REASON SHOPPING AND THE UNDERMINING OF WHISTLEBLOWER PROTECTIONS

We are delighted to announce the publication of the case study entitled “Reason shopping and the undermining of whistleblower protections,” which has been prepared by Stephen Holden, a Ph.D. candidate at Manchester Law School.

The video recording of the case study as well as the slides used during the presentation and a list of additional relevant sources are accessible at the following address: https://www.corporatecrime.co.uk/corporations-governance-crime/#comp-lgjpfjsi

This presentation is part of a series of eight case studies focused on occurrences of corporate misconduct, which were presented during the event “Corporations, Governance, and Crime” that was held on the 17th of November 2022.

This hybrid international roundtable (in-person and online) was focused on corporate governance failures and irresponsible business practices. It was organized by our Editor-in-Chief, Dr. Costantino Grasso - Associate Professor in Law at Manchester Law School, in cooperation with the Manchester Metropolitan University, and was included in the teaching activities of the Master of Laws course in Corporate Governance and Business Ethics at Manchester Law School.

The event was driven by the ambition of casting light on some of the most burning issues affecting the corporate world through a series of brief but highly topical case studies. In particular, a series of terrific guests focused on eight select corporate scandals, which covered issues spanning several countries and different industrial sectors including the food, leisure, extractive, and financial industries. The event also focused on a recent UK judicial decision that represents a matter of concern in the area of whistleblowing and corporate compliance and audit systems.

In this case study, which was based on the paper entitled "Troubling UK Judicial Decision Undermines Whistleblower Protection" that has been published on the Corporate Crime Observatory, Stephen Holden illustrates how the recent Court of Appeal case Kong (appellant) v Gulf International Bank (UK) Ltd established the troubling precedent that a whistleblower may be dismissed for their conduct without statutory relief in circumstances even where allegations against the reporting individual are unfounded and arise resultant of the disclosure. The concern is that such a decision may exert adverse effects on whistleblowers that, with their knowledge of internal systems, are crucial in preventing criminal behavior in organizations.

In particular, the presentation discusses how whistleblower disclosures can lead to unethical retaliatory practices by organizations, which can ultimately result in the dilution of existing whistleblower protections. The presentation argues that in this particular case, the dismissal of an employee was directly linked to her initial disclosure, which highlights the potential risks associated with whistleblowing. The presentation suggests that the decision to dismiss the employee may cause uncertainty in the minds of potential whistleblowers, leading them to remain silent for fear of being accused of unacceptable conduct and losing the legal protections granted to whistleblowers. The main argument is that this shift is inherently problematic for at least three main reasons.

Firstly, the presentation discusses the concept of "reason shopping," which allows employers to take action against a whistleblower while distancing themselves from retaliation. The scope of reason shopping has expanded to include complaints of hurt feelings by the subject of the disclosure, making it easier for employers to retaliate against whistleblowers. The presentation highlights a recent case where the court found that a lack of evidence or due process is not a barrier to separability and incentivizes employers to act first and investigate later to establish that the decisions were not influenced by the disclosure itself.

The presentation also discusses the financial implications of whistleblower retaliation and dismissal, with financial compensation for whistleblower retaliation and dismissal being uncapped, which creates a powerful financial argument for organizations to persuade judges that a person was wrongfully dismissed for reasons other than a protected disclosure.

Finally, the presentation notes that those employed for fewer than two years may be subject to summary dismissal without recourse of unfair dismissal, which leaves whistleblowers entirely without recourse if the company succeeds in arguing the dismissal was resultant of reported conduct in making the disclosure.

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