Scottish Court of Session Decisions

[1] This is an appeal under section 37(1) of the Employment Tribunals Act 1996 against a decision of the Employment Appeal Tribunal dated 25 April 2001. Leave to appeal to this court was granted by the Tribunal on 16 May 2001. The appeal relates to the proper construction to be placed upon certain provisions of the Employment Rights Act 1996 ("the 1996 Act"), as inserted by the Public Interest Disclosure Act 1998 ("the 1998 Act").

[2] According to its long title, the main purposes of the 1998 Act were to protect individuals who make certain disclosures of information in the public interest and to allow such individuals to bring action in respect of victimisation. The making of such disclosures is frequently called "whistle-blowing". By section 1 of the 1998 Act a new part IVA was inserted into the 1996 Act. It is with the construction of these provisions that this appeal is principally concerned. The provisions of the inserted part IVA, so far as relevant, are as follows. By section 43A the expression "protected disclosure" is defined as meaning a qualifying disclosure (as defined by section 43B) which is made by a worker in accordance with any of sections 43C to 43H. By section 43B(1) the expression "qualifying disclosure" is defined as meaning any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of various specified matters. These include (a) that a criminal offence has been committed, is being committed, or is likely to be committed and (b) that a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject.

[3] Section 43C(1) provides that a qualifying disclosure is made in accordance with that section if the worker makes the disclosure in good faith - (a) to his employer, or (b) where the worker reasonably believes that the relevant failure relates solely or mainly to - (i) the conduct of a person other than his employer, or (ii) any other matter for which a person other than his employer has legal responsibility, to that other person. Section 43D relates to disclosures to legal advisers, and section 43E relates to disclosures to Ministers of the Crown. Section 43F provides:

[4] Section 43G(1) provides:

Subsection (2) provides that the conditions referred to in subsection (1)(d) are inter alia:

Subsection (3) provides that in determining for the purposes of subsection (1)(e) whether it is reasonable for the worker to make the disclosure, regard shall be had, in particular, to inter alia (a) the identity of the person to whom the disclosure is made and (b) the seriousness of the relevant failure.

[5] Section 43H provides inter alia:

Subsection (2) provides that in determining for the purposes of subsection (1)(e) whether it is reasonable for a worker to make the disclosure, regard shall be had, in particular, to the identity of the person to whom the disclosure is made. Section 43K contains provisions relating to the meaning of the words "worker" and "employer" for the purposes of part IVA, which we do not require to repeat.

[6] Section 47B of the 1996 Act, as inserted by section 2 of the 1998 Act, confers on a worker a right not to be victimised by his employer for having made a protected disclosure, and section 48, as amended, provides inter alia for the making of complaints about victimisation to an Employment Tribunal.

[7] By section 5 of the 1998 Act there was inserted into the 1996 Act a new section 103A, which provides:

The remedies for unfair dismissal include a compensatory award, which by section 124 of the 1996 Act is unlimited in inter alia the case of a person who is to be regarded as unfairly dismissed by virtue of section 103A. Under sections 128 and 129 of the 1996 Act, as amended by section 9 of the 1998 Act, an employee who presents a complaint to an Employment Tribunal that he has been unfairly dismissed by his employer and that the reason, or, if more than one, the principal reason for the dismissal is that specified in section 103A, may apply to the Tribunal for interim relief, and the Tribunal may make an order for the continuation of his contract of employment.

[8] The 1998 Act was passed on 2 July 1998. Section 18(3) provided that, subject to subsection (4), the Act should come into force on such day or days as the Secretary of State might by order made by statutory instrument appoint. Subsection (4) provided inter alia that section 1 came into force on the passing of the Act, so far as relating to the power to make an order under section 43F of the 1996 Act. On 5 June 1999 two orders were made. The Public Interest Disclosure Act 1998 (Commencement) Order 1999 (SI 1999 No. 1547), made in exercise of the powers conferred by section 18(3) of the 1998 Act, brought into force on 2 July 1999 all the provisions of the 1998 Act which did not come into force on the passing of the Act. The Public Interest (Prescribed Persons) Order 1999 (S.I. 1999 No. 1549), which was made in exercise of the powers conferred by section 43F of the 1996 Act and came into force on 2 July 1999, specified persons and descriptions of persons prescribed for the purposes of section 43F and the descriptions of matters in respect of which each person, or persons of each description, were prescribed. The prescribed persons and descriptions of persons included the Commissioners of the Inland Revenue ("the Inland Revenue"), and the description of matters in respect of which they were prescribed included income tax, corporation tax and national insurance contributions.

