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Employment Law Worldview

New Statutory Training Scheme for Employees in France

Posted in Employment Relations, Legislation

In France, employees have in the past accrued each year 20 hours of Individual Right to Training (“droit individuel à la formation” or “DIF”) up to a maximum of 120 hours.

Law 2014-288 of 5 March 2014 has now come into force and has substantially amended the previous law, notably by replacing the DIF with a Personal Training Account (“compte personnel de formation” or “CPF”).

Under these new provisions, all French companies must implement the following actions  

  • Before 31 January 2015: inform employees of their accrued but unused training time rights as at 31 December 2014. Planned training granted prior to 31 December 2014 but due to be conducted in 2015 must be classed as “consumed” in advance and so need not form part of the information to be given to the employee.
  • Before 7 March 2016: conduct career development interviews with all employees hired before 7 March 2014. The meeting aims to review the progression prospects of each employee and take stock of training undertaken with the general intention of putting self-advancement back on the agenda of both employers and employees to the hoped-for benefit of both.  For employees hired after 7 March 2014, the deadline for the first interview is two years after their date of hire.
  • Every 2 Years: to maintain career momentum at an individual level and upskill the French workforce as a whole, each employee should have a self-development session of this sort with his employer at least once every two years.  If the employer does not arrange this, the employee may be credited with additional training hours off work.

In addition: 

  • Employees are now entitled to a minimum of 24 hours’ training per year (rather than 20) up to 120 hours. Once this limit is reached, they gain an additional 12 hours of training per year up to a maximum of 150 hours. Note: accrued but unused DIF hours are not taken into account for the 120 and 150 hour limits and can be used until 1 January 2021.
  • As the rights are now attached to the person, not the job, employees retain their rights to time off for training even through dismissal or resignation and into their successive employers.

As of 5 January 2015, employees are responsible for opening their personal training account on the website: “moncompteformation.gouv.fr” and should include their number of DIF hours.  The website contains details of training courses approved for these purposes.

U.S. Supreme Court Issues Decision Affecting Retiree Benefits

Posted in Contracts, Employment Contracts, Employment Policies, Union, Welfare

From Greg Viviani via our Global Compensation Insights blog:

In M&G Polymers USA, LLC v. Tackett, the U.S. Supreme Court has opened the door for many employers to re-examine their ability to alter or amend retiree benefit plans.

The Court rejected a long-standing presumption in the Sixth Circuit of the U.S. Court of Appeals (Michigan, Kentucky, Ohio, and Tennessee) that retiree benefits in collective bargaining agreements are vested lifetime benefits that cannot be changed.  In doing so, the court stated that the Sixth Circuit erred because it had erroneously “placed a thumb on the scale” in favor of the retirees.  Instead, ordinary contract interpretation principles should apply.

Since a collective bargaining agreement will inevitably have a durational clause (e.g. often, three years), this ruling by the court would seem to effectively lead to a 180 degree turn in the applicable presumption.  Now, it would appear that the initial presumption is that retiree benefits were only promised only for the duration of the contract.

If that is so, the positions of the parties in litigation over this type of issue will have dramatically shifted.  To overcome that presumption, retirees will have to introduce legal arguments based on other language in the contract and/or extrinsic evidence to show that the parties intended the benefits to be lifetime benefits.

For example, a concurring opinion joined by four justices indicated that evidence of a lifetime promise of benefits might be derived from commonly seen bargaining agreement provisions that tie receipt of retiree medical benefits to entitlement to a company pension, or that provide lifetime benefits for surviving spouses.  Both the majority and concurring opinions also pointed to “industry practice” as being potentially relevant extrinsic evidence.

Nevertheless, in an instance where the relevant negotiations may have occurred many years ago (e.g. 20 – 30 years), it may be very difficult for a plaintiff to demonstrate an intention to provide lifetime benefits.   Thus, many U.S. employers may be re-examining whether they can later or amend their retiree benefit plans.

