University of Law MSc in Law, Business and Management Case Study (Masters Module 2) on whistleblowing and corporate governance. Includes an executive summary, bibliography, and reflective statement.
TITLE:
Case study 5 – Whistleblowing and Corporate Governance
EXECUTIVE SUMMARY:
Traitors or heroes? Corporate treachery or public justice? The purpose of this report is
to explore the role of the whistleblower in today’s society and establish whether the
current legal and corporate governance framework serve as adequate protection.
Whistleblowers play an integral role at facilitating effective management while fostering
a culture of openness, and should accordingly be rebranded as ‘the CEO’s Best Friend’
as they essentially lie at the heart of corporate governance – serving as the most
effective system of internal control. However, through analysis of the Public Disclosure
Act 1998, this report asserts that the Act could much more effectively encourage
fairness, transparency, accountability, and responsibility – the key pillars of corporate
governance – through widening the scope of protection, establishing an independent
regulatory body for whistleblowing cases, and imposing a duty on organisations to adopt
mandatory whistleblowing policies amongst many other things. This report therefore
calls for Parliament to speed up their review of the current whistleblowing framework
and introduce changes aimed at more effectively empowering whistleblowers.
0
, [candidate name]
REPORT:
1. Introduction
The Zeebrugge ferry disaster, Piper Alpha oil rig explosion, and Clapham Junction rail
crash – tragedies in British history that could have been avoided at the ‘blow of a
whistle.’1 It only takes a few to stand up for the many in the face of injustice, but is it
worth the risk? ‘Whistleblowers’ are those who go out of their way to expose corporate
malpractice as the stigma surrounding whistleblowing entails sacrificing one’s livelihood
for the greater good. The severe consequences of doing so has undoubtedly deterred
many from ‘blowing the whistle,’ which has come at the cost of fairness, transparency,
accountability, and responsibility – the key pillars of corporate governance.2
Although the Public Interest Disclosure Act 1998 (PIDA) has since come into play, it has
not gone far enough in successfully empowering employees to speak up against
workplace wrongdoing.3 Accordingly, this report argues that the protections offered by
PIDA are insufficient. The Act fails to recognise that whistleblowers essentially lie at the
heart of corporate governance, serving as the most effective system of internal control
as they play an integral role in facilitating effective management while fostering a culture
of openness.
Accordingly, the aim of this study is to investigate how best to empower whistleblowers.
Firstly, the report outlines the current regulation and framework surrounding
whistleblowing. Next, it goes on to explore and evaluate the role of the whistleblower.
Then, the report evaluates whether the current regulation and framework for both
whistleblowers and firms are adequate, suggesting appropriate reforms. Finally, it
reflects on the future of whistleblowers and corporate governance. Concluding, this
report asserts that the current corporate governance framework surrounding
whistleblowing is inadequate and in need of reform.
1
Amanda Jordan, Amy Luna, David Grayson et al., ‘Whose Responsibility? The role of business in
delivering social and economic change’ (The Smith Institute 2006)
2
G. N. Bajpai, ‘The Essential Book of Corporate Governance’ (SAGE Publications 2016)
3
Kelly Bouloy, ‘The Public Interest Disclosure Act 1998: Nothing more than a “Cardboard Shield”’ [2012] 1
The University of Manchester Review of Law, Crime and Ethics 17
1
, [candidate name]
2. Public Interest Disclosure Act 1998 (PIDA)
2.1 Purpose
In the corporate world, an employee is expected to remain loyal to their organisation no
matter what.4 Consequently, employers often respond defensively when their
wrongdoings are brought to light, branding the whistleblower as a ‘traitor’ for disclosing
internal matters to the public.5 The Public Interest Disclosure Act 1998 was enacted to
safeguard whistleblowers against such reprisal from their employers, adding Part IVA on
protected disclosures into the Employment Rights Act 1996 (ERA).6 As per section
47B(1), “a worker has the right not to be subjected to any detriment by any act, or any
deliberate failure to act, by his employer done on the ground that the worker has made
a protected disclosure.”7 Section 103A makes clear that whistleblowing is an automatic
unfair reason for dismissal which entitles whistleblowers to remedies such as
reinstatement and compensation, as well as compensation for loss of career and future
earnings.8 From an employee's perspective, knowing that, as expressed by Lord Borrie,
“the law will not stand idly should they be vilified or victimised” by their employers
encourages them to speak out against wrongdoings in the workplace.9 Thus, it is clear
that the main purpose of the Act is to offer whistleblowers protection from being unfairly
dismissed as a result of blowing the whistle, in addition to holding organisations
accountable for such dismissals and cover-ups to ensure corporate transparency.10
4
James Gobert and Maurice Punch, ‘Whistleblowers, the Public Interest, and the Public Interest
Disclosure Act 1998’ [2000] 63 Modern Law Review 25
5
ibid
6
Practical Law Employment, 'Whistleblower protection' (2022)
<https://uk.practicallaw.thomsonreuters.com/Document/I43e1d2a31c9a11e38578f7ccc38dcbee/View/Full
Text.html?transitionType=SearchItem&contextData=(sc.Search)#co_anchor_a658903> accessed 12 May
2022
7
Employment Rights Act 1998, s 47B(1)
8
ERA s 103A; John Bowers QC, Martin Fodder, Jeremy Lewis and Jack Mitchell, ‘Whistleblowing: Law
and Practice’ (Oxford University Press 2022); Lingard v HM Prison Service ET/1802862/04; Practical Law
Employment (n 6); Watkinson v Royal Cornwall Hospitals NHS Trust ET/1702168/08 and ET/1702079/09
9
Bowers et al. (n 8)
10
Gobert and Punch (n 4)
2
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