[9] On 15 September 2000 the respondent was dismissed from his employment with the appellants as a diving and operations superintendent. He applied to the Employment Tribunal complaining inter alia that he had been unfairly dismissed under section 103A of the 1996 Act. He also made complaints of unfair dismissal (under section 98), breach of contract (at common law) and victimisation under sections 47A (sic; recte 47B) and 48 of the 1996 Act. In his application he set out the grounds upon which his complaints were made which, so far as relevant for present purposes, may be summarised as follows. Between 1990 and 1993 the respondent was employed as a staff diving-superintendent by Seaway (U.K.) Limited. In 1993 that company was merged with another company to form a company called Stolt-Comex-Seaway Limited ("SCS"), who became the respondent's employers. The respondent alleged that SCS purported to change his status to that of a self-employed person, that he was unwilling to accept this, because it was a false and untrue description of his status, and he reported SCS to his Inspector of Taxes. In November 1993 he was dismissed by SCS for reporting to the Inspector of Taxes the attempts by SCS to classify him as self-employed in circumstances in which that designation was untrue and inaccurate. Thereafter, the proceedings by the Inspector of Taxes continued and in or about 1998 SCS were fined a total of £3,000,000 arising out of and in connection with the report made to the Inland Revenue by the respondent. Meanwhile, between 1 March 1995 and 1998 the respondent was employed by McDermott Subsea Constructors Limited. In 1998 there was a transfer of this company's undertaking to ETPM Deep Sea Limited. In or before 1998 a joint venture had been formed between this latter company and two others, one of whom was SCS, the respondent's former employers. In or about December 1999 the undertaking of ETPM Deep Sea Limited was transferred to SCS. The two transfers took place in circumstances such that the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied. At or about that time SCS was re-named Stolt Offshore Limited, who are the present appellants. Accordingly SCS, who had formerly been the respondent's employers and in respect of whom he had made the disclosure to the Inland Revenue, became his employers again and were, by virtue of the 1981 Regulations, his employers from 1995 onwards. The respondent alleged that during the course of his second period of employment with them the appellants acted in a fashion which amounted to victimisation of him for having made the report to the Inland Revenue, and that this was the true reason for his dismissal on 15 September 2000. In their notice of appearance the appellants denied the respondent's allegations. They alleged that there were circumstances in which they ascertained a redundancy situation, that the respondent was identified as a candidate for redundancy, that his employment was terminated by reason of redundancy and the dismissal was, having regard to the equity and substantial merits of the case, fair and reasonable in all the circumstances.

[10] The respondent applied to the Employment Tribunal for interim relief under section 128 of the 1996 Act. This application was opposed by the appellants and a hearing took place on the question of whether or not the respondent should be granted interim relief. On 27 October 2000 the Tribunal decided that they did not have jurisdiction to consider the respondent's complaint in terms of section 103A of the 1996 Act; this complaint was dismissed and consequently his application for interim relief was refused. The Tribunal further held that a full hearing on the merits of the respondent's complaints of unfair dismissal and breach of contract should be arranged. Finally, the Tribunal required the respondent to specify, within a period of 14 days, the basis for his complaint that he was victimised in terms of sections 47A (sic) and 48 of the 1996 Act.

[11] In reaching the view that they did not have jurisdiction to consider the complaint in terms of section 103A of the 1996 Act, and consequently that the respondent could not seek interim relief in terms of section 128, the Tribunal stated, at p. 7:

[12] The respondent appealed to the Employment Appeal Tribunal against the decision of the Employment Tribunal. On 25 April 2001 the Employment Appeal Tribunal allowed the appeal to the extent of remitting back to the Employment Tribunal for a full hearing on all aspects of the case, including those raised by sections 47B and 103A of the 1996 Act. In their judgment, delivered by Lord Johnston, the Tribunal stated, at para. 13:

It is against this decision that the present appeal is brought.

