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In Timis & Anor v Osipov & Anor [2018] EWCA Civ 2321, the Court of Appeal concluded that the Employment Tribunal was able to award the Claimant (Mr Osipov) compensation against the Respondents (Messrs Timis and Sage) as individuals, for the losses caused by his whistleblowing dismissal. The court rejected the Respondent’s argument that such compensation could only be awarded by way of compensation for unfair dismissal and thus only against the company (IPL) since only the employer can be liable for unfair dismissal.

The facts in Timis & Anor v Osipov & Anor [2018] EWCA Civ 2321

The Claimant was employed by International Petroleum Ltd (“IPL”) as its CEO. Two of IPL’s directors were the Respondents. Mr Timis is IPL’s largest individual shareholder. Mr Sage was at the material time its Chairman.

In late October 2014 Mr Timis, with the agreement of Mr Sage, decided that the Claimant should be summarily dismissed, and the dismissal was effected by an e-mail from Mr Sage sent on 27 October.

The ET agreed that the Claimant was a whistle-blower and that the reason for his dismissal was that he had made protected disclosures. However, the ET also held that by their conduct in relation to his dismissal the Respondents had subjected the Claimant to a detriment, or detriments.  According to section 47B of the Employment Rights Act 1996 “whistle-blower detriment” by individuals employed by the same employer, as well as by the employer itself is unlawful.  As such, the ET concluded and the EAT agreed that the Respondents were jointly and severally liable with IPL, to compensate the Claimant for the losses suffered as result of his dismissal in an agreed amount of £2,003,972.35.

The Respondents appealed to the Court of Appeal, arguing that the ET was not entitled to award the Claimant compensation against the Respondent for these losses. It is their case that such compensation could only be awarded by way of compensation for unfair dismissal and thus only against IPL (since only the employer can be liable for unfair dismissal).

At the time of the ET’s judgment, IPL was in liquidation.

The Court of Appeal’s decision

The Court took the opportunity to trace the development of the law in this area, ending with an explanation of the changes to the whistleblowing regime introduced by the Enterprise and Regulatory Reform Act 2013.  The Court explained that the starting-point is that individual co-workers are now personally liable for acts of whistleblower detriment done by them, irrespective of the liability of the employer.

The employer can be made vicariously liable for the acts of individual employees, but can escape such liability if it shows that it took all reasonable steps to prevent the individual responsible from acting in the way complained of, in which case the claim will only succeed against that individual.

The claim against the Respondents was that they subjected the Claimant to various detriments which led to his dismissal. There were some 14 detriments listed, but the pertinent detriment which was considered by the Court was:

“Any instructions or recommendations given by the 2nd to 5th Respondents which culminated in the Claimant’s dismissal on 27th October 2014”.

The ET decided that the Respondents were responsible for this detriment.  It decided that a compensation payment was to be made to the Claimant (initially a sum of £563,461.92 which was described as “the award for unfair dismissal”) but did not apportion the payment between the Respondents (including IPL).  When questioned, the ET elaborated that it found the Respondents to be individually liable for the detriments for which it had found them to be responsible and thus “for all the losses flowing from the detriments up to the point of dismissal”.

The ET appeared to have adopted the view that the losses occasioned by the dismissal were recoverable against the Respondent because the dismissal was itself caused by the earlier unlawful detriments but did not explicitly say so.  Even so, it was understood by the parties that the Respondents individually were liable to pay the award for unfair dismissal.  

Although the Respondents were not held liable for the Claimant’s unfair dismissal as such, they were held liable for the losses that he suffered in consequence of the dismissal, on the basis that those losses flowed from the pre-dismissal detriments for which they were liable, and specifically from the instruction or recommendation to dismiss him, which the ET clearly regarded as distinct from the dismissal itself.

The Court considered the following two grounds of appeal:

  • Neither Mr Timis nor Mr Sage could be liable to the Claimant in respect of an instruction to dismiss the Claimant, nor could they be liable for losses which flowed from the Claimant’s dismissal.
  • In any event, Mr Sage could not be liable to the Claimant in relation to any instruction to dismiss the claimant because, as the ET found, it was Mr Timis who gave the instruction to dismiss, not Mr Sage.

In relation to the first point, the Court concluded that Mr Timis had the authority to dismiss the Claimant, whereas Mr Sage did not.  The Court conducted a lengthy examination of the wording of and motivation behind section 47B(2) of the Employment Rights Act to accept that the exclusion of individual liability in a case where the detriment amounted to dismissal would produce serious anomalies. The Court’s final conclusions on this matter were that an employee can bring a claim against an individual co-worker for subjecting him or her to the detriment of dismissal, i.e. for being a party to the decision to dismiss and can also to bring a claim of vicarious liability for that act against the employer and where a claim is brought based on a distinct prior detrimental act done by a co-worker which results in the claimant’s dismissal, the Claimant can seek to recover losses flowing from the dismissal.

In relation to the second point, the ET had found that Mr Timis made the decision to dismiss the Claimant and instructed Mr Sage to do so.  It was suggested that Mr Sage was just the “mouthpiece”, but the Court rejected that, stating that case one individual may take the leading role, but that does not mean that the other participants are not also responsible for the act in question. In this case Mr Timis, the largest shareholder, made the decision but Mr Sage expressly agreed. On that basis the ET was entitled to make a finding that he was a party to the decision and shared Mr Timis’s motivation and the resultant liability.

Our solicitors’ comments on Timis & Anor v Osipov & Anor [2018] EWCA Civ 2321

Rana Tandon, senior associate in the employment team at Redmans, commented: “This case offers an excellent insight and analysis of the law around whistleblowing compensation.  It is useful for companies to be aware that any allegations of whistleblowing detriment by individuals should be taken seriously and steps should be taken to prevent any further detriment.  Equally, individuals should be clear that if they participate in any detriments which result in the dismissal of a fellow employee, they could be liable to pay any losses which result.”

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. Redmans have offices in Richmond, Chiswick, Hammersmith, Fulham, Kingston, Wimbledon, Ealing, Kings Cross and Marylebone (meetings strictly by appointment only).

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