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On 25 April 2013 the Enterprise and Regulatory Reform Bill received Royal Assent. The Bill will make considerable changes to employment law. See here for our full briefing.

Background
On 23 May 2012 the Department for Business Innovation and Skills(DBIS) published the Enterprise and Regulatory Reform Bill (ERRB). Among other proposals that include establishing the Green Investment Bank, changes to competition law, and a host of changes to employment law, the Government has included an amendment that will affect the Public Interest Disclosure Act 1998 (PIDA). The amendment is intended to remove a legal loophole whereby whistleblowing protection under PIDA could be given to someone who has raised concerns about their personal employment contract. See our briefing on the amendment and for a full list of the reforms required, click here.

What is the legal loophole?
A decision in an interim employment tribunal case, Parkins v Sodexho, watered down the public interest purpose of PIDA. In this case the Employment Appeal Tribunal found that an individual raising a concern about their personal employment contract could be covered by the breach of a legal obligation provision under PIDA. This has led to worries that PIDA is being abused by City Bankers using it to claim that raising concerns about their bonus payments are protected disclosures under PIDA. This has led some to say that PIDA cases are being dominated by “pale stale males”. This affects the reputation of this key piece of legislation and is a far cry from the original purpose of the legislation and the Parliamentary debates for the first and second bills.

The Governments solution has been to insert a public interest test within PIDA, where to achieve protection under the law a claimant would need to show the protected disclosure was ‘made in the public interest’.

DBIS proposed public interest test-
‘Enterprise and Regulatory Referral Bill

Clause 15: Disclosures not protected unless believed to be made in the public interest In section 43B of the Employment Rights Act 1996 (disclosures qualifying for protection), in subsection (1), after “in the reasonable belief of the worker making the disclosure,” insert “is made in the public interest and”. The change would have the following effect:

Employment Rights Act 1996
43B.
(1) 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 failing or is likely to fail to comply with any legal obligation to which he is subject,
(c) that a miscarriage of justice has occurred, is occurring or is likely to occur,
(d) that the health or safety of any individual has been, is being or is likely to be endangered,
(e) that the environment has been, is being or is likely to be damaged, or
(f) that information tending to show any matter falling within any one of the preceding paragraphs has been,is being or is likely to be deliberately concealed.’

PCaW's views
We agree that this important issue needs to be resolved but disagree with the Government's proposed solution as this would require a whistleblower confronted with a difficult situation, to judge what is in the public interest. A better way to deal with this issue is through amending PIDA to exclude protection for concerns that relate to an individual's employment contract.

There was no public consultation into this proposed amendment so the views of trade unions, UK business and other interested groupswere not taken into account when the Government drafted their amendment. This also represents a missed opportunity to take a wider look at the legislation’s success and failures which could in turnlead to further reforms that would improve the legislation.

Where is the Bill?

First reading
The bill was published and first reading took place on 23 May 2012.

Second Reading
The bill received its Second Reading on 11 June 2012, where Katy Clark MP (Labour) spoke in favour of a public consultation and voiced concerns about the proposed public interest test. Shadow Secretary of State for Business Innovation and Skills Chuka Umunna also expressed concerns over the introduction of a public interest test.

Committee Stage
The Committee Stage of the bill started on 19 June 2012 with a number of scrutiny sessions where the Public Bill Committee heard evidence experts and interested parties. Our Chief Executive Cathy James gave evidence to the Committee.

On 3 July 2012 Labour Shadow Minister Iain Murray proposed the following amendment:

43B. - (1) In thisPart a "qualifying disclosure" means any disclosure of information which, in the reasonable belief of the worker making the disclosure, 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 failing or is likely to fail to comply with any legal obligation to which that person is subject (other than a private contractual obligation which is owed solely to that worker),
(c) that a miscarriage of justice has occurred, is occurring or is likely to occur,
(d) that the health or safety of any individual has been, is being or is likely to be endangered,
(e) that the environment has been, is being or is likely to be damaged, or
(f) that information tending to show any matter falling within any one of the preceding paragraphs has been, is being or is likely to be deliberately concealed.