[13] In presenting the appeal, counsel for the appellants submitted that the issue for this court was whether the Employment Tribunal was correct in its construction of the 1998 Act and the conclusion which it reached. It was not a question for this court whether the Employment Appeal Tribunal was correct. Counsel referred to the decision of the Court of Appeal in Hennessy v. Craigmyle & Co. Ltd. [1986] I.C.R. 461, in which Donaldson M.R. said, at para. 25:

Counsel said that he sought to show, not that the Employment Appeal Tribunal was wrong, but that the Employment Tribunal was correct. (We note, however, that the first ground of appeal for the appellants starts with the words "The Employment Appeal Tribunal erred in law..."). Notwithstanding this, counsel said that he did not seek to argue, as it had been argued for the appellants before the Employment Tribunal, that to hold that the respondent had made a protected disclosure would be to give retrospective effect to the 1998 Act. He accepted the analysis that the Act was not to be treated as retrospective simply because some of the elements required for liability pre-dated its coming into force. He referred to another decision of the Employment Appeal Tribunal (sitting in London), The Met Office v. Edgar, 14 June 2001, in which, following the Employment Appeal Tribunal's decision in the present case, it was held that the Employment Tribunal had jurisdiction to hear the applicant's complaint of victimisation by reason of making a protected disclosure, contrary to section 47B of the 1996 Act, even though the protected disclosure had been made before the 1998 Act came into force on 2 July 1999. Counsel for the appellants did not seek to quarrel with this approach.

[14] Counsel's main submissions were based on the provisions of section 43F of the 1996 Act. Until the order made under that section came into force on 2 July 1999, there were no persons who were prescribed within the meaning of that section. In particular, the Inland Revenue could not be described as persons prescribed by an order for the purposes of section 43F until 2 July 1999. If there was no category of prescribed persons prior to that date, the Inland Revenue could not fall into that category. Counsel submitted that this was self-evident, having regard to the plain wording of section 43F. His primary submission was, therefore, that if section 43F did not apply to the 1993 disclosure, the 1998 Act should be construed in such a way that no disclosure made prior to 2 July 1999 could be a protected disclosure. Even if sections 43C, 43D, 43E, 43G and 43H might otherwise be regarded as ambiguous, section 43F made it clear that none of these sections had the effect of providing that a disclosure made prior to 2 July 1999 was a protected disclosure. In support of this argument, counsel submitted that reference within these sections to good faith and reasonable belief were consistent with the approach he was advancing, because of the difficulty of investigating these matters at different times. Once the 1998 Act had come into force, employers were more aware of the need to keep records, so that the difficulty of investigation would not be so great. As a matter of construction it would be incongruous to have one rule for section 43F and a different rule for the other sections.

[15] Counsel for the appellants advanced a subsidiary argument, on the assumption that we were not persuaded by his argument that none of sections 43C to 43H applied to a disclosure made before 2 July 1999. In that event, he submitted, his argument in respect of section 43F still stood, for the reasons summarised above. Counsel went on to submit that none of sections 43C, 43D, 43E, 43G or 43H, even if they applied to a disclosure made before 2 July 1999, could, on a proper construction, apply to a disclosure made to the Inland Revenue. If, however, section 43F did, on a proper construction, apply to a disclosure made before 2 July 1999, counsel accepted that, in the circumstances alleged by the respondent, taken pro veritate at this stage, he had made a protected disclosure for the purposes of the legislation.

[16] While counsel for the appellants was addressing us, counsel for the respondent intervened to object that the argument about section 43F was new and that it was not covered by the appellants' grounds of appeal. Their second ground of appeal is, however:

We decided that the argument fell within the terms of this ground of appeal.

[17] In due course, when he came to address us, counsel for the respondent replied in the first place to the subsidiary argument advanced by counsel for the appellants. He submitted that if the respondent could not bring himself within section 43F, he could bring himself within one or more of the other sections. He could, in the circumstances alleged by him, rely on section 43H. He could also rely on section 43G, because before making the disclosure to the Inland Revenue he had previously made a disclosure of substantially the same information to the appellants, and thus satisfied the condition referred to in section 43G(2)(c)(i), and the provisions of subsection (1) were otherwise satisfied. Counsel for the appellants intervened to point out that no allegation of such a complaint was made in the respondent's original application to the Employment Tribunal. At this, counsel for the respondent said that this was his information, and that the application could be amended. He also tentatively suggested that the respondent would be able to bring himself within the terms of section 43C.

[18] Turning to the primary submission of counsel for the appellants, counsel submitted that the same approach should be adopted in the case of both the 1998 Act and the 1999 order made under section 43F. The important point of time was that at which the employer took the decision to dismiss the worker. Counsel submitted, under reference to the decision of the Employment Appeal Tribunal in Harvey v. Institute of the Motor Industry (No. 2) [1996] I.C.R. 981, that in approaching the task of construction the question was one of fairness. There was nothing unfair in the construction favoured by the Employment Appeal Tribunal in the present case, because at the date when they dismissed him the appellants knew that the respondent had made a disclosure, which was a qualifying disclosure in terms of section 43B, that he had made it to the Inland Revenue, who were prescribed persons for the purposes of section 43F, and accordingly the disclosure was a protected disclosure within the meaning of section 43A.

