Clause 135 - Protected disclosures: reporting requirements

Small Business, Enterprise and Employment Bill – in a Public Bill Committee at 2:30 pm on 4th November 2014.

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Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 2:30 pm, 4th November 2014

I beg to move amendment 230, in clause 135, page 114, line 19, at end insert—

‘(4A) The Secretary of State shall make amendments to this section under the powers of subsection (4), to provide for the definition of “workers” to include “applicants”.

It is a pleasure, Mr Brady, to have you back in the Chair. One has to ask what you have done to deserve that particular pleasure, but perhaps we can find out later. It is also a great pleasure to follow my hon. Friend the Member for Chesterfield, who has yet again managed to win a vote in this Committee, on improving insolvency provisions in this country. I hope that the Minister’s generosity of spirit will continue. If she does not wish to approve our amendments, perhaps she can just fall asleep, as she did this morning, and they can go through unopposed.

We are now on the employment part of the Bill. The amendment is fairly simple, but it has wide-ranging consequences for those who wish to use whistleblowing at work. The amendment would extend the Government’s ambitions in the Public Interest Disclosure Act 1998 regulations and on whistleblowing to blacklisting. Blacklisting is a major issue, which this Parliament has tried to deal with. The Scottish Affairs Committee has produced two extensive reports—an interim report and a full report—on blacklisting. We have also had a number of Opposition day debates on the matter, all of which have been similar to the pubs debate we had in part 4, in that we have had to drag the Government kicking and screaming to do anything on these issues.

Photo of Sheryll Murray Sheryll Murray Conservative, South East Cornwall

That is the second time that the hon. Gentleman has referred to my amendment. I put on record how grateful I am for the Opposition’s support for that amendment.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

It is very kind of the hon. Lady to intervene and do that. We accept that gratitude and we will continue in that vein. Hopefully she might reciprocate with some of these amendments. She reciprocated this morning by not paying attention, but perhaps she will consciously vote for one of our amendments in the next few minutes.

It is worth reflecting on what the Public Interest Disclosure Act 1998 seeks to achieve. It provides protection to employees and workers. An employee’s dismissal will be automatically unfair where the reason for the dismissal is that they made a protected disclosure, which is whistleblowing as we know it. Workers have the right not to be subjected to a detriment as a result of making a protected disclosure. Employees or workers bringing a whistleblowing claim do not require a minimum period of service with the employer; it is a day one right, as with discrimination and other protected characteristics. There is also no limit on the compensation an employee can be awarded.

Those aspects are particularly relevant in seeking to understand the increase in the number and types of these claims over recent years. It is important to bear that in mind when thinking about blacklisting, which is the subject of our amendment. The whistleblowing aspect is important to preserve, but the reality is that high-salary individuals have sought to use the day one uncapped compensatory protection offered by PIDA to bring claims to satisfy the level of compensation they wish to see, rather than trying to address a genuine unfair dismissal claim through the whistleblowing legislation.

I can give an example. Someone who is on a salary of £2 million per year, who claims to have been unfairly dismissed from their work, would find the employment tribunal system unsatisfactory on the basis that compensation is capped. In that example, the cap would be at the level of about a month’s salary, if not less. So they would have to find another avenue if they wished to seek redress for unfair dismissal, and people have used the whistleblowing legislation to whistleblow on their own contracts and so on in order to try to make those claims.

That is why it is important to put into context why we are looking to extend some of this to individual applicants as well as workers themselves. Under the legislation, the employee must make a qualifying disclosure under six broad terms of malpractice. The first of these is a criminal offence, which would ordinarily be something that someone wishes to report. That seems fairly straightforward. The other terms are a breach of any legal obligation; a miscarriage of justice; a danger to health and safety, which is clearly related to whistleblowing regarding blacklisting in the construction industry and other industries where health and safety are very much prevalent; damage to the environment, where we all want to see included any area on which an employee wishes to whistleblow; and, of course, the deliberate concealment of information about any of the other breaches or types of malpractice.