Teaching agency gives School a hard lesson on UK worker liabilities

Posted in Agency Workers, Contracts, Equal treatment, Legislation, Recent Cases, Recruitment

The 2010 Agency Worker Regulations require that once an agency worker has been in post for 12 weeks, he should receive the same pay as would a permanent employee of the hirer in the same role.   This is the principle of equal treatment.   

Regulation 14(3) makes the agency liable for any breach of equal treatment with respect to basic working and employment conditions (e.g. pay) unless it has, in summary:   

(a) taken reasonable steps to obtain relevant information from the hirer;  

(b) once that information was received, determined what those basic working and employment conditions are; and then  

(c) ensured that the worker receives his AWR equal treatment rights.   

The AWR also states that the agency and the hirer shall be liable for any breach “to the extent that each is responsible”, so accepting that the blame may at least to some extent lie with the hirer.  

Stevens v Northolt High School is the only reported case we have seen on this point.  The School agreed to pay agency Teach 24 for Miss Stevens’ services as a music teacher. She successfully passed the 12 week qualifying period and so became entitled to equal treatment.  Teach 24 contacted the School on at least 5 occasions outlining in no doubt increasingly insistent tones that:   

  • the School should provide Teach 24 with details of the salary/allowances that would have been paid to Miss Stevens if she had been directly employed by it;
  • Miss Stevens’ pay had to be adjusted to remain compliant with the AWR; and
  • It was both Teach 24’s and the School’s responsibility to ensure Miss Stevens was paid appropriately and there would be legal implications and penalties for failing to do so.  

On the facts, the Tribunal concluded that Miss Stevens should have received an additional £94 a week over 111 weeks; she therefore suffered a total loss of £10,878 gross.  Who should be responsible for this?   

Had Teach 24 taken reasonable steps to obtain the relevant information from the School as required under Regulation 14(3)(a)?  Or should Teach 24 have done more to determine the appropriate pay rate, e.g. by searching its databases/the internet for the School’s old permanent vacancy adverts and taking a view on that basis?  The Tribunal concluded that Teach 24’s actions to chase the School were reasonable and so it had satisfied Regulation 14(3)(a). It was unnecessary to consider limbs (b) and (c) because the School had not provided the requested information.  The School was therefore found liable for the whole sum.  

In this case, the Tribunal did not criticise Teach 24 for its failure to pay Miss Stevens any increase because her entitlement could not be quantified due to the lack of information provided by the School. What is not clear, however, is who would have been liable (or how liability would have been shared) if the hirer had provided the information, but the agency had no contractual right to increase its fee, and the hirer would not agree to it?    

One could argue that the agency would be responsible for the breach by failing to include a clause allowing for an increased fee.  Alternatively, you could argue that the hirer who is aware of the worker’s rights under the AWR but refuses to agree to the increased fee anyway is responsible.   Sorry, agencies, but in my view liability would wholly lie with the agency as the agency’s duty under limb (c) to ensure the worker receives equal treatment should extend to ensuring that its contract with the hirer provides for an increase in the fee in light of the AWR and/or to meeting the extra out of its margin.  

Lessons from this case:  

  • agencies should persevere with repeated written information requests of a hirer both during and after the first 12 weeks of an assignment; making one or two requests is unlikely to satisfy the “reasonable steps” test so as to shift the liability on to the hirer.  It makes sense to start those requests as soon as it becomes clear that the worker will get past the 12 week point.  It must make sense also for the agency to retain the evidence of the requests – read-receipts on emails, signed-for deliveries of hard copy letters, etc.;
  • agencies should ensure they have the contractual right to increase their fee where required in order to satisfy the AWR;
  • hirers should treat agencies’ requests for information seriously and respond promptly (and ensure their staff are aware of the risks of not doing so); but  
  • there is no suggestion from the Stevens case that agencies are required to conduct their own external or independent research as to what comparable packages at the hirer might look like, or to rely on a guess (even an informed one) as to what the hirer pays.

