Landmark £2m ruling means individuals can be liable for whistleblowing dismissals

Court of Appeal rules shareholder and chairman must compensate axed CEO

Court of Appeal judges have upheld a landmark £2m award in a whistleblowing case that marked the first time directors have been sued for unfairly dismissing an employee.

The judges unanimously ruled the Employment Appeal Tribunal (EAT) decision in favour of Alexander Osipov, former chief executive of International Petroleum Ltd (IPL), had been correctly applied. 

The award was one of the largest ever made by an employment tribunal, and its implications are far-reaching. The case establishes that individual directors who decide to dismiss someone for making protected disclosures can be held personally liable for such decisions, and face financial consequences. 

Gareth Brahams, managing partner of Brahams Dutt Badrick French – who represented Osipov in the case – said he was pleased with the ruling. 

“We are happy to have had the principle of individual as well as corporate liability for victimising whistleblowers by dismissing them upheld at this level in the courts,” Brahams said. 

“We believe this will encourage decision makers to think more carefully than ever before giving instructions to dismiss an employee for whistleblowing, and will encourage employers to take steps to train their staff so as to prevent any such actions occurring in the first place.”

Osipov was fired in October 2014 after a series of disagreements between himself, Frank Timis – IPL’s largest individual shareholder – and chairman Antony Sage over the business’s operations and specifically the award of contracts in Niger. He brought proceedings to an employment tribunal for unfair dismissal and victimisation on the grounds he was a whistleblower. 

In 2016, the tribunal ruled Osipov had been unfairly dismissed for making protected disclosures under whistleblowing legislation. The tribunal awarded him damages of more than £1.7m and held Timis and Sage individually liable for Osipov’s sacking. 

The pair appealed the ruling to the EAT, which upheld the ruling in 2017 and increased the payout to £2m. The two directors went to the Court of Appeal, which dismissed the appeal and upheld the EAT’s ruling. 

Paul Holcroft, associate director at Croner, said it had already been established that individuals can make claims against their employer for automatic unfair dismissal, where whistleblowing is the sole or principal reason for the dismissal. However, this case establishes that claims can be brought against individuals who have caused detriment to a whistleblower leading to their dismissal. 

“An influx of claims against co-workers for whistleblowing detriment may now be experienced, and employers will have to defend against being held vicariously liable,” Holcroft said. “It will not be enough for employers to show they had a whistleblowing policy in place.”

He said employers will have to prove they took all reasonable steps within their business to prevent unfair treatment – such as carrying out whistleblowing training, holding specific management training on decision-making and implementing their internal policies in a fair and consistent manner.

Laura Anthony, associate at Dentons, said it was imperative employers identify whistleblowing complaints as soon as possible and any decision to dismiss an employee who claims to have made important disclosures is taken only after thorough and careful consideration.  

“In light of this decision, it is essential that personnel responsible for investigating and making decisions relating to whistleblowing are properly trained so they are fully capable of recognising whistleblowing complaints as soon as they arise,” Anthony said. “Employers should ensure HR managers and dismissing managers or directors pay more than lip service to whistleblowing policies and procedures.”

She said employers should also be mindful employees may be entitled to an injury-to-feelings award in claims brought against the individual dismissing manager or director, and the employer could be vicariously liable for this award. 

Osipov, Timis and Sage could not be reached for comment.