We can see that these include some very serious categories of malpractice, which people may wish to raise under these whistleblowing regulations. Critically, under the Enterprise and Regulatory Reform Bill—the Committee for which Mr Brady also had the unmitigated pleasure of chairing—the Government also added the  public interest test. If, therefore, an employee takes a whistleblowing action and is unfairly dismissed, the issue they raised could be incredibly serious, whether a miscarriage of justice, a criminal offence, damage to the environment or health and safety.

We think that the Government’s ambitions for what they are trying to achieve with clause 135 of the Bill do not quite go far enough. Perhaps we could reflect on the explanatory notes to the Bill, which state:

“Clause 135 provides a power for the Secretary of State to require certain bodies listed on the PID(PP)O to report annually on disclosures by workers. The content of the report will be prescribed by regulations, which will also determine how the report is published and timing of the report. The Secretary of State also has the power to make further regulations setting out additional bodies to report annually. These regulations will be subject to parliamentary scrutiny by debate in both Houses.”

We can see from the clause that the extension of the whistleblowing legislation that the Government are trying to achieve here is incredibly limited. They are extending it only so far as to ensure that companies or bodies can report to the Secretary of State on the number of workers and the types of workers. We are not quite sure how the regulations will be set out, but I imagine that the information would be set out on that basis, perhaps with a matrix under those six headings of malpractice showing how many people have complained and what the remedy may have been. While that is a service, that is pretty much the sum total of the Government’s ambition on this. That has been emphasised by Cathy James, the chief executive of Public Concern at Work. I quote from the document that her organisation sent to the entire Committee on 25 June 2014:

“These reforms do not go far enough. This is a clear missed opportunity for the Government to strengthen the law that protects whistleblowers. While the proposed new requirements on regulators to report annually are a step forward”— which is what we have just seen with this clause—

“there are still some gaping holes in the law. These include the prevention of blacklisting of those who have blown the whistle”.

That is crucial. She then goes on to talk about a number of other issues which the Government have not included in this report. However, our amendment focuses particularly on blacklisting. It would probe the Government on what other plans they have for extending this, perhaps into,

“gagging clauses and an overall simplification of the law”.

Cathy James goes on to seek some information with regard to how this can be addressed, particularly with the 80%

“drop in claims to employment tribunals since the introduction of fees”.

Fees were introduced as part of the Enterprise and Regulatory Reform Act 2013 by the Ministry of Justice, and they are a

“barrier to people taking whistleblower claimants”.

That is a slight aside to what we are discussing, but it is worth getting on record.

Cathy James went on to add:

“Having undertaken a thorough review of the effectiveness of whistleblowing in the UK”, which Public Concern at Work did as part of its remit,

“we are disappointed that only a handful of the Whistleblowing Commission’s recommendations are being adopted by Government.”

She was referring particularly to the lack of ambition that the Government seem to be showing in terms of the opportunity to put something into the Bill that could clearly make a difference to some of those issues.

It can be seen from the list of malpractices that I emphasised at the start that it is important to ensure that employees can raise issues without being discriminated against. Our amendment would add to the clause a provision that people should not be blacklisted for participating in whistleblowing, and that there should be a mechanism for redress if they are. It is an opportunity for the Government to show that they take the issue of blacklisting seriously, because it has been shown to be a national scandal when we have debated it in this House. Many of the trade unions, UCATT and the Blacklist Support Group have consistently raised with us in Parliament how much of a national scandal it is. It ruins lives.

The issues affect thousands of workers who have been denied employment and left unable to make a living or support their families. A lot of them have been unable to get back into employment. Given the example of what happens with blacklisting, particularly but not exclusively in the construction industry, one would hope that anyone whistleblowing on the basis of health and safety or environmental regulation breaches would be able to. We are currently discussing fracking in this House, along with all the environmental issues connected with it, including vibrations, water table pollution and so on. If someone were to whistleblow on those particular health and safety or environmental grounds, they might be blacklisted from working in that industry. They must feel safe to make such allegations without having to sacrifice not only their current employment but any future employment as well. We must extend that to other areas if we can.

