden of proof is on the worker to establish the requisite reasonable belief: see Babula, supra, at [74]. 15. In the context of the question of whether the worker reasonably believes that the information disclosed tends to show that a relevant legal obligation has been breached, is being breached or is likely to be breached, it was held in Darnton, supra, per Judge Serota QC at [29], [31], [33] that the truth or falsity of the information disclosed may be relevant to assessing the reasonableness of the belief: see also Babula, supra, per Wall LJ at [79]. By analogy, it is likely that a tribunal would consider whether a disclosure was in fact in the public interest in determining whether a worker s belief that it was in the public interest was reasonable. However, that will merely take the tribunal back to the thorny question of whether the disclosure is in the public interest, however that term is properly to be interpreted. 16. Assuming that the courts retain the Darnton / Babula approach, it can therefore be seen that the new public interest test is likely to be a relatively easy one for a claimant to overcome. The concept of the public interest is potentially very wide, and in itself contains a large element of subjectivity. Tribunals are unlikely to be willing to define the public interest narrowly. But if that was not bad enough, the worker need demonstrate only that he reasonably believed that his disclosure was made in the public interest. He may succeed in doing that, even if the tribunal finds that, with hindsight, the disclosure was not in the public interest at all. 17. The ease with which the public interest test may be satisfied can be demonstrated with the example of an employee who alleges that he has been unlawfully discriminated against on grounds of his race by his employer. The employee makes a disclosure of the alleged discrimination to senior management, and later claims he was subsequently dismissed by reason of his disclosure. The employer argues that he does not have the protection of the whistleblowing legislation, because his disclosure was made in his own personal interest, not in the public interest. The employee responds that he considers race discrimination to be a pernicious evil in society, and that he felt duty bound to raise the matter with senior management so as to challenge what he believed to be the prevailing culture of unlawful discrimination within the organisation. Even if the employer argues that the disclosure was plainly made at least in part in the employee s own self-interest, that is unlikely to provide a defence in circumstances where the 5

6 legislation does not require that the disclosure be made solely in the public interest, and the legislation further contemplates that a protected disclosure may be made in bad faith without the protection of the whistleblowing provisions necessarily being lost (as to which see below). 18. If the employee is believed, it is quite possible that the tribunal would find that his disclosure was made in the public interest. After all, there surely is a public interest in eliminating unlawful discrimination. Even if the tribunal found that there was not in fact any public interest in making the disclosure, they might well still find that the employee reasonably believed that his disclosure was in the public interest. 19. Similar issues would be likely to arise, for example, where an employee raised concerns about his health and safety in the workplace, or about alleged breaches of the Working Time Regulations, particularly where the employee was able to argue that he was not the only victim or potential victim of wrongdoing. 20. However, the position might be more difficult if an employee was complaining about a breach of contract, which in general will not have wider implications, unless, perhaps, he sought to argue that there was a public interest in employers complying with their legal obligations. This would be an ambitious argument, since on this view the public interest requirement would add very little to the legislation as it now stands. But it is far from self-evident that there is no public interest in promoting compliance with all legal obligations. 21. In summary, in most cases, the introduction of the new public interest test is unlikely to present a very high hurdle for putative whistleblowers. Indeed, it remains to be seen whether the new test will have much practical impact at all in filtering out those complainants who seek to abuse the whistleblowing provisions for the purposes of personal gain. Good faith 22. The potential inadequacy of the new public interest requirement is compounded by the removal by section 18 of the ERRA of the requirement that protected disclosures be made in good faith. This is, on its face, a curious reform. Surely it is uncontroversial that those who seek the protection of the whistleblowing provisions should be, at the very minimum, acting in good faith, and not in bad faith? There are precedents for such 6

