Are Financial Incentives the way forward for UK Whistleblowing Legislation?
Unlike other jurisdictions such as the US, financial incentives are not currently a mechanism present in UK whistleblowing legislation. Whilst the HMRC could theoretically offer monetary rewards for those who offer up information on tax fraud, this would be nowhere near the figures on offer in the US. This article will examine the current whistleblowing framework in the UK and touch briefly on the benefits and the potential pitfalls of introducing financial incentives into UK whistleblowing legislation.
The Current Whistleblowing Framework
UK legislation has granted vast protections for employees who raise concerns of potential wrongdoing and corruption in the workplace – also known as ‘whistle-blowers’ since the implementation of the Public Interest Disclosure Act in 1998. At the time of its conception, the legislation was regarded as ‘groundbreaking’ due to its ability to provide extensive protections for whistleblowers when making disclosures about their workplace, as well as the means to be granted compensation at an Employment Tribunal if they were either dismissed or subjected to detrimental treatment following their disclosure. Under section 43K of the Public Interest Disclosure Act, protections are not just offered to employees, but also extends to agency workers, sub-contractors and even those on work experience. There is also no minimum serve requirement for bringing a whistleblowing claim- this is often referred to as a ‘day-one right’ and perhaps most significantly, there is no ceiling on how much compensation a whistleblower can receive either through their detriment or dismissal, unlike in standard unfair dismissal claims which are capped. Whistleblowers may bring about a protected disclosure if they are exposed to a criminal offence, lack of compliance of company’s legal obligations, health and safety concerns or deliberate concealment of information, just to name a few. However, nowhere in the Act does it mention financial incentives for offering up this level of information about their employer.
UK Whistleblowing Bill
MPs and the public have called for the modernisation of Public Interest Disclosure Act for many years, especially after the implementation of the EU Whistleblowing Directive in 2019 which enhanced whistleblowing protections across its Member States by compelling all companies to possess internal mechanisms for whistleblowing. The first step forward was the UK Government’s review of its current framework in 2023. As of July 2024, this review is still ongoing despite the initial forecast suggesting the review would have been completed by the end of 2023. Concurrently, the Conservative Government proposed the Whistleblowing Bill at the end of 2019 which had its first reading in the House of Commons in January 2024. Whilst the proposal refers to the introduction of new civil offences, there was no indication of the possible inclusion of monetary incentives. The Labour Party on the other hand has suggested, if they were to succeed in the forthcoming election, rewards of up to £250,000 would be available for whistleblowers who expose misconduct, stolen assets and misappropriated funds relating to banks. A similar pledge was once made by the Conservative Government yet there was no sign of the measure during the legislative process.
The Double-Edged Sword
It could be said that introducing whistleblowing financial incentives in the UK are a double-edged sword. Whilst the new Director of the Serious Fraud Office, Nick Ephgrave, made clear in his February 2024 speech that the office should be permitted to offer such incentives, European culture is generally against the idea of providing monetary funds in exchange for incriminating information on a company. The implementation of the new EU Directive further cements this. The United States on the other hand, favours financial incentives for whistleblowing on the premise it encourages people to ‘speak up’ in spite of the potential personal or professional suffering they may endure. If someone has uncovered wrongdoing in their workplace, a financial incentive could make the difference in disclosing the misconduct or concealing it. Despite these types of programmes potentially being prone to exploitation, there has been plenty of financial incentive success stories in the US. In 2012, a whistleblower was rewarded $104m for provide vital information that led to UBS Bank admitting to encouraging tax evasion.
The UK, as it stands, takes the position that our moral duty to speak up when misconduct occurs is enough, and it is the strength of the protections outlined in the Public Interest Disclosure Act that should provide the necessary support to avoid such disclosures having a detrimental effect on the employee. Discovering the truth is, and should always be, the cornerstone of justice and good governance. The question is whether introducing monetary rewards into legislation in the UK, as encouraged by our own SFO Director would overshadow our core values by fuelling greed, as opposed to pursuing our moral duty to expose wrongdoing simply because it is just that – wrong.
Where Next?
With the UK general election campaigns now reaching its penultimate day, naturally, there has been little talk surrounding proposals employment laws in the UK. That does not mean to say that the inclusion of financial incentives in whistleblowing reforms in the future are off the table. We must ask ourselves whether the addition of financial incentives to whistleblowing legislation is truly necessary, or whether a safer, more sensible path would be to follow the EU’s Whistleblowing Directive more closely by compelling all companies to implement internal whistleblowing mechanisms that also spans to self-employed, non-executive directors as well as relatives and colleagues of the whistleblower.
This article was written by Phoebe-Jean Grainger-Williams, you can contact Phoebe-Jean via the following email: [email protected]