healthcare update - issue 15
Whistle while you work - managing the risks posed by potential whistleblowers
A recent article in the Independent newspaper claims that
millions have been spent on “gagging orders” designed to prevent
hospital doctors from speaking out about incompetence and mistakes
in patient care. The article states that at least 170 doctors in
England and Wales agreed severance terms with their NHS employers
with pay offs totalling more than £3m and that nearly 90% of
severance agreements include confidentiality clauses.
The article quite correctly points out that workers who blow the
whistle can still be protected even if they have signed
confidentiality clauses. The legislation makes contractual terms
void to the extent that they attempt to prevent the making of a
protected disclosure. Where workers make protected disclosures to
their employers or, in some cases; to other parties it is unlawful
to subject them to a detriment or to dismiss them because of the
disclosure. Protected disclosures can relate to matters involving a
range of wrongdoing including criminal offences, breach of any
legal obligation, miscarriages of justice, danger to the health and
safety of any individual and damage to the environment.
Whenever there is mention of whistle-blowing, minds immediately
turn to thoughts of impropriety – that an employer has been
breaking the law or acting in some way contrary to the public
interest. That seems to be the implication here by the reference to
incompetence and mistakes in patient care. After all the primary
legislation was the Public Interest Disclosure Act and the clue
usually is in the title.
However, despite the title, employers need to be aware that the
legislation covers a much broader ambit than public interest
disclosure. Protected disclosures are frequently about rather more
mundane issues and can relate to private matters. Complaints about
workers own contractual relationships with their employers have
been found to amount to protected disclosures, provided that they
actually state facts rather than amount to merely a position
statement. For example, in one case a complaint was made that the
employer was not complying with its equal opportunities procedures
where it decided to reallocate amongst other employees the duties
of a member of staff who had resigned. The complainant said that
there should have been an external appointment to replace the
leaving employee. This was held to be a protected disclosure.
In whistle-blowing cases there is no minimum qualifying period
of service, nor is there any restriction on the upper limit of
compensation as is normally the case in unfair dismissal claims.
Claims can therefore be brought as a way of getting around the
continuous service requirements and compensation cap in unfair
dismissal claims. Employers therefore need to be careful not to
subject workers to less favourable treatment than others because of
a protected disclosure that they have made.
Compromise and severance
The Independent article reports that nearly 90 per cent of
severance agreements between NHS Trusts and departing doctors
contain confidentiality clauses. It is certainly not uncommon to
use confidentiality clauses in compromise agreements but usually to
prevent individuals from telling others of their terms of
settlement, rather than to prevent disclosure of matters of public
interest. Employers naturally want to avoid it becoming common
knowledge that they have made a financial settlement to an
employee. They want to avoid a belief that they are a soft touch
from which to extract a compensation payment. The norm with such
clauses is to relate to the terms of settlement, rather than to
wider concerns about matters of public interest.
In any event, settlements that involve NHS bodies making extra
contractual payments require Treasury approval and in our
experience approval is increasingly difficult to secure. The
Treasury approach is to decline applications that relate to
severance or dismissals due to misconduct by employees.
Furthermore, stringent tests are applied when considering the
amount of any proposed severance payments to ensure that they do
not exceed legal liability and take account of the prospects of a
success claim against the employing organisation.
For non – Foundation Trusts, approval will in most cases also be
required from the Strategic Health Authority and this can include
cases where redundancy payments are considered, even though they
are within contractual entitlements.
The key points to note are as follows:
- All extra-contractual settlements require Treasury approval,
whether severance of employment or settlement of Employment
Tribunal proceedings
- Settlements below £10,000 do not automatically require SHA
approval but should be copied to the SHA when the application is
made to the Treasury
- In some cases under £10,000 the DoH may still ask for SHA
approval
- Further guidance will be issued but this has been delayed
because of the election
- For any settlements the Trust needs to send with the
application its business case for the settlement, a copy of the
legal advice given, a copy of the Auditor's approval and a copy of
the remuneration committee approval. Settlements for Foundation
Trusts are sent to Monitor and do not require SHA approval
- Redundancy payments do not require Treasury approval but
payments over £10,000 require SHA approval (the SHA approval having
been set by SHAs rather than being a national rule)
- The settlement figure needs to be less than the compensation
that would be awarded at ET x the % chance of the claim
succeeding
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The content of this update is provided for the purposes of
general interest and information. It contains only brief summaries
of aspects of the subject matter and does not provide comprehensive
statements of the law. It does not constitute legal advice and does
not provide a substitute for it.