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In Chesterton Global Ltd & Anor v Nurmohamed & Anor [2017] EWCA Civ 979 the Court of Appeal further refined the test for determining whether a protected disclosure was in the “public interest” or not.

The facts in Chesterton Global Ltd & Anor v Nurmohamed & Anor

Mr Nurmohamed worked as an estate agent at Chesterton Global Ltd, a well-known firm of estate agents, from January 2008 to his dismissal on 17 October 2013; latterly, he was employer as a Director at Chesterton’s Mayfair office.

In 2011 a new group of investors acquired a shareholding in Chesterton, which is a privatec company. Their involvement with the company led to a review of, and changes to, the existing system for payment of commission to sales staff, with the payment of commission being based on profitability rather than the previously-used metric of revenue. Mr Nurmohamed believed that this change would negatively affect the amount of commission he was paid and objected, but in February 2013 he agreed to the new system, subject to some modifications.

After the changes to the commission payment system Mr Nurmohamed monitored Chesterton’s accounts for a number of months. On 14 August 2013 he met with Patricia Farley, a director responsible for the London area, and explained a number of anomalies on the accounts which he believed showed that the profitability of the Mayfair office was being artificially suppressed in order to reduce the amount of commission payable to staff – two examples that he referred to were that a depreciation charge had been made that was higher than had been budgeted for and, further, a figure had been included for a ‘staff bonus’ that had not been paid. He made the accusation that he believed that the accounts were being manipulated “to the benefit of the shareholders”. Mr Nurmohamed repeated this allegation to Mr Verman (HR director of the company) on 24 September 2013 and again to Ms Farley on 8 October 2013.

Mr Nurmohamed was dismissed from his employment on 13 October 2013 and brought claims against Chesterton and Mr Verman in the Employment Tribunal for unfair dismissal and automatic unfair dismissal, claiming that his dismissal was because he had made protected disclosures within the meaning of the Employment Rights Act 1996 (i.e. that he was a whistleblower).

In its ET3 Chesterton and Mr Verman accepted liability for the unfair dismissal claim but disputed that the reason for Mr Nurmohamed’s dismissal was related to any protected disclosures.

The decision of the Employment Tribunal

The Employment Tribunal found in Mr Nurmohamed’s favour in respect of his claims for unfair dismissal and automatic unfair dismissal, holding that Mr Nurmohamed had made a number of protected disclosures (including his complaints about the artificial suppression of the accounts for the Mayfair office on 14 August 2013, 24 September 2013, and 8 October 2013), that those complaints were in the public interest, that at the time of making the disclosures Mr Nurmohamed had a reasonable belief that those disclosures were in the public interest, and that the sole or principal reason for Mr Nurmohamed’s dismissal was the making of one or more of those protected disclosures. In particular, the Employment Tribunal held that the disclosure had been in the public interest because the alleged misconduct was allegedly deliberate, that the financial effect of such alleged misconduct was potentially significant (between £2 million and £3 million), and that it affected over 100 senior managers’ earnings.

The Respondents appealed against the Tribunal’s conclusions, arguing that the Tribunal had erred in holding that the disclosures were sufficient to constitute being in the “public interest”, as only 100 employees were affected (and that this group was not sufficiently large).

The decision of the Employment Appeal Tribunal

The Employment Appeal Tribunal rejected the Respondents’ appeal, holding that Mr Nurmohamed’s disclosures were not only made in his own interest but that he also had in mind the interests of the 100 other senior managers who would have been affected by the allegations that the accounts had been artificially suppressed. The EAT held that the grouping of these 100 or so senior managers was sufficient in order to render a conclusion that a section of the public would be affected, particularly given the fact that Chesterton was a well-known estate agent, that the allegation was that its alleged misconduct was deliberate, and that the effect of the alleged misconduct was significant (at between £2 million and £3 million).

The Respondents again appealed, on the basis that the EAT had erred in law in its finding that the disclosure had been made in the reasonable belief that it was in the “public interest”, given that Mr Nurmohamed had been complaining about a breach of a legal obligation that was principally related to his own private interests.

The decision of the Court of Appeal

The Court of Appeal dismissed the Respondents’ appeal, holding that the EAT had applied the law properly in the circumstances: it was open to the Employment Tribunal to conclude that, although Mr Nurmohamed clearly had a private interest in his disclosures to his employer, he had also had a reasonable belief that there had been a breach of a legal obligation owed by Chesterton to its senior managers; this category of persons was broad enough to constitute a section of the public, therefore rendering the disclosures in the “public interest”. The Court of Appeal also held that the nature of the employer, the significance of the alleged breach, and the nature of the wrongdoing (i.e. whether it was accidental or deliberate) were also relevant factors in determining whether a disclosure was in the public interest.

The Court of Appeal went on to suggest at paragraph 34 of its judgment a broad test that could be applied in order to determine whether a disclosure of information was in the public interest or not – the Tribunal should examine:

  1. the numbers in the group whose interests the disclosure served;
  2. the nature of the interests affected and the extent to which they are affected by the wrongdoing disclosed;
  3. the nature of the wrongdoing disclosed;
  4. the identity of the alleged wrongdoer.

Our solicitors’ comments

Chris Hadrill, a specialist employment solicitor at Redmans, commented on the case: “This case is particularly significant as it should lay to rest the grey area of when a disclosure is made (in the reasonable belief of a worker) in the ‘public interest’ or not if it involves a matter in which the relevant employee has a private interest – the conclusion of the Court of Appeal was that it is not a bar to a successful whistleblowing claim that the relevant employee has a private interest in any allegation that there has been a breach of a legal obligation if the requirements of the new test (laid out in this article) are met.”

About

Redmans Employment Team deal with employment matters for both employers and employees, including drafting employment contracts and policies, advising employers and employees on compromise agreements, handling day-to-day HR issues, advising on restructures, and handling Employment Tribunal cases for both employers and employees

Call 020 3397 3603 to speak to one of the members of our employment team or email us on enquiries@redmans.co.uk.

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