Timis v Osipov

The Court of Appeal dismissed the appellants' challenge to the Employment Appeal Tribunal's decision that individuals (directors/co-workers) can be held liable under section 47B of the Employment Rights Act 1996 for whistleblower detriments which amount to dismissal, and that such individuals may be liable for losses flowing from that dismissal. The court construed section 47B(2) as disapplying Part V only so far as it seeks to permit a claim against the employer for its own act of dismissal; it does not bar an employee from bringing a Part V claim against a co-worker or agent who participated in, or caused, the dismissal.

Key legal principles:

• Section 47B(1A) (as amended) creates personal liability for co-workers/agents for whistleblower detriments; section 47B(1B) treats such acts as done by the employer (subject to a reasonable-steps defence under section 47B(1D)).
• Section 47B(2) excludes only claims under Part V that are claims against the employer for the employer's own act of dismissal within the meaning of Part X; it does not prevent Part V claims against individuals for detriments that amount to dismissal.
• Where a prior unlawful detriment by a co-worker causes dismissal, compensation for losses resulting from that dismissal can be recovered as compensation for the original detriment, subject to ordinary causation and remoteness rules.

The court also affirmed the Employment Tribunal's factual finding that Mr Sage was a party to the dismissal decision and therefore liable on the Part V claim.

Background and parties: The claimant, Mr Alexander Osipov, was CEO of International Petroleum Ltd (IPL). The appellants, Mr Frank Timis and Mr Antony Sage, were IPL directors. The claimant was summarily dismissed on 27 October 2014 by e-mail from Mr Sage after instructions/agreement from Mr Timis. The Employment Tribunal (ET) found the dismissal to be automatically unfair under section 103A (whistleblower dismissal) and also found that the appellants had subjected the claimant to whistleblower detriments contrary to section 47B, awarding compensation. The EAT re-calculated quantum and upheld individual liability in substance; the appellants appealed to the Court of Appeal.

Nature of the claim / relief sought: The claimant sought compensation for whistleblower detriments and for losses resulting from his dismissal. He pursued claims under Part X (section 103A) against the employer and under Part V (section 47B, including 1A/1B) against individuals and the employer.

Procedural posture: ET judgment (initial reasons April 2016; further judgment December 2016) found unfair dismissal by IPL and individual liability for detriments culminating in dismissal. The EAT (Simler P, July 2017) largely upheld the ET, save that the EAT removed the basic award element that could only be awarded against a party liable for unfair dismissal; the parties agreed the grossed-up figure now quantified as £2,003,972.35. The Court of Appeal heard the appellants' appeal and Protect intervened.

Issues framed by the court:

• Whether the ET could lawfully award compensation against the appellants personally for losses arising from the claimant’s dismissal when only the employer can be liable for unfair dismissal under Part X (section 103A).
• Whether, on the ET’s findings of fact, Mr Sage was liable in respect of the dismissal (i.e. whether he was a party to the decision or merely a messenger).

Court's reasoning (concise):

• On statutory construction the court concluded that section 47B(2) disapplies Part V only insofar as it would permit a claimant to bring a Part V claim against the employer for the employer’s own act of dismissal which is within the meaning of Part X. Section 47B(2) does not bar a Part V claim against an individual co-worker or agent who has done an act which amounts to dismissal.
• The court emphasised the purpose of the 2013 amendments creating individual liability (to fill the lacuna identified in Fecitt) and rejected a construction that would produce incoherent anomalies (for example, allowing liability for prior unlawful acts but immunising individuals who participate in the dismissal itself).
• The court accepted that losses flowing from a dismissal consequent upon an earlier unlawful detriment are recoverable as compensation for that prior detriment, subject to ordinary causation and remoteness and discounting rules.
• On the facts the ET was entitled to find that Mr Sage was not merely a messenger but a participant in the dismissal decision, and therefore liable under section 47B.

Practical implications: Individuals who participate in whistleblower detriments that amount to dismissal can be held personally liable under section 47B and an employer may be vicariously liable under section 47B(1B) unless it establishes the statutory reasonable-steps defence.

The appeal is dismissed. The Court of Appeal held that section 47B(2) of the Employment Rights Act 1996 does not prevent a claimant from bringing a Part V claim against an individual co-worker or agent for a detriment that amounts to dismissal, nor does it prevent recovery of losses flowing from a dismissal caused by an earlier unlawful detriment; on the facts the tribunal was entitled to find Mr Sage was a party to the dismissal and therefore liable.

Appeal from the Employment Tribunal (London Central: judgment and reasons issued 6 April 2016; further judgment 5 December 2016) to the Employment Appeal Tribunal (Simler P: principal judgment 19 July 2017; grossing-up issues 27 July 2017), and thence to the Court of Appeal (this judgment, [2018] EWCA Civ 2321).