Whistleblowing: non-executive directors personally liable for nearly £1.8 million following the dismissal of a whistleblower

Published 4 August 2017

The EAT upholds a finding that (with the employer) two non-executive directors were jointly and severally liable for the detriment suffered by a CEO who was dismissed for whistleblowing.

The facts

Mr Osipov was employed by International Petroleum Ltd, a gas and oil exploration company. For the last few months of his employment, before he was summarily dismissed, he was the CEO of the company. He claimed that he had been dismissed because he was a whistleblower, having made four protected disclosures relating to the company's business in the Republic of Niger. He also claimed that he had suffered detriments at the hands of two non-executive directors and two external contractors. These detriments included being sidelined from negotiations in which, as CEO, he would have expected to be involved, and being excluded from participation in the company's work in Niger in which, again, as CEO, he would have been involved. He was mistakenly sent an email by one of the non-executive directors, clearly indicating that he considered Mr Osipov was an obstacle. This email was a further detriment, and also provided evidence the disclosures were the reason for the dismissal.

Mr Osipov's detriment claims were brought not just against his employer, but also against the non-executive directors and external contractors, in their individual capacities.

The tribunal upheld the claims, holding that International Petroleum Ltd and the two non-executive directors were jointly and severally liable, with the employer, for £1,744,575.56 of losses which flowed from Mr Osipov's dismissal.

The case proceeded to the EAT, where both the employer and the non-executive directors unsuccessfully appealed. International Petroleum Ltd unsuccessfully argued that the tribunal was wrong to find that the disclosures were protected and that they were the reason for the detriments and the dismissal. The non-executive directors argued that they should not be liable for losses flowing from the dismissal, because the wording of the legislation meant that the liability of individuals is restricted to pre-dismissal detriments, not losses flowing from the dismissal. Their arguments were unsuccessful.

What does this mean for employers?

It is not unusual for individuals to be named in discrimination claims. We expect, following this case, to see this more frequently in whistleblowing claims. Claimants may now look for compensation from individual decision makers from losses flowing from dismissals as well as from detriment. The case raises the possibility of (rare) cases where a claim for unfair dismissal against an employer fails, but the employee manages to persuade a tribunal that the decision maker is liable for losses flowing from the dismissal because a protected disclosure had some influence on a decision to dismiss. Awards for injury to feelings may also be made against individual decision makers.

Given the increased risk of claims against managers, employers should consider training managers on the rights of whistleblowers, including how to spot and deal with whistleblowing allegations.

International Petroleum Ltd and Others v Osipov