7 a requirement elsewhere in employment law: see, for example, the bad faith exception in relation to protected acts for the purposes of the victimisation provisions under section 27(3) of the Equality Act Section 18 removes the requirement that a disclosure must be made in good faith from: (a) section 43C(1) (disclosure to employer or other responsible person); (b) section 43E(b) (disclosure to a Minister of the Crown); (c) section 43F(1)(a) (disclosure to a prescribed person); (d) section 43G (disclosure in other cases ); and (e) section 43H (disclosure of an exceptionally serious nature). 24. In the light of the Court of Appeal s decision in Street v Derbyshire Unemployed Workers Centre [2004] EWCA Civ 964 [2005] ICR 97, there is a certain irony in the abolition of the requirement of good faith by the ERRA. The significance of the decision in Street v Derbyshire was, in effect, to import a requirement akin to the public interest into the test for a protected disclosure. The Court of Appeal rejected an argument that good faith was to be equated merely with honesty or honest intention. Instead, the test of good faith was held to relate to the worker s motivation, such that it was open to a tribunal to find that a disclosure was not made in good faith if it was made predominantly for some ulterior purpose, being a purpose other than the public interest: see Auld LJ at [56] and Wall LJ at [73], [75]. 25. Thus, not only did Street v Derbyshire import a requirement of public interest by the back door, but it focussed directly on the claimant s motivation. It was not caveated by the question of whether the claimant had a reasonable belief that the disclosure was in the public interest. 26. In an apparent attempt to off-set the consequences of the abolition of the good faith requirement for the purposes of establishing a protected disclosure, section 18(5) of the ERRA introduces a new section 123(6A) into the ERA, which provides: Where (a) the reason (or principal) reason for the dismissal is that the complainant made a protected disclosure, and (b) it appears to the tribunal that the disclosure was not made in good faith, The tribunal may, if it considers it just and equitable in all the circumstances to do so, reduce any award it makes to the complainant by no more than 25%. 7

8 27. Section 18(4) of the ERRA introduces an equivalent new section 49(6A) of the ERA in relation to awards for detriments inflicted on grounds of a protected disclosure where the disclosure was not made in good faith. 28. These are a curious provisions. Whilst tribunals are used to increasing or reducing awards because, for example, a statutory procedure has not been following properly, to make a modest adjustment for bad faith seems somehow inadequate. Thus, if a worker makes a disclosure for the purposes of personal gain, the worst that can happen is that their compensation will be reduced by 25%. Indeed, even if a worker makes a disclosure maliciously, the only adverse consequence would be a reduction in compensation. Provided the worker also reasonably believes that the disclosure is in the public interest, his bad intentions will not prevent him from being handsomely compensated if he is dismissed or subjected to detriment. 29. The power to reduce compensation by up to 25% was seen as following a middle path between the current requirement of good faith in relation to the making of a protected disclosure, and the complete abolition of that requirement. But it is in reality nothing of the sort. Take the case of a worker who wrongly but reasonably believes that a disclosure is in the public interest, but whose main reason for making it is malicious, in order to blackmail his manager. If he succeeds in showing causation, then the worst that can happen is that he will receive 75% of his loss. And given that malicious disclosures are now protected, it may be easier to show causation, because employers are highly likely to be goaded into retaliating against employees who seek to blackmail them, or otherwise act in bad faith. 30. Given these potentially extravagant consequences, it may be that tribunals will seek to mitigate the potentially far-reaching effects of the removal of the requirement of good faith by altering the test of causation to be applied in whistleblowing cases. The manner in which disclosures are made has hitherto been treated as relevant to whether they are made in good faith: see Korashi v Abertawe Bro Morgannwg University Local Health Board [2012] IRLR 4 per HHJ McMullen at [63] and Hossack v Kettering BC Appeal No. EAT/1113/0129 November 2002 per Wall J at [39]-[41]. It may be that the courts and tribunals now seek to develop the law on causation, so that where the manner of disclosure, rather than its content, is the principal reason for dismissal (or the ground of a detriment), the test of causation will not be satisfied. This might present a means of 8

