23 June 2024 is World Whistleblower Day, an internationally recognised opportunity to focus on the importance of whistleblower protection. While corruption and unethical behaviour are global concerns, there is no common approach to whistleblower protection.

The UK is increasingly viewed as being out of step with international developments – with significant concerns over whether the UK’s current framework is effective at either facilitating disclosures or adequately protecting workers. The UK whistleblower regime has been under review for some time and change is potentially on the agenda for a new government.

All too often, the problems with the current legislation translate to expensive and complicated litigation – or to settlements which may resolve the individual dispute without addressing the underlying malpractice. The law is also complex, and attempts to address the problems via case law or amendment to the existing framework are not achieving the required result.

With these concerns in mind, we consider how whistleblowing protections may develop and whether the measures on the table will be improvements – or create further complexity while leaving the most vulnerable without proper protection.

How Might UK Whistleblowing Protection Develop?

Labour Party Proposals

Current polling suggests that, post 4 July 2024, the UK will have a Labour government for the first time in 12 years. This may be a catalyst for change, with Labour having made a commitment to strengthen protections for whistleblowers. The Labour manifesto confirms an intention to strengthen whistleblowing protection but does not set out what these proposals entail. However, one interesting proposal is that the protection for women who report sexual harassment at work will be updated so that their complaint will fall within the whistleblowing framework.

What this means in practice remains to be seen. If complainants can bring harassment claims under both the Equality Act and whistleblowing legislation this will add a further unwelcome layer of complexity in what is an already-complicated area. It will also have implications for whistleblowing policies, data reporting and management information, investigation process and litigation tactics (including options for interim relief and anonymity applications).  

Reforms to reflect the EU Whistleblowing Directive

The EU Whistleblowing Directive now helps to shape whistleblower protection across EU member states. While there are many areas where UK law is already similar, there are also a number of differences. It is therefore possible that changes to UK law could include some amendments to close the gaps between current UK law and the new EU approach. This could include:

  • Protection for a wider category of whistleblowers: the directive protects self-employed people, shareholders and board members (including non-executives), as well as “facilitators” (a natural person who assists a reporting person in the reporting process in a work-related context, and whose assistance should be confidential), third parties connected with the whistleblower such as colleagues and family members who could suffer retaliation in a work context, and legal entities that the whistleblower owns, works for or is connected with in a work-related context. The current gaps in protection have been a focus for the whistleblowing charity Protect while the EU approach shows that it is possible for protection to be afforded on a much wider basis.
  • A shift to the burden of proof for retaliation (or detriment) claims: under the directive it is for the alleged perpetrator to demonstrate that the detrimental treatment is justified. This would significantly shift the balance in favour of complainants as currently many tribunal claims for whistleblowing turn on “causation” with workers unable to prove a connection between their disclosure and the treatment suffered.
  • Framework and feedback: the directive sets out a framework with timescales for actions. In particular, this includes a requirement for feedback to the whistleblower within 3 months. UK law does not require the whistleblower to be given feedback at all, a position which has been the subject of debate in an ESG context. From an employment law perspective, any requirement to provide feedback will need careful consideration as it often requires balancing the rights of other employees who may be the subject of ongoing investigation.
  • National authority oversight: there is no single UK regulatory body which oversees all whistleblowing matters. This is a requirement of the directive, with member states required to establish a single national authority which puts in place external complaints channels. We do already see a degree of external oversight in the UK, in particular the approach taken by the FCA and PRA in the financial services sector. However a body with overall responsibility would provide a consistent approach and may address some of the concerns about the harm arising from directly linking whistleblowing and employment rights.

Financial Incentives

Other jurisdictions, most notably the US and South Korea, operate schemes for the financial incentivisation of whistleblowers. In the US, there are a number of routes by which whistleblowers can seek reward in return for disclosures. These include the Dodd Franks Act, the Commodity Futures Trading Commission (“CFTC”) rules and the False Claims Act. Broadly, these provide that whistleblowers can be awarded monetary rewards of between 10% and 35% of the fines levied or monetary sanction collected.

This is a significantly different approach to the UK – whether we should adopt similar measures is a common area of debate. Notably, Shadow Foreign Secretary David Lammy has reportedly committed to introducing a new whistleblower reward scheme for those who identify sanctions breaches and report money laundering.

However, these arrangements are not supported by all stakeholders. The FCA’s review into Financial Incentives for Whistleblowers in July 2014 ruled them out in favour of regulatory changes requiring firms to have effective whistleblowing procedures and making senior management accountable. It is also the case that they receive a large volume of disclosures even without financial incentives. Statistics from the FCA show that they received 1,127 whistleblower reports in the year ending 31 March 2024. 

Protect also note that there are limitations with financial incentives. The US arrangements can result in large pay-outs but this is often in financial services and other sectors which attract very large fines. Furthermore, those receiving big awards appear to be the exception. Protect notes that of the 5,212 SEC whistleblowers in 2019, only 8 received any reward, while the CFTC issued only 16 payments in 2020 despite receiving 1,030 disclosures. In both cases under 2% of those who came forward received anything.

In a UK context, the limitation of this is approach as a cure for the current concerns is clear. Financial incentives are unlikely to be effective in sectors where unethical and / or unlawful behaviour can cause very significant harm – but where money is not available to fund awards. This would, for example, be unlikely to assist whistleblowers in the NHS or other public sector organisations.  However, it may be that a sector or context specific approach emerges, particularly within financial services, where there is more confidence the introduction of a reward scheme would improve the detection and deterrence of specific types of wrongdoing.

Where does that leave UK Organisations?

If a new government does support financial incentivisation of whistleblowers, employers may face the startling prospect of needing to review their entire whistleblowing toolkit – and evaluating a new regulatory and financial risk landscape.  However, this may not be happening anytime soon. There is a debate to be had with important stakeholders regarding reform and design – and how such a scheme would work within or alongside the current whistleblowing landscape. 

However even if this doesn’t happen – and with Labour currently committed to wide-ranging employment law reforms – it seems likely that businesses will have navigate some changes. Some may well come in the next 12 months.

Whatever the outcome, leadership paying sustained attention to whistleblowing as a means of improving work culture has never been more important.