News - CA considers correct approach for interpreting ‘in the public interest’ in Chesterton case

Employment & Discrimination - Adam Ross

Chesterton Global Limited and another v Mohamed Nurmohamed [2017] EWCA Civ 979

This appeal concerned the correct approach that Employment Tribunals should take to interpreting the words “in the public interest”, inserted into Section 43B of the Employment Rights Act 1996 (ERA) by the Enterprise and Regulatory Reform Act 2013. Section 43B ERA defines qualifying disclosures, which must be made in a manner prescribed by Sections 43C-43H ERA in order to become protected disclosures. Having made such a disclosure, the worker is then protected from being subject to a detriment (Section 47B ERA) or dismissal (Section 103A ERA) as a consequence. The effect of the amendment is that in order to be a qualifying disclosure, there must be a disclosure of information which, in the reasonable belief of the worker making the disclosure, is made in the public interest.

The Facts

The Claimant, Mr Nurmohamed, was dismissed by his employer, Chestertons, which employed him as Director in its Mayfair office. He alleged that this was because he had made protected disclosures, contrary to Section 103A ERA. He also alleged that he had been subject to certain detriments because he had made protected disclosures, contrary to Section 47B ERA. The relevant disclosures, made to senior Chestertons’ employees, concerned the way in which a new profit-based commission system was operated by Chestertons. The Claimant contended that costs had been purposefully overstated so as to reduce the apparent profitability of the Mayfair office. He stated that the misstatement was in the order of £2 million to £3 million and that over 100 senior managers were affected.

The ET and EAT

The Employment Tribunal considered the question: “did the Claimant make the disclosures in the reasonable belief that they were in the public interest”? It noted that there was no authority on what “in the public interest” meant. It found that where a section of the public was affected rather than simply the individual involved that must be sufficient for the matter to be in the public interest.  This reasoning was upheld in the Employment Appeal Tribunal by Supperstone J.

The CA

There were three positions put forward to the Court of Appeal by the Chestertons and Mr Verman, the Appellants; Mr Nurmohamed, the Respondent; and Public Concern at Work (PCAW), the Intervener. The Appellants said that for something to be in the public interest, it could not simply be a private grievance (for example relating to pay), no matter how many people were involved. The Respondent said that for a disclosure to be in the public interest at least one other person must be affected and the disclosure must be “sufficiently important”, which was to be judged by reference to all of the circumstances and particularly four factors: the size of the affected group, the nature and extent of the interests effected, the nature of the alleged wrongdoing and the identity of the alleged wrongdoer. The Intervener said that the only requirement for a disclosure to be in the public interest was that at least one other person was affected.

The Court of Appeal rejected the Appellants and Intervener’s positions and accepted the Respondent’s. Beatson and Black LJJ sounded notes of caution about the “binary” approaches of the Appellant and Intervener. Beatson LJ cited H.L.A. Hart’s The Concept of Law and said that “bright line” rules increase certainty at the expense of “blindly prejudging what is to be done in a range of future cases, about whose composition we are ignorant”.

Underhill LJ, giving the leading decision, with which Beatson and Black LJJ agreed, began by making four important points. Firstly, he said that the question is two-stage: (a), did the worker when making the disclosure believe that it was in the public interest? And, if so, (b) was that belief reasonable? Secondly, he said that there is a range of possible views on whether a disclosure was made in the public interest and the Tribunal when answering the reasonableness question should avoid substituting its own view for the worker’s. Thirdly, the worker’s contemporaneous reasons for thinking that a disclosure was made in the public interest are relevant to assessing their subjective belief, but not necessarily its objective reasonableness. A Tribunal might therefore find that a worker’s reasons for (genuinely) believing something to be in the public interest were unreasonable, but that there were other reasons (unarticulated at the time) that made that belief reasonable. Fourthly, although the worker must have a genuine (and reasonable) belief that the disclosure was made in the public interest, that does not have to be the predominant motive for making the disclosure: Sections 49(6A) and 123(6A) ERA, which deal with reductions to compensation on the grounds of bad faith, would otherwise be otiose.

Underhill LJ, emphasising the importance of considering “all the circumstances of the case”, approved the Claimant’s formulation of the test. He said that the position taken by PCAW could not be correct, as a matter of purely private interest (such as holiday pay) does not become a matter of public interest simply because it is shared by another. Underhill LJ rejected the Appellant’s formulation because he was not prepared to rule out the possibility that a disclosure of information concerning a breach of a private nature could be a matter of public interest if a sufficiently large number of other employees share the same interest. It was likely, however, that the larger the number of people involved, the more likely there will be other features meeting the public interest threshold.

The Outcome

The Appellant stated that the Tribunal in conducting the evaluation of reasonableness simply took into account the number of employees said to be affected. Underhill LJ found that it was debatable as to whether the Tribunal had also taken into account the alleged deliberate wrongdoing and the size of the alleged accounting discrepancy, as it ought to have done. Even if it had not, though, the conclusion would in his view have been the same, such that any error of law was immaterial. The appeal was therefore dismissed.

Discussion

Underhill LJ’s point that the reasonableness of the relevant belief can be judged after the event is an essential part of the decision. It lowers the bar considerably for a would-be whistle-blower. It is conceivable that a claimant would say that they genuinely believed that the disclosure of information was in the public interest because it affected at least one other person. When it comes to a Tribunal case though, those representing the claimant can give cogent reasons on why the disclosure of information was in the public interest, which never occurred to the claimant at the time, focusing on the four factors identified above. There remains a lingering issue though: it is not the worker’s belief at the time that the disclosure was in the public interest that is being evaluated as reasonable or not; it is the reasonableness of a freestanding argument that the disclosure actually was in the public interest. It therefore remains unclear what actually has to be in the worker’s head at the time of the disclosure. Time will tell whether or not this proves to be problematic for Tribunals applying the test.

To read the transcript, please click here.

Case summarised by Adam Ross.

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