9 mitigating the consequences of the abolition of the requirement of good faith. On this approach, it would be open for an employer to say that he had dismissed a worker not because of the disclosure itself, but because of the offensive, provocative or inappropriate manner in which it was made. Unless some such adjustment is made by the courts and tribunals, the law will remain exceptionally generous to the malicious whistleblower. 31. In the health and safety and trade union dismissal context, the Employment Appeal Tribunal has recognised that dismissal or detriment in response to wholly unreasonable, extraneous or malicious acts may be lawful: see Shillito v Van Leer (UK) Ltd [1997] IRLR 495 per Judge Peter Clark at [18], [19] and Lyon v St James Press Ltd [1976] ICR 413 per Phillips J at p 419 C-D. In Goodwin v Cabletel UK Limited [1997] IRLR 665 Judge Peter Clark said at [40], in the health and safety context: The protection afforded to the way in which a designated employee carries out his health and safety activities must not be diluted by too easily finding acts done for that purpose to be a justification for dismissal; on the other hand, not every act, however, malicious or irrelevant to the task in hand, must necessarily be treated as a protected in circumstances where dismissal would be justified on legitimate grounds. 32. Underhill J was similarly prepared to accept a distinction between the fact of a protected act and the manner in which it was done in the victimisation context in Martin v Devonshires Solicitors (UKEAT/0086/10/DA, 9 th December 2010) at [22]. 33. In the light of the abolition of the good faith requirement, it may be that a similar principle comes to be recognised in the whistleblowing context. Conceivably, this may lead the courts to re-think the liberal approach to causation formulated, in cases of detriment, in Fecitt v NHS Manchester [2011] EWCA Civ 1190, [2012] ICR 372 per Elias LJ at [43] and [45]. It may be that the material influence test will be modified to permit the tribunal to take into account the manner in which a protected disclosure is made. Vicarious liability 34. Section 19 of the ERRA introduces new provisions which apply when a worker is subjected to detriment on whistleblowing grounds by a colleague or agent of his employer. 35. In summary: 9

10 35.1. A worker will have the right not to be subjected to any detriment by any act, or any failure to act, done on the ground that he has made a protected disclosure: (a) by another worker of his employer acting in the course of his employment; or (b) by an agent of his employer acting with the employer s authority (section 47B(1A) of the ERA); Where the worker is subjected to such a detriment, the thing done by his colleague or by his employer s agent will be treated as done by his employer (section 47B(1B)), irrespective of the whether the employer knows about it (section 47B(1C)); However, the employer will have a defence if he can show that he took all reasonable steps to prevent the worker or agent from doing the act in question or acts of that description (section 47B(1D)); The worker or agent responsible will not be liable if he acts in reliance on a statement by the employer that he would not thereby be in contravention of the ERA, and if it is reasonable for him to rely on that statement. However, that will not prevent the employer being vicariously liable (section 47B(1E)). 36. These amendments were introduced at least in part in the light of the Court of Appeal s decision in Fecitt v NHS Manchester [2011] EWCA Civ 1190, [2012] ICR 372. In that case, the claimants argued that their employer was vicariously liable for detriments they had suffered at the hands of other employees. However, it was held by the Court of Appeal that the employer could not be so liable, since the acts of its employees did not in themselves amount to actionable wrongs: see Elias LJ at [32]-[35]. The new section 47B(1A) of the ERA remedies this loophole, by making it unlawful for co-workers and agents of the employer to subject a worker to a detriment. Moreover, section 47B(1B) provides in terms that the employer will be vicariously liable for such acts. The meaning of worker 37. Section 20 of the ERRA amends section 43K of the ERA 1996, which sets out the extended meaning of worker which applies for the purposes of the whistleblowing legislation. Its purpose is essentially to ensure that all workers in the NHS are covered by the 10

11 whistleblowing legislation. At present, contractual arrangements for some workers in the NHS are such that they fall outside the protection of the provisions. 38. Section 20(7) of the ERRA inserts a new section 43K(4) into the ERA, which gives the Secretary of State the power to make by order amendments to the definition of workers for the purposes of the whistleblowing provisions, even though the workers in question may not fall within the definition of worker contained in section 230(3) of the ERA. By section 43K(5), an order under section 43K(4) may not have the effect of removing a category of individuals from the definition of worker unless the Secretary of State is satisfied that there are no longer any individuals falling within that category. 39. It is to be noted that this extension of the meaning of worker will not impact on the decision of the Court of Appeal in Bates Van Winkelhof v Clyde & Co LLP [2012] EWCA Civ 1207 [2012] IRLR 992 to the effect that, on the facts of that case, a member of an LLP was not a worker within the meaning of section 230(b) of the 1996 Act and therefore could not pursue a whistleblowing claim. 40. The Court found that the purpose of section 4(4) of the Limited Liability Partnerships Act 2000 was to ensure that those who would not have been employees or workers as partners within a partnership within the meaning of the Partnership Act 1890 would not enjoy such status within an LLP. A partner could not be an employee of a partnership, since each partner would have to be employed by himself. Moreover, the concept of employment requires a hierarchical relationship which is inconsistent with a relationship of partnership. This is the case even though LLP agreements will confer different powers and duties on different groups of partners: see Elias LJ at [67]. 41. However, given the widely varying categories of partner within LLPs, it may be that some purely salaried partners could still fall within the definition of a worker for the purposes of the whistleblowing legislation. MISSED OPPORTUNITIES FOR REFORM? 42. For those who advocate the strengthening of protection for whistleblowers, the reforms brought about by the ERRA may be seen as not having gone far enough. Public Concern 11