End of the Week Roundup – Paid Sick Leave and 2014 Unionization Rates

Posted in Employment Policies, Flexible Working, Hours, Leave, Union, Wage and Hour

Two brief items to pass along as we head into the weekend:

  • In his State of the Union address earlier this week, President Obama urged passage of the Healthy Families Act, a measure that would require private sector US employers to allow employees to accrue up to seven paid sick days per year (see our post here).  In response, Congressional Republicans have already proposed, or intend to propose, alternative legislation.  On January 22, representatives from Alabama and Utah reintroduced the Working Families Flexibility Act, which passed in the House of Representatives but was not passed by the Senate during the previous congressional session.  Rather than requiring paid sick leave, this bill would allow employers to offer employees up to 160 hours of compensatory time off in lieu of overtime wages for hours worked in excess of 40 hours in a workweek, provided they have worked at least 1,000 hours in the previous 12 months.  Another lawmaker has announced intentions to introduce legislation that would offset the cost of paid sick leave by providing tax incentives to those employers who provide sick leave benefits to their workers.
  • The Department of Labor’s Bureau of Labor Statistics issued its annual report setting forth union membership data for 2014.  In the private sector, union density in 2014 was 6.6%, down 0.1% from the prior year.  Unionization continued to vary widely by state, with 30 states having union membership rates below the US average (primarily the southern states), and nine states with union density below 5.0%.  The report further indicated that more than half of all US union members live in only seven states – with more than half of those in California and New York.

Check back next week for more developments.

Jury still out on UK lawyer’s rights to freedom of speech

Posted in Discrimination, Religious Discrimination

It is not easy to reduce the Charlie Hebdo murders to employment law, but courtesy of one Aysh Chaudhry, here goes anyway.

Mr Chaudhry, a trainee at international law firm Clifford Chance, filmed a twenty-one minute video message within days after the killings in France.  It is widely available on YouTube if you really want, but essentially it was an exposition of his views that the West had brought the Charlie Hebdo attack on itself, that Western ideologies (including, ironically, freedom of speech) were bankrupt and that Muslims expressing regret for those events had been mentally “colonised” and were “weak”.  Non-Muslims were referred to repeatedly as “Kuffar”, a term which Mr Chaudhry would certainly have known to be dismissive and derogatory.  A number of commentators described it as “the language of terror”.

As an exercise in reconciliation or encouraging inter-faith understanding in these most difficult of times, the video therefore has its limits.  As an example of testing an employer’s tolerance for freedom to manifest one’s religion, however, it is an absolute belter.

Clifford Chance is very properly retaining its usual swan-like serenity on the surface, but that belies the furious debate which must be going on behind the scenes.  The firm must have regard not only to the usual considerations of free speech –v- corporate impact, etc., but also to the unique nature of a legal training contract, which by regulation limits the employer’s right to dismiss trainees mid-way through the two year term to “unacceptable conduct”.

Leaving aside the training contract point, if you were Mr Chaudhry’s employer what would you do?  Is this merely an exuberant manifestation of a strongly-held religious belief intended for a private audience only, or does it cross the line into something more serious? 

Clifford Chance has taken a lot of flak for not bundling Mr Chaudhry out of the door immediately, but in fairness to both it and him, these things do call for some calm consideration of the effect of the individual’s belief-driven behaviour on the employer before any final decision is taken.  In the end, however, the firm may be left with little option but to ask him to leave.  This is not about Islam or any other religion, nor about Mr Chaudhry’s freedom to believe whatever he wants about the rights and wrongs of the Paris attacks.  It is instead surely about assessing the response which Mr Chaudhry’s clip will engender among clients and colleagues.  Even more so, it is about what it says of his personal judgment and self-awareness both in uploading the video and in the insultingly spurious suggestion in his later apology that it was intended to do no more than “encourage intellectual debate”.   It has been suggested that if Mr Chaudhry is dismissed he would have a viable religious discrimination claim, but that seems a pretty tenuous proposition in these circumstances.  There is clearly a distinction to be made between your faith on the one hand and the impact on your employment of how you manifest it on the other. 