Public Concern at Work has also said that we should use the Bill as an example of the carrot-and-stick approach with employers by putting it on the face of primary legislation that blacklisting is unacceptable. Although extending it to applicants might not be heavily used, and although there might be ways to subconsciously blacklist people, if you like, without actually using a list of names—it might be enough merely to know that someone has been active in whistleblowing on health and safety breaches—it would send a strong message that prospective employers cannot assess people on the basis of how previous job applications have gone or their job history. That has been tested. In the 2010 case of BP plc v. Elstone, the judge emphasised his disappointment that he was unable to extend the legislation before him in the case to that application to the employment tribunal.

We feel that this is a huge missed opportunity. In the spirit of this Committee, I would be delighted to continue that co-operative approach by listening to the Minister before I decide whether to press the amendment to a vote, but persuasive though she has been with my hon. Friend the Member for Chesterfield, we will analyse the question when we have heard from her.

Photo of Jo Swinson Jo Swinson Parliamentary Under-Secretary of State (Department for Education) (Women and Equalities) , The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I am delighted that the hon. Gentleman ended his remarks on a slightly more charitable note than he began them when he suggested that I had been sleeping during an earlier part of the Committee. I had let my attention move to a subsequent clause at that  point in the vote. It is certainly a good lesson to me to stay in the moment, but I do not think it is fair to suggest that I would go to sleep.

Clause 35 takes the critical step of putting in place a power to require prescribed persons dealing with whistleblowing to report annually on public interest disclosures. A report last year by the University of Greenwich and Public Concern at Work found that three quarters of whistleblowers believe that nothing is done about the wrongdoing that they report. That statistic should worry us all, so we must address people’s lack of confidence in the whistleblowing framework.

Prescribed bodies are currently under no legal obligation to investigate matters reported to them. The duty will introduce public reporting of information to help demonstrate that reports of wrongdoing are taken seriously. It is important to point out that the measures are not intended to compromise the confidentiality obligations of those bodies. It is vital that whistleblowers are responded to positively by those who are in a position to act. We have heard case after case in which this has been the issue and that is why all parties represented in the Committee agree that whistleblowing protection is so important. We know that many regulators have procedures in place to handle whistleblowing disclosures. However, some do not and a reporting duty will make sure that all regulators are more aware of concerns that are raised to them through whistleblowing. Of course, that will require regulators to consider the impacts of whistleblowing in their sectors.

A minimum guarantee that regulators should consider how they handle whistleblowing disclosures should give greater confidence to whistleblowers that their concerns are heard and action taken when necessary. On the details of the reporting process, which is a matter that the hon. Member for Edinburgh South raised, the Department has just completed a consultation to determine the best approach. It began at the beginning of August and finished on 1 October. Responses are still being analysed but we expect to report on this in the new year to make sure that we get it right.

I want to say how we intend this to operate across the devolved Administrations, because employment law is a reserved power, yet many of the functions of regulators are devolved. We expect the reporting process for entirely devolved bodies, such as the Care Council for Wales, to mirror the process for UK-wide bodies, but we will not require these entirely devolved bodies to report to the UK Parliament. Let us be clear: this clause is only one of many steps we are taking to change cultural attitudes towards whistleblowing. It is not anticipated that the clause will be the solution to all issues that whistleblowers face. I shall not detain the Committee long on this, but it is important to point to some of the other actions that the Government have taken on whistleblowing, in order to provide reassurance that this is part of a strong package of measures to tackle this important issue.

In addition to the measure that we are debating today, we are issuing guidance to employers, workers and prescribed persons, including a non-statutory code of practice for employers. We are analysing the system that refers disclosures within employment tribunal application forms to the relevant regulator, bringing student nurses within the scope of the legislation and  considering whether other student groups need to be added. That is an issue that has long been raised by the hon. Member for North Ayrshire and Arran (Katy Clark), who has worked tirelessly on these issues, and I know she will be delighted that that change is being made. The Department of Health is working to investigate whistleblowing procedures within the NHS and the Home Office is doing similarly to strengthen protection within the police. We have updated the prescribed persons list, added MPs to it, introduced vicarious liability, introduced a public interest test, removed the good faith test and brought more NHS workers into scope.