12 at Work, the whistleblowers charity, is currently consulting on a number of additional measures 5. Potential additional measures include: Mandatory whistleblowing procedures within all sectors; Financial rewards for whistleblowers (as there are in the US); Protection for those who are wrongly identified as having made protected disclosures; Protection for job applicants against being refused employment because of a previous protected disclosures; The causation test for unfair dismissal (i.e. that in Kuzel v Roche Products Ltd [2008] ICR 799 being assimilated with the test for detriment (i.e. that in Fecitt, supra) ; Interim relief being made available in detriment claims; Specialist tribunals or judges for whistleblowing cases; An open register of whistleblowing claims issued in the tribunal; Whistleblowing claims to be exempt from employment tribunal fees; Tribunals to have the power to make recommendations, levy fines and/or refer regulatory or criminal matters to the appropriate authorities. 43. However, some of those who practice in the field consider that the whistleblowing legislation in some respects already goes too far, permitting as it does claims by workers acting essentially in their own interests, and using the whistleblowing legislation to seek to obtain unlimited compensation. 44. For the reasons given above, it is far from clear that the new public interest test, particularly when combined with the removal of the good faith requirement, will suitably redress the balance. Indeed, it is strongly arguable that the amendments brought in by the ERRA will make it easier for opportunistic workers to bring claims in 5 See Whistleblowing Commission: Strengthening Law and Policy. Responses are sought by 21 st June

13 bad faith, using the fig leaf of a public interest justification. This will ultimately depend on how the courts and tribunals interpret the new provisions. POST-DISMISSAL WHISTEBLOWING 45. Since the decision of the Court of Appeal in Woodward v Abbey National plc [2006] EWCA Civ 822 [2006] IRLR 677 it has been relatively clear that a worker may raise a claim of whistleblowing in respect of a post-dismissal detriment, even if the scope for raising such claims remains unclear: see Ward LJ at [64]. The detriment must always relate to the employment relationship, but that does not preclude detriments which postdate the termination of the employment contract being actionable. 46. The case of Onyango v Adrian Berkeley t/a/ Berkeley Solicitors (UKEAT/0407/12/ZT) (25 th January 2013) raised the further question of whether a worker may bring a whistleblowing complaint based on an alleged protected disclosure made after the termination of the employment relationship. The Employment Appeal Tribunal (Judge Peter Clark presiding) had little hesitation in finding that a worker may in principle rely on a post-dismissal disclosure. As was noted, Ward LJ had expressly left this possibility open in Woodward at [67]. The EAT were particularly influenced by the fact that a worker is defined in section 230(3) of the ERA so as to include a person who has ceased to work under a relevant contract: see para [6]. GAGGING CLAUSES 47. There has been much recent publicity in relation to so-called gagging clauses being included in compromise agreements entered into between workers who have made protected disclosures and their employers. Such clauses are more usually referred to by lawyers as confidentiality and/or non-disparagement agreements. An employer will often wish to settle a dispute to a worker who has made, or purported to make, protected disclosures. In such cases, the employer may wish to pay a financial settlement to the employee at least in part in return for them not repeating the same or similar allegations. 13

14 48. A gagging clause will be void in so far as it seeks to restrain a worker from making genuine protected disclosures. Section 43J of the ERA provides: (1) Any provision in an agreement to which this section applies is void in so far as it purports to preclude the worker from making a protected disclosure. (2) This section applies to any agreement between a worker and his employer (whether a worker s contract or not), including an agreement to refrain from instituting or continuing any proceedings under this Act or any proceedings for breach of contract. 49. It is to be noted that section 43J is not confined to provisions in compromise agreements; it applies equally, for example, to confidentiality clauses contained in employment contracts. 50. To the extent that a confidentiality or non-disparagement agreement seeks to prevent a worker from making a protected disclosure, it will therefore be void. That, however, begs the question of whether a particular disclosure fulfils the definition of a protected disclosure. If an employee enters into a compromise agreement, and then purports to make a protected disclosure in prima facie breach of contract, he will not be able to pray in aid section 43J of the ERA if his disclosure is not in fact protected, for example because he does not reasonably believe that it is made in the public interest, or because it does not fall within one of sections 43C to 43H of the ERA. 51. To put the point another way, section 43J renders a provision void only in so far as it purports to prevent the worker from making a protected disclosure. On the most natural reading of the provision, therefore, it only applies where the worker makes a disclosure which in fact attracts protection. (After all, Parliament could have drafted the section to read if it purports ). It follows that an employee will not always be able to breach a confidentiality or non-disparagement clause with impunity. 52. On one reading, the confidentiality clause will only be void if it purports expressly to prevent the worker from making protected disclosures. On this view, if the clause seeks in terms to prevent a protected disclosure being made, it will be void come what may, whether or not the worker in fact makes a disclosure which is protected. However, it is submitted that the better view is that it will be void in so far as, properly construed, its effect is to purport to prevent the worker from so acting. This need not require express wording relating to protected disclosures. Moreover, the clause will remain valid and binding where it is being relied upon to enforce confidentiality more generally, provided that it is not being relied upon to prevent a protected disclosure being made. 14

