EMPLOYMENT NEWS - DECEMBER (1) 2018
WHISTLEBLOWNG AND INDIVIDUAL LIABILITY
The Court of Appeal decision in Frank Timis (1) Anthony Sage (2) v. Alexander Osipov [2018] EWCA Civ 2321 concerns a claimant director who was awarded c.£2m in damages by an employment tribunal and was able to enforce judgment against two co-respondent directors after his employer had become insolvent.

Background

Osipov joined International Petroleum Limited (“IPL”) in 2011. In June 2014 he was appointed Chief Executive Officer by Timis who was a non-executive director and majority shareholder.

In October 2014 Osipov was summarily dismissed by email by another non-executive director (Sage). The grounds for dismissal cited a lack of trust and confidence.

The background to the dismissal stemmed from Osipov raising a number of different corporate governance issues primarily related to production sharing contracts in Niger.   

Osipov eventually found himself being undermined and he was excluded from meetings. Following protests by Osipov to the Board it culminated in Timis instructing Sage to dismiss Osipov summarily. No due process was followed.

Osipov brought claims for unfair dismissal as a result of his whistleblowing. He also brought claims directly against Timis and Sage with regards to their detrimental treatment of him.

The tribunal upheld both the claim for unfair dismissal by IPL for making protected disclosures, as well as the detriment claims in respect of Timis’ and Sage’s behaviour towards Osipov which led to his dismissal.

The tribunal’s findings meant that Timis and Sage were jointly and severally liable, together with IPL to compensate Osipov for his losses which at the time of the Court of Appeal decision stood at £2,003,972.35.

Following the tribunal hearing IPL became insolvent. Osipov therefore sought to enforce the judgment directly against Timis and Sage.

Court of Appeal

Having had their appeal rebuffed by the EAT, Timis and Sage appealed to the Court of Appeal.

The nub of the appeal was that Timis and Sage could not be liable for losses flowing from a dismissal as a detriment. Furthermore, they argued, dismissal claims under s103A Employment Rights Act 1996 could only be brought against an employer, not individuals.

Underhill LJ dismissed the appeal by saying that a detriment claim could include a claim that a fellow employee had subjected a whistleblower to the detriment of dismissal. In addition, a claim for detrimental acts prior to dismissal, where those acts resulted in dismissal, would result in any losses flowing from the dismissal being recoverable.

Comment

It may well be the case that had IPL not become insolvent, then this case might not have been so newsworthy - presumably because IPL would have picked up the c£2m damages bill.

However, commentators are now speculating whether this decision could energise claimant lawyers looking to maximise the full potential of bringing whistleblowing claims against companies, by adding employees defendants wherever possible.

The approach is analogous with that taken more routinely in pursuing sex discrimination cases, whereby a claimant also alleges discrimination against one or more managers and/or fellow employees.

It is true to say that defending tribunal claims on behalf of companies where there are also named employees as co-respondents, tends to complicate the overall conduct of any defence.

In particular, there is the potential for conflicts of interest to arise, which leads to the appointment of additional firms of solicitors. The upshot is that unless an employer is extremely resilient, there can be a tendency to want to settle, as the addition of co-respondents almost certainly adds to the burden of legal costs which are usually irrecoverable.

The only way for an employer to potentially disentangle themselves from employees who might have committed acts of discrimination is to run a “reasonable steps” defence. The reality is that very few employers can evidence sufficient diversity training in order to avail themselves of this defence.

The same reasonable steps defence is also available to employers in whistleblowing claims. It is however unlikely to be enough for an employer to produce a whistleblowing policy, and then argue the policy is sufficient to absolve it of any liability for the acts of its employees.
CONTACT: Christopher Filor
EMAIL: cfilor@filorsolicitors.co.uk   TELEPHONE: 01647 231475
MOBILE: 07891 055856   www.filorsolicitors.co.uk
This publication is not intended to provide legal or other professional advice and should not be relied upon as such. Readers should take legal advice before applying the information contained in this briefing.
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