29 May 2017

Employers should ensure that whistleblowing complaints are handled properly and in accordance with the law.

Here is the scenario: you receive an anonymous letter making a number of serious allegations against a fellow employee. You notify your employer’s compliance team but you think it would be helpful if you were to speak with the complainant in order to gather further information about his / her concerns. Should you make attempts to identify the author in order to fill in the gaps in your understanding or should you allow the compliance team to carry out its investigation without a full appreciation of the extent of the alleged wrongdoing?

Well, the CEO of Barclays Bank plc, Mr Jes Staley, encountered a similar scenario in 2016 when he became aware of two anonymous letters raising concerns of a personal nature about a senior employee, including Mr Staley’s knowledge of and role in addressing those issues at a previous employer. Presumably aggrieved at the fact that those allegations implicated him, Mr Staley directed Barclays’ Group Information Security team to identify the authors of the letters, in contravention of Barclays’ internal policy which offers whistleblowers anonymity. On both occasions, the attempts to unveil the identity of the whistleblowers proved unsuccessful.

On 10 April 2017, Barclays announced that Mr Staley had been issued with a formal written reprimand and informed that a significant adjustment would be made to his bonus payment as a result of his actions. In addition, Barclays confirmed that the Financial Conduct Authority and Prudential Regulation Authority had commenced an investigation into the matter. Mr Staley recognised that a mistake had been made and apologised.

While large banks, building societies and insurers are subject to additional rules in respect of whistleblowing policies and procedures, it is important for all employers to be aware of their responsibilities (and limitations) when handling complaints from whistleblowers.

When considering anonymous complaints and / or allegations made on a confidential basis, the British Standards Institution Code recommends that employers should respect a whistleblower’s request for confidentiality unless it is legally impossible to do so. Moreover, any successful attempt to identify the whistleblower will involve the processing of personal data which, if done without his / her consent, may constitute a breach of the Data Protection Act 1998. As such, the employer is advised to take appropriate action on receipt of an anonymous or confidential complaint. This may involve carrying out a full investigation into the matter. Alternatively, it could mean simply keeping a record of the complaint if the information received is insufficient to facilitate an investigation (and notifying the complainant of this, if possible) – while respecting the wishes of the whistleblower to remain anonymous.

In terms of the larger (arguably more important) issue, often workers are motivated to report concerns anonymously out of fear that they will be victimised should they be identified as drawing attention to wrongdoing. This is despite the statutory protection against detriment or dismissal offered to workers who ‘blow the whistle’. In order to develop a culture of transparency and openness where staff feel safe to make such disclosures, employers should consider implementing an appropriate whistleblowing policy.

Although there is no legal requirement for companies to establish a written policy on whistleblowing (subject to a couple of notable exceptions, such as listed companies), an effective policy will mitigate the employer’s reputational and / or litigation risk by encouraging a culture where concerns are reported internally rather than externally. This sends a clear message to the workforce that whistleblowing complaints will be taken seriously. An effective whistleblowing policy may also help to demonstrate that the employer had in place adequate procedures to prevent bribery in its organisation and thus avoid possible criminal sanctions under the Bribery Act 2010.

In summary, employers should ensure that whistleblowing complaints are handled properly and in accordance with the law. Although an anonymous and / or confidential complaint may not provide a full picture of the alleged wrongdoing, it may be a useful indicator that there are problems within your organisation that need to be addressed: whether misconduct issues and / or a workplace culture that deters workers from openly challenging inappropriate behaviour.