15 53. From an employer s point of view, section 43J creates certain risks. The employer may pay a substantial additional sum in compensation in order to have the peace of mind of a confidentiality clause, only to find that that clause is void. Moreover, since only the confidentiality clause is rendered void, the employer may well end up being unable to recover any of the sums paid under the agreement. Indeed, it seems unlikely that, in the case of an ordinary compromise agreement, a court or tribunal would hold the entire agreement to be void ab initio simply because it contained a confidentiality clause which, for some purposes at least, was void. After all, in many cases the sums paid under the compromise agreement will be primarily in respect of any legal claims the worker may have, and amount largely to compensation for loss of employment: compare Sutherland v Network Appliance Ltd [2001] IRLR 12, in the context of statutory compromise agreements, per Lindsay P at [10]. 54. For this reason, employers would be well advised to attribute a specific and realistic sum to the confidentiality clause in a compromise agreement, and make it explicit that such sum is repayable in the event that the confidentiality clause is found to be void. Such an approach might well help to dissuade a worker from breaching the terms of a confidentiality clause. The sum allocated would of course have to be sufficiently large to act as a deterrent to the worker, whilst not being so large that it could be held to be an unlawful penalty clause. 55. The case of Gary Walker, a senior manager in the NHS, has drawn much recent attention. Mr Walker was employed as Chief Executive of the United Lincolnshire Hospitals Trust. He was dismissed in 2010, and subsequently signed a compromise agreement, under which he was reported to have received 500,000. The agreement contained a confidentiality clause, apparently prohibiting him from discussing either the settlement itself or issues arising from his employment. 56. Mr Walker later spoke out about his experiences in the NHS, in apparent breach of the confidentiality clause, and the Trust s lawyers took steps to recover the sums paid to him. Notwithstanding that he had been paid a substantial sum under the compromise agreement, the sympathy of both the media and the public seemed to lie with Mr Walker, rather than the Trust. Given that his statements related to patient safety, this is perhaps unsurprising, although his readiness to breach the terms he had signed up to was rather unattractive. After all, if workers cannot be required to sign up to 15

16 confidentiality agreements, it will become very difficult to resolve whistleblowing disputes without the matter going to a tribunal hearing. 57. The press subsequently reported that the use of confidentiality clauses in compromise agreements with NHS staff was widespread. 58. In an interview with the Daily Mail on 13 th March 2013, the Health Secretary, Jeremy Hunt MP, was reported as saying that: so-called compromise agreements under which NHS staff cannot raise anything embarrassing to their employers when they leave their jobs, would be barred with immediate effect The Health Secretary said: We are just going to ban them. All these compromise agreements have to be approved by the Department of Health and the Treasury. We are now saying we won t approve any with a confidentiality clause that prevents people speaking out about patient safety or patient care. We will make sure there is a specific clause in them saying that nothing in them can prevent people speaking out on issues such as patient care. 59. It is unclear what precisely Jeremy Hunt plans to do. On one interpretation, the Department of Health will withhold approval for compromise agreements which prevent NHS staff from embarrassing their employers. On another, it will withhold approval for agreements which prevent workers from speaking out about patient safety or patient care. But does this mean that no objection will be taken to agreements seeking to prevent disclosures about other issues, for example environmental issues or allegations of criminal activity by NHS managers? 60. In any event, it would appear from the press reports that no-one told Mr Hunt about section 43J of the ERA. 16