For an employer which asks clients to part with considerable sums of money for the fine professional judgment of its staff (including at trainee level), it will surely be impossible to separate perception of Mr Chaudhry’s professional abilities from the catastrophic lack of personal judgment represented by his actions in this case.  There are after all few other professions where it is so necessary to draw lines between what comes into your head and what comes out of your mouth.  Much like this case about Christian beliefs http://www.employmentlawworldview.com/weather-man-causes-storm-through-religious-views-prospects-unsettled-heading-south-decreasing/, no one will argue against your right to think what you want, but that does not give you carte blanche to publicise your views at your employer’s expense.

UK’s Coronation Street looks to employment law for next storyline

Posted in Age Discrimination, Conduct, Recruitment

One of the bastions of British soap opera has seemingly become tired of your run-of-the-mill torrid affaire/grisly murder/dodgy dealings stories and for a bit of dramatic spice has turned instead to the world of employment law. While as lawyers we already know that there is little which makes more compelling viewing than a juicy discrimination claim or a bizarre disciplinary, maybe Coronation Street is about to show everyone else.

In her first big break actress Katie Redford was cast as Bethany Platt, the 14 year-old grand-daughter of, well, someone else.  ITV issued a trumpeting press release last week that stated new arrival Katie’s age as 19.  A 19 year-old playing 14? The world of television and film has always had a funny way of looking at age. Remember “Indiana Jones and the Last Crusade”? Sean Connery played Harrison Ford’s father, when he was only 12 years Indy’s senior. I will not even touch on television shows based in American High Schools, where actors often appear well into their 30′s before being able to access the emotional heft required to portray an “average” American teenager.

However, due to the detective work of dedicated fans, it was discovered last week that Katie is actually 25. As the internet clamour started to grow, (who cares enough, really?) the Corrie producers decided to “re-cast” the role, effectively sacking Katie before she had filmed a scene. Her agent has since admitted that Katie auditioned as a 19 year-old, but that it was “not necessarily her idea”, she had just gone along with it.  Everyone in the industry does it all the time, daahlings” said Joan Collins, 29.

To summarise this hard-hitting storyline, we therefore have an employee who has been “de-cast”, if there is such a word, either for being too old to play the part she was only weeks earlier recruited for, or for lying about her age during the recruitment process.

If the producers went for the first reason, then we have the potential for a few episodes following the twists and turns of a discrimination claim. To dismiss on the basis that the employee is too old for the job would clearly raise questions of age discrimination. While it is possible to objectively justify age discrimination, it may be difficult to show this here, where the producers thought Katie was perfect for the role right up to the point they discovered her true age.  The only thing which has changed is the knowledge of her actual age – she still looks, talks and walks the same as the person who triumphed over no doubt stiff competition to win the part, i.e. Katie thought to be 19.  Maybe it is a future concern – that at 25 she can pass for a television 14, but at 27 she could probably not get away with a day under 20, a rate of ageing too implausible even for Coronation Street.  I would not want to be the person explaining that one to her. 

The second reason, the lie, (or is it merely “artistic licence” in the world of television?) may leave us with less to chew on. It is well established that if an employer discovers that an employee lied during the recruitment process, it may dismiss him.  But what about the lie which makes no difference to the appointment?  Let us assume that Katie was auditioned  because the producers thought she was 19.  Therefore she got so far under false pretences, agreed.  But from the point where she was sifted out of that audition at the cost of a host of other hopefuls who actually were 19 (or were they all pretending too?) and into the role, that was irrelevant – she got the part because she fitted the part, not because of her age.  The age lie became immaterial.  Is it then still grounds to dismiss or is its irrelevance an open invitation to a Tribunal to conclude that the real reason was something else?