Unfortunately this amendment was rejected.
Report Stage

Following the Government’s rejection of an amendment to redraw the wording used to close the Parkin v Sodexho loophole, an alternative amendment (below) was proposed by Katy Clark MP and Richard Shepherd MP which sought to remove the good faith test from PIDA in order to rebalance the legal protection afforded by PIDA, given the Government’s intention to press ahead with a public interest test in the legislation.

New Clause: Removal of requirement for protected disclosures to be made in good faith
The Employment Rights Act 1996 is amended as follows:
(1) Omit “in good faith”
(a) in section 43C (Disclosures qualifying for protection), in subsection (1),
(b) in section 43E (Disclosure to Minister of the Crown), in paragraph (b), and
(c) in section 43F (Disclosure to prescribed person), in subsection (1), paragraph(a).

(2) Omit“makes the disclosure in good faith,
(b) he”
(a) in section 43G (Disclosure in other cases), in subsection (1), and
(b) in section 43H (Disclosure of exceptionally serious failure), in subsection (1).
A further clause dealing with vicarious liability was proposed by Katy Clark MP and Richard Shepherd MP.

New clause: Duty on employers to prevent detriment caused by others to workers who have made protected disclosures
(1) The Secretary of State shall make regulations requiring an employer, where a worker has made a protected disclosure under section 43A of the Employment Rights Act 1996, to take reasonable steps
to ensure that the worker is not subjected to any detriment by any act, or any deliberate failure to act, by
a person other than his employer [or, by another worker] done on the ground that the worker has made
the disclosure.
(2) Regulations under this section—
(a) are to be made by statutory instrument, and
(b) are not to be made unless a draft of the instrument has been laid before, and approved by a
resolution of, each House of Parliament.

Both the amendments were rejected. The bill has now been sent to the House of Lords and First Reading took place on 16 October 2012.

Early Day Motion
Outside the consideration of the bill, Katy Clark MP has put forward an Early Day Motion (EDM). The EDM (359) called for a public consultation and the wording is as follows:

“That this House believes greater protection should be provided to whistleblowers in the workplace; is alarmed at the Court of Appeal's decision in NHS Manchester v Fecitt & Ors which indicates that employees are no longer protected from harassment of co-workers; believes that this is just one of a number of issues, including the implementation of the Shipman Inquiry's recommendations to remove the good faith test, and the use of gagging clauses which requires serious debate; believes that the changes put forward in the Enterprise and Regulatory Reform Bill will make it more difficult for individuals to rely on the Public Interest Disclosure Act and calls on the Government to hold a wider consultation on possible reforms to ensure a meaningful strengthening of the protection of whistleblowers.”

The EDM received 41 signatures.

House of Lords
The ERRB had its first reading in the House of Lords on 18 October 2012. At second reading- Lords Touhig, MacKenzie, Low, Wills and Baroness Dean made speeches about whistleblowing and the impact of clause 15.

At committee stage on December 2012, several amendments were tabled by Lords to improve PIDA. The amendments include good faith alternatives to the public interest test being put forward by the Government, vicarious liability, anti-gagging, blacklisting, review of PIDA and open justice provisions. Our briefing can be found here. To read the debate click here and read from Column GC248 onwards.

Report Stage took place on 26 February 2013 and PCaW have produced this briefing.

Royal assent took place on 25 April 2013. The public interest test will apply to disclosures made on or after 25 June 2013. Dates for application of vicarious liability and good faith to be confirmed. See our briefing for further details.

Key Documents

PCaW Briefing Enterprise and Regulatory Reform Act receives Royal Assent (1 May 2013)
PCaW Briefing at Report Stage of House of Lords (26 February 2013)
PCaW Briefing at Committee Stage of House of Lords (10 December 2012)
PCaW Briefing on Whistleblowing and Enterprise and Regulatory Reform Bill
PCaW Evidence to the Scrutiny Committee
Press Release: Where's the Public Interest? Government's barrier for whistleblowers (25 May 2012)

Press Coverage
Letter to Times 14 June 2012
Cathy James interview on BBC South
Shonali Routray comment piece on ExaroNews