Can individuals be personally liable for dismissal losses in a whistleblowing claim? Danielle Crawford looks at the Court of Appeal’s decision in the case of Timis & Sage v Osipov.
Osipov was CEO of International Petroleum Limited’s (IPL) During his employment, he made a number of protected disclosures about poor corporate governance.
He was summarily dismissed from IPL in 2014, just days after his last protected disclosure. He subsequently brought a claim in the Employment Tribunal alleging that he had suffered detriment and had been dismissed as a result of the protected disclosures he had made during his employment. He brought an automatic unfair dismissal claim against IPL and a detriment claim against the two directors of IPL – Timis and Sage – Timis had instructed Sage to dismiss Osipov, and Sage had not resisted.
The Tribunal found in Osipov’s favour. However IPL was now insolvent so his victory in the unfair dismissal claim was meaningless: could the two directors be held personally liable for Osipov’s dismissal losses under the detriment claim?
The Tribunal held that the two directors were personally liable for Osipov’s dismissal losses since it was the detriment that they had subjected him to which ultimately led to his dismissal. This liability decision was important because the two directors had director liability insurance which was likely to cover the full sum awarded to Osipov, whereas IPL did not have the funds available to discharge the unfair dismissal award.
Employees have been able to bring whistleblowing detriment claims against individuals personally since 2013. However, the legislation states that if a detriment amounts to a dismissal, it should be brought as an automatic unfair dismissal claim under Part X, Employment Rights Act 1996 rather than a detriment claim. The directors therefore appealed the decision, arguing that the statutory whistleblowing provisions preclude employees from bringing detriment claims against individuals where the detriment amounts to dismissal. Specifically, they argued that individuals could only be held liable for pre-dismissal detriment losses and, if a whistleblowing detriment amounts to dismissal, the compensation would be limited to an automatic unfair dismissal award which only employers could be liable for.
That appeal failed and the two directors further appealed to the Court of Appeal.
The Court of Appeal has now confirmed that individuals can be liable for detriment which results in dismissal and the two directors were held to be personally liable for the dismissal losses Osipov had suffered as a result of their actions. The Court of Appeal noted that if a claimant was not able to bring a claim against an individual for the detriment of dismissal, it would “produce an incoherent and unsatisfactory result”.
This case clarifies the law in relation to personal liability in whistleblowing detriment claims. From a practical perspective, when dismissing employees, senior managers will now need to be aware they could find themselves personally liable for a whistleblowing detriment claim involving a dismissal. Not all such managers will be directors with insurance.