While lying about age may not be common outside the entertainment industry, misleading a potential employer in a CV or during an interview is certainly not unheard of.  If the lie were discovered only after years of valuable service, the employer could clearly take a pragmatic view and leave the employee in post.  But in the end, a deliberate lie is a deliberate lie and to say that you could not dismiss fairly for it, even years later, is in my view the same as saying that you cannot dismiss someone for stealing because you didn’t initially notice the money was missing.  Deceit at interview (as opposed to ordinary hype and self-promotion) undermines the most fundamental requirements of trust and confidence in the employment relationship, and the view that it didn’t justify dismissal because in the end it made no difference is a very unattractive one.  Do let me know if you disagree. 


New Obligations of Employers in the Slovak Republic in Relation to Protection of Whistleblowers

Posted in Whistleblowing

On 16 October 2014, the National Council of the Slovak Republic adopted Act No. 307/2014 Coll. on Certain Measures Related to Reporting of Anti-social Activities and on Amendment and Supplements to Certain Acts, considered the first more comprehensive regulation of whistleblowing in Slovakia. The Act came into force on 1 January 2015.

The new legal regulation introduces, for some employers, obligations to be fulfilled in a relatively short, half-year period; a failure to fulfil them is penalized by a fine of up to €20,000.

This overview provides basic information on the objectives of the new Act in protecting whistleblowers and on new obligations imposed on employers.

Should you have any questions in relation to the new Act, please contact Jana Pagáčová or Peter Devínsky.

For more information see our publication online.


Dňa 16. októbra 2014 prijala Národná rada Slovenskej republiky zákon č. 307/2014 Z.z. o niektorých opatreniach súvisiacich s oznamovaním protispoločenskej činnosti a o zmene a doplnení niektorých zákonov, ktorý je považovaný za prvú komplexnejšiu úpravu tzv. whistleblowingu na Slovensku. Zákon nadobudol účinnosť 1. januára 2015.

Nová právna úprava zavádza pre niektorých zamestnávateľov povinnosti, ktorých nesplnenie v relatívne krátkej, polročnej dobe, penalizuje pokutou až do maximálnej výšky 20 tisíc eur.

Tento prehľad poskytuje základnú informáciu o predmete nového zákona slúžiaceho na ochranu whistleblowerov a o nových povinnostiach, ktoré zamestnávateľom ukladá.

V prípade akýchkoľvek otázok v súvislosti s vyššie uvedeným, kontaktujte prosím Janu Pagáčovú alebo Petra Devínskeho.

Viac informácií nájdete v našej.

United States Supreme Court Declines to Review California Supreme Court Decision Erecting Barriers Against Arbitrating Private Attorneys General Act Claims

Posted in Arbitration, Class Action, Employment Contracts, Recent Cases, Wage and Hour

On January 20, the United States Supreme Court denied a motion for certiorari filed by CLS Transportation which was appealing the California Supreme Court’s decision in Iskanian v. CLS Transportation, about which we blogged in June. While Iskanian generally vindicated employers’ right to enforce class action bans in arbitration agreements, the California Supreme Court distinguished representative claims under the California Labor Code Private Attorneys General Act (Labor Code § 2698 et seq.). The California Supreme Court decision would result in individual employees subject to appropriately drafted arbitration agreements being barred from bringing class actions for damages while they are permitted to bring actions for penalties where they stand in for other current and former employees – a class action for penalties in fact, if not in name.

The denial of review by the United States Supreme Court leaves California employers in a difficult predicament. Presumably state courts will continue to follow Iskanian. However, the federal courts are generally not doing so. Three decisions from the US District Court for the Central District of California issued between August and October 2014 declined to follow Iskanian on the ground that Iskanian’s holding with respect to PAGA is hostile to arbitration in violation of the Federal Arbitration Act. The Eastern District of California added a similar view in October 2014, and now have been joined by the Northern District at the end of November and the Southern District in December. Perhaps the US Supreme Court wanted to wait for the Ninth Circuit Court of Appeal to take up this issue before the Supreme Court wades into this arena again. In the meantime, employers will be well advised to remove to federal court, if possible, cases involving arbitration agreement bans on representative PAGA claims. Employers interested in this issue should also consider the NLRB’s recent decision reaffirming their opposition to workplace arbitration agreements circumscribing the right to bring class or collective actions.