The Government are taking a whole range of steps to deal with this, because it is such an important issue, as the Committee will agree. The amendment that the hon. Member for Edinburgh South is proposing will take us to the issue of blacklisting, but first let me deal with his question of whether there will be an increase in whistleblowing claims as a result of the unfair dismissal compensation cap. Because that cap is set at a relatively high level—I appreciate that there are different opinions about that and we have had debates about it—of £74,200 or 52 weeks’ salary, whichever is lower, it is still significantly higher than the vast majority of claims. I do not think that it is driving an increase in whistleblowing claims at employment tribunals.

Turning to the issue of blacklisting, which the hon. Gentleman raises in his amendment, suggesting that job applicants are added to the definition of “worker” in subsection (4) of the Employment Rights Act 1996, I share his concern about the practice of blacklisting. It is abhorrent, unacceptable and illegal. There are hefty penalties, rightly, if people are found to have indulged in this kind of appalling behaviour. I appreciate the frustration that many involved felt when they found out about the case of the Consulting Association, which came to such prominence because the legislation change in the previous Parliament had not happened early enough to catch the Consulting Association. The level of penalties available to the regulators to deal with that were therefore not of the order that most people would have wanted to see. I absolutely understand that frustration. However, it is important to recognise that we now have a strong set of protections against blacklisting with strong penalties for those who break the law in that regime.

The hon. Member for Edinburgh South mentioned the Scottish Affairs Committee’s report on blacklisting. It has already published its interim report but we are still waiting to hear its final findings. My right hon. Friend the Secretary of State for Business, Innovation and Skills and I have, on many occasions, encouraged anyone—whether Members of Parliament or external organisations—with any evidence of ongoing blacklisting to get in touch and send us that. We would take that with the utmost seriousness. Indeed, we have passed on that Select Committee report to the Information Commissioner for further investigation. We absolutely accept the seriousness of blacklisting but, much as there is understandable concern about what has happened in the past, we do not have evidence of any kind of ongoing blacklisting.

In our consultation, we asked about the issue of whistleblowing. Again, no evidence was submitted to suggest any kind of activity preventing known whistleblowers from finding employment today. We had  a very good response to our consultation and published our response back in June. However, evidence of that activity was not forthcoming. If any individuals think that they have been unfairly excluded from employment, perhaps because they are on a list of known whistleblowers, they can report their concerns to the Information Commissioner’s Office. The office has the power to investigate misuse of personal data under the Data Protection Act 1998 and can impose penalties of up to £500,000 for serious breaches.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills) 2:45 pm, 4th November 2014

I am grateful to the Minister for running through what the Government have been doing on blacklisting. The issue is surely that there may be no evidence to suggest that blacklisting is still taking place—I hope that it is not still taking place. If there is not a strong piece of primary legislation, people who wish to whistleblow may not come forward, out of fear for their job and future employment. There is a chicken and egg issue here in terms of what we are trying to promote.

Photo of Jo Swinson Jo Swinson Parliamentary Under-Secretary of State (Department for Education) (Women and Equalities) , The Parliamentary Under-Secretary of State for Business, Innovation and Skills

I understand and accept the hon. Gentleman’s point, but I disagree with him on whether there is a strong piece of legislation dealing with this. The Public Interest Disclosure Act 1998 was a strong piece of primary legislation, and the Government have taken all these steps to strengthen and improve it as further evidence has come forward about where it is and is not working well. We also have regulations on blacklisting which are, if I recall correctly, secondary legislation but which none the less provide strong penalties. Some of those penalties would come under the Data Protection Act.

The protections are spread between different pieces of legislation, but I believe that they are strong. If the Information Commissioner issues a fine and the person does not comply, that