U.K. Whistleblower Protections and Financial Awards Needed to Address ‘Career Suicide’ Risks

Discrimination against whistleblowers in the U.K. has escalated to a point where the government may need to take more decisive action to enhance legal protections and introduce financial awards to compensate for what is often perceived as “career suicide.”

Last month, the Financial Times reported a sharp increase in the number of workers making legal claims against employers for unfair treatment after raising concerns in the workplace.

The report found that the annual number of claims involving “public interest disclosures”—a term meant to offer whistleblower protection under U.K. law—increased by 92 percent between 2015 and 2023.

Legal experts are not surprised by this trend. Piers Rake, a partner at the legal and professional services firm Astraea Group, noted that companies frequently mishandle whistleblowers. He highlighted that the Association of Certified Fraud Examiners, a professional training body, estimates that 43 percent of internal frauds are identified through tips received from whistleblowers. Rake pointed out, “So organizations that crack down on whistleblowers—rather than engage properly with their disclosures—are shooting themselves in the foot.”

Despite the U.K. having had whistleblower protection laws in place since 1998, a 2021 review by the International Bar Association found that the country met only five of the 20 criteria necessary for adequate whistleblower protection. At the time, the U.K. had the highest number of whistleblower cases globally.

Will Burrows, a partner at the law firm Bloomsbury Square Employment Law, identified a key issue: “Whistleblowers do not know they are actually whistleblowers until somebody tells them—and that’s usually when they’ve gone to make a bullying or unfair dismissal complaint after management or colleagues’ behavior towards them has changed.”

Burrows explained that many whistleblower reports come from employees who believe that raising concerns about issues like discrepancies in accounts or invoices is simply part of their job. “They don’t think of it as whistleblowing or making a ‘protected disclosure’ because they don’t necessarily suspect fraud or deliberate wrongdoing—they often just think mistakes are being made and are not being recognized,” he said. Burrows added that the treatment of whistleblowers within the U.K. legal system is “appalling,” noting, “It can be career suicide. Many people never work again. Companies have the resources to throw money at lawyers to win cases, so whistleblowers are at a disadvantage from the start. It is also my opinion that regulators don’t know how to protect whistleblowers either.”

Some experts believe that the culture surrounding whistleblowing in the U.K.—and elsewhere—perceives whistleblowing channels as a means to protect the company rather than the individual making the disclosure. Nada Kakabadse, a professor of policy, governance, and ethics at Henley Business School, argued that whistleblowing is seen by organizations as a “sensitive” issue, prompting them to be “defensive” rather than open.

This defensiveness, she said, stems from the C-suite’s acute awareness of the reputational and financial damage that serious wrongdoing can inflict on a business. As a result, senior managers often avoid the issue in the hope that it will “blow over,” leaving whistleblowers vulnerable.

Kakabadse suggested that whistleblower complaints are generally handled better when processed independently, though she admitted that “the outcomes are not always in favor of the whistleblower.” She cited an example where whistleblowing concerns at a large U.K. company that went to tribunal resulted in a 3:1 ratio in favor of the company.

Efforts have been made to change the culture around whistleblowing. In October 2015, the U.K.’s two main financial services regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority, introduced a requirement for firms to appoint a senior manager as a “whistleblowing champion.” This individual is responsible for ensuring the integrity, independence, and effectiveness of the firm’s whistleblowing policies and procedures. The rules also oblige firms to inform the FCA if they lose an employment tribunal with a whistleblower, although there is no requirement to report the number of cases brought.

In February, the director of the U.K. Serious Fraud Office advocated for whistleblower payouts and the establishment of a better disclosure regime. Meanwhile, members of the main political parties have called for comprehensive reform to ensure that companies retaliating against whistleblowers face severe civil and criminal sanctions, possibly under a U.S.-style Office of the Whistleblower.

Nick Hawkins, an employment partner at law firm Knights, expressed mixed feelings about the U.K.’s attempts to “destigmatize” whistleblowing. “I don’t think the presence of a senior individual in the role of ‘whistleblowing champion’ would necessarily precipitate an upturn in confidence amongst employees that they will be heard, and (crucially) protected if they do blow the whistle. Indeed, the FCA actually reported a decline in whistleblowing reports between 2022 and 2023,” he said. Hawkins added, “Realistically, I suspect it is likely that financial incentives would assist in destigmatizing whistleblowing far quicker, as too might be the introduction of our own ‘Office of Whistleblower,’ although such a proposal is only a private members’ bill, so a long way from something being made law.”

By fLEXI tEAM