DC Circuit Says NLRB Improperly Evaluated Employer’s Company Hat-Only Uniform Policy

Posted in Employment Policies, NLRB, Recent Cases, Union

It is a long-established principal that under the National Labor Relations Act, employees have the right to wear union insignia on their work uniforms, unless doing so would present special circumstances, such as a safety hazard. It is equally established that employers may require that employees wear certain apparel as part of an approved work uniform. Not surprisingly therefore, tension – and thus litigation – often arises when an employer’s uniform policy is alleged to intrude on employees’ right to wear union buttons, pins, and other items.   That was the situation in a recent case involving a Nevada printing company called World Color (USA) Corp.

In that case, the employer maintained a policy that allowed employees to wear baseball caps at work, but only a baseball cap bearing the company’s logo, and not any other baseball cap.  The union representing World Color’s employees filed an unfair labor practice charge with the National Labor Relations Board, alleging that this rule infringed on the employees’ right to wear union insignia on their uniform.

After a hearing, an administrative law judge concluded that rule was overbroad and unlawful because it prohibited employees from wearing union baseball caps and that World Color had failed to demonstrate special circumstances warranting a company hat-only rule.  In February 2014, the NLRB affirmed this finding, stating that it was “undisputed that the policy on its face prohibits employees from engaging in the protected activity of wearing caps bearing union insignia.”

World Color appealed to the United States Court of Appeals for the District of Columbia.  It argued that, contrary to the NLRB’s finding, there was a dispute over whether its policy facially prohibited the wearing of union insignia.  The company explained that its policy prohibited wearing any hat other than a company logo hat, but it did not prohibit employees from accessorizing that hat with union insignia, and therefore it was not overly board and unlawful.

The court agreed with World Color, finding that the NLRB had improperly “short-circuited” its analysis by concluding that there was no dispute that the policy facially prohibited union insignia on uniform hats, and stating “[a]though the hat policy restricts the type of hat that may be worn, it does not say anything about whether union insignia may be attached to the hat.”  Because the NLRB’s erroneous conclusion regarding the rule’s supposed facial invalidity tainted its decision, the court reversed the NLRB and remanded the case for reconsideration.

Presumably the NLRB’s reconsideration on remand will involve an analysis under the Board’s familiar two-step inquiry from Lutheran Heritage Village Livonia. Under that standard, a rule will be found unlawful if it restricts protected activity on its face.  If it doesn’t, under the second step of the test, the rule may still be deemed unlawful if it was promulgated in response to union activity, if it was applied to restrict union activity, or if employees would reasonable interpret the rule as prohibiting union activity.

Given the court’s holding that World Color’s company hat-only rule does not restrict union activity on its face, it’s a certainty that on remand, the NLRB will be limited to analyzing the rule only under the second step of the Lutheran Heritage Village Livonia test.  Where it will come out on that is difficult to say, and may well depend on which NLRB members are on the panel that reconsiders the case on remand.  It’s possible that the Board could conclude that the policy is lawful, or it could conclude that because the policy does not specifically advise of the right to wear union insignia on company hats, employees would reasonably construe the policy to prohibit doing so, and thus the policy is unlawful (no doubt, an outcome that would be likely to generate a second appeal). Although we will have to wait and see, this case does have broader significance than just one employer’s uniform policy.  As those who have been following the NLRB’s activities over the past two years know, the Board has been aggressively reviewing – and finding unlawful – seemingly innocuous and sensible employer policies.  World Color (USA) Corp. is a good example of how judicial oversight of those decisions may rein in the Board’s attempt to police even the most mundane of workplace policies.   

Should Employers Offer Financial Incentives for Whistleblowing

Posted in Whistleblowing

This article was written for whistleblowing hotline provider Expolink http://expolink.co.uk/ 

It is well known that many employees do not blow the whistle for fear of repercussions if they do (from harassment to dismissal and various poor treatment in between). So should we offer incentives to employees to follow a whistleblowing procedure, in order that health and safety breaches and other illegality can be promptly brought to employers’ attention and swift remedial steps taken?  

