Ex-Clarks boss brings unfair dismissal claim | The dangers of dismissing a whistleblower

No company wants its name tarnished, which is why some employers will do all they can to keep reports of bad business practice under wraps.

However, while having to confront ethical or professional misconduct may be uncomfortable, most employers would agree that whistleblowing is an ethical thing to do, as it prevents companies from operating unchecked, with no regard for the law or the harm caused by their activities.

As such, rather than shying away from whistleblowing disclosures, encouraging employees to speak out about any criminal offences, environmental damage, and health and safety threats happening within the company is likely to help rather than hinder. After all, it will help to cultivate a culture of honesty and transparency, as well as circumvent the risk of legal prosecution, major fines and potentially business-threating reputational damage.

Whistleblowing as a weapon

Under the Public Interest Disclosure Act (PIDA), employers cannot legally subject workers to punishment, victimisation or otherwise unfair treatment in response to them blowing the whistle. 

These laws serve an important purpose by, in theory, enabling employees to report concerns without fearing repercussions, and preventing situations where an employer seeks to silence the employee.

The danger is that a disgruntled employee may pull the whistleblowing card as a form of retaliation should the employment relationship sour. Of course, whistleblowing laws do not mean that someone who has raised a concern under a whistleblowing policy cannot be managed (monitored, disciplined, dismissed, etc.) for reasons unrelated to the complaint, and employees will often allege that any subsequent dismissal is related to them blowing the whistle. The employer, on the other hand, will claim that they had a legitimate reason for terminating the employment relationship, that was in no way connected to the employee making a protected disclosure.

Former Clarks boss 'forced out for whistleblowing'

As a prime example of the legal headache that can follow if whistleblowing disclosures aren’t handled carefully, ex-Clarks Shoes boss Mike Shearwood recently took the Somerset-based retailer to an Employment Tribunal claiming that he was forced out of his post for exposing alleged misconduct within the company.

After being with the company for just shy of two years, the board made a unanimous decision to ask Mr Shearwood to leave, citing “inappropriate behaviour”, and he was forced to resign the following day. At this point, Mr Shearwood made a claim for unfair dismissal, arguing that the real reason he was pushed out was that he had lifted the lid on the company’s chairman adjusting the minutes of board meetings.

The case went to trial, where the Tribunal heard how Mr Shearwood had made sexist, racist and homophobic slurs that violated the company’s code of ethics. Mr Shearwood’s inappropriate behaviour had even extended to colleagues in the United States, further vindicating the company’s actions. Ultimately, his claim was rejected, with the Barrister representing Clarks’ stating that Mr Shearwood had “attacked the integrity of Clarks officers”.

What's the solution?

For employers, high-profile cases like these serve to reinforce the need to make sure that any action taken following a protected disclosure is in no way linked, and cannot be perceived to be linked, to the employee’s decision to blow the whistle. There are a number of practical steps employers can take to reduce the risk of a claim arising from whistleblowing mismanagement:

  1. Develop a robust whistleblowing policy that provides clear direction on how disclosures should be made and dealt with. For employees, this should clearly explain the type of issues that can be raised, how to report any concerns, what the company will do to ensure whistleblowers are protected from victimisation and harassment, and the process that will be followed. For managers, the policy should outline precisely what to do from the moment a disclosure is made and provide a framework for investigation.
  2. Provide whistleblowing training to ensure all staff understand your whistleblowing policy and how it applies to them. This is particularly important to develop managers’ confidence in dealing with disclosures in a fair and consistent way and will encourage them to think carefully before disciplining or dismissing whistleblowers or selecting them for redundancy. (Again, this isn’t to say that managers should avoid taking action where necessary, but it is crucial that any decisions made are in no way related to an employee’s whistleblowing disclosure).
  3. Keep robust records. Good record-keeping is essential in all aspects of employment law. By keeping records of any whistleblowing disclosures you receive and details of your investigation, as well as documented evidence of any performance appraisals, grievances, disciplinaries and redundancy exercises, you will be able to demonstrate legitimate reasons your actions, putting you in a better position to defend any claims for unfair dismissal.

James Tamm

Director of Legal Services

Expert Comment

This case illustrates perfectly the often competing versions of events a Tribunal has to assess in a case of this nature. The employee says that the reason for dismissal is X and the company says it’s Y.

In such cases, it is vital that the company has completed a thorough and balanced investigation into alleged wrongdoing and that it has the evidence to support the sanction issued. Without evidence, you have something of a vacuum, and into that employees will often advance alternative explanations for their dismissal. This is where employers get into difficulty, and the safest way to avoid these scenarios (and to establish a defence should they occur) is to have access to ongoing professional support, as this will help to keep your business on the right path.

Unlimited Employment Law support

At Ellis Whittam, we help organisations to manage their people problems quickly and confidently, without legal risk. If you require personalised support through any employee relations challenge, our Employment Law specialists can guide you through the process and provide valuable reassurance that the matter is handled appropriately. This includes providing pragmatic advice on dealing with whistleblowing disclosures, as well as an expert-created whistleblowing policy to promote best practice across your organisation.

Simply call 0345 226 8393 today to speak to one of our friendly team.