[19] Although the submissions for the appellants were ably and attractively presented, we are satisfied that they are unsound and that the decision of the Employment Appeal Tribunal is correct. Our reasons for reaching this conclusion can be stated quite briefly. The principal purpose for which the 1998 Act was passed was, as its long title makes clear, to protect individuals who make certain disclosures of information in the public interest. The main protection conferred on such an individual is the protection against unfair dismissal provided by section 103A of the 1996 Act. An employee who, in terms of that section, is unfairly dismissed may apply under section 128 for interim relief, and under section 129 this may take the form of an order for the continuation of his contract of employment. Clearly, therefore, the point of time which has greatest significance for the purposes of the legislation is that at which the employer dismisses the employee. This is because it is the dismissal which triggers the employee's entitlement to invoke the statutory remedies conferred by the provisions of the 1996 Act inserted by the 1998 Act (in addition to such other remedies as he would have had in any event). The making of the disclosure requires to be considered at that point of time; and it is then that the criteria for treating it as a protected disclosure are applicable, on a proper construction of the relevant statutory provisions. While, therefore, an event which has taken place in the past may be relevant for the purpose of establishing that a dismissal has been unfair, the legislation is not in our opinion truly to be regarded as retrospective. What is affected by the legislation is not the original act of the employee in making the disclosure, but the act of the employer in dismissing the employee. When the matter is looked at in this way, there can be no unfairness to employers. As the Employment Appeal Tribunal pointed out in the present case, and in similar terms in The Met Office v. Edgar, there is no unfairness to employers in this interpretation of the legislation. Any employer who, since 2 July 1999, is contemplating the dismissal (or victimisation) of an employee for making a qualifying disclosure must be taken to be aware that if he does so the disclosure will be treated as a protected disclosure. It is therefore immaterial whether the disclosure was made before or after 2 July 1999. It would appear to us to be consistent with the main purpose of the 1998 Act to approach the matter in this way, as to construe it in the manner suggested by counsel for the appellants would be to deprive employees, particularly no doubt in the early part of the period after the 1998 Act came into force, of an important protection which it was thought appropriate to confer on "whistle-blowers" in the public interest. We would add that the 1998 Act does not, in our view (and counsel for the respondent did not suggest otherwise), apply to a dismissal which took place before 2 July 1999.

[20] For similar reasons, there is in our opinion no force in the submission that section 43F could not apply to any disclosure made to a person who had not yet been prescribed by an order for the purposes of that section, even though that person had been so prescribed by the date of the dismissal. Provided that the person to whom the disclosure has been made has been prescribed for the purposes of section 43F by the date of the dismissal, the criteria for unfair dismissal are satisfied. Looking at the matter as at that date, if the disclosure was made to a person who by then was to be treated as a prescribed person, it became a qualifying disclosure, and thus fell to be treated as a protected disclosure for the purpose of deciding whether the dismissal was unfair. This, in turn, is a matter of which the employer must be taken to be aware in deciding whether to dismiss (or victimise) his employee for having made a disclosure.

[21] Since, for these reasons, the primary argument for the appellants fails, there is little that we require to say about the subsidiary argument. Clearly, in our opinion, it is open to the respondent, in the circumstances alleged by him, to rely on section 43F. If, however, that section were not available, for example because the person to whom the disclosure was made had not been prescribed for the purposes of section 43F by the date of the dismissal, the employee might well be able to rely on one of the other sections. Sections 43C to 43H are clearly intended to confer comprehensive protection by providing for a wide range of disclosures to be treated as qualifying disclosures. In the circumstances of the present case, the respondent might well have been able to rely on section 43H, and perhaps also, if his application were amended in the manner suggested by his counsel, on section 43G. We were only briefly addressed on section 43C, and we prefer to reserve our opinion about its proper construction and the circumstances to which it might apply.

[22] It remains to mention that there was no discussion before us of the Employment Tribunal's decision that the respondent should be required to specify, within a period of 14 days, the basis for his complaint that he was victimised in terms of sections 47B and 48 of the 1996 Act. As we have already said, the Employment Appeal Tribunal remitted back to the Employment Tribunal for a full hearing on all aspects of the case, including those raised by the complaints under these sections. It was not submitted to us that this was not the appropriate course.

[23] For the foregoing reasons we shall accordingly refuse the appeal, with the result that the case can proceed to a full hearing before the Employment Tribunal.