In the US the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act features an incentivised whistleblowing procedure relating to whistleblowing in the financial services sector.     

In 2014 two of the UK’s top financial regulators, the Bank of England and the Prudential Regulation Authority, looked into providing incentives for making protected disclosures in the financial services sector in the UK. The recommendation they made to Parliament, following their investigation, was that a State programme to reward whistleblowers should not be implemented.   

This means that Parliament will not be introducing any law on the State offering financial incentives to individuals who whistleblow in the financial sector. But this would not prevent employers in that or other sectors introducing their own incentives for whistleblowers.   

But should they? What can be learned from the research conducted by the financial services regulators?  

Reasons against offering incentives  

  1. The cost – there is no way of assessing how high the cost of paying out these financial incentives could be. In the US under Dodd Frank the amount paid to whistleblowers is 10 – 30% of the fine ultimately imposed by the enforcing Commission there, providing it exceeds $1m. Consequently, significant sums of money could potentially be paid out. There would be no obligation on a UK employer to match that but even relatively minimal financial incentives are still an additional cost to the business, which few companies can afford in the current economic climate.  If we assume that fear of retribution, dismissal, etc., would otherwise deter the employee from blowing the whistle, it is obvious in addition that a purely nominal incentive is not going to be enough to get him over that concern.  An incentive scheme not generous enough to make any difference might have its cosmetic attractions, but in practical terms is really not worth having.
  2. It could be complex – how will the amounts of any award be decided, will it only be paid on a successful investigation, will there be a minimum bar that has to be hit before a payment is made? It could get complicated.  The US system is a ratchet off a penalty but the proper aim of whistleblowing should be to get wrong-doing stopped, not necessarily punished.  What price do you attach to a disclosure which has no monetary impact?
  3. It could undermine the introduction and maintenance by companies of effective internal whistleblowing mechanisms, which should be encouraged as good employee relations practice.  You should blow the whistle because it is the right thing to do for the good of your employer, not because you may have something to gain from doing so.
  4. It might encourage malicious reporting, prompting employees to entrap others into breaking the law so they could collect a reward or simply to make a speculative claims of wrongdoing in the hope of some reward.
  5. The cash recipient could in some cases be the perpetrator.
  6. Giving material rewards to whistleblowers could damage their credibility during an internal investigation in court by calling their motives into question.
  7. Under Dodd-Frank the scheme provides little or no incentive to whistleblowers whose information does not lead to an enforcement outcome. How could that work in a company scheme? Would a payment only be made if information led to a dismissal, for example? Or a lesser sanction? Will there not be a sufficient protection for whistlebowers under existing company policy?
  8. There is a strong view that this sort of scheme is giving money to employees for performing what is arguably their duty anyway, like an additional incentive for turning up on time or not performing badly.
  9. Given that UK law already provides uncapped financial remedies to those suffering retaliation for whistleblowing, is an additional incentive really needed?
  10. Finally, the research concluded that a financial incentive scheme is unlikely to increase the number or quality of disclosures, which is a fairly damning conclusion.  While it is possible to envisage that a very generous scheme might increase disclosure numbers, it is equally likely that this would be accompanied by a drop in disclosure quality.      

So what should employers be doing instead?  

The advice from the Bank of England and Prudential Regulation Authority research, which will be published later this year is that:  

  1. strong measures are needed to encourage and protect whistleblowers; and
  2. there is a need for a culture change to help improve behaviour and value the opportunity to improve senior management accountability for whistleblowing.  

We will have to see how this translates into concrete proposals that employers can implement. Until then, companies should be looking to have strong whistleblowing policies and procedures to protect employees who blow the whistle and also for key staff to be trained on dealing with whistleblowing complaints, maintaining confidentiality and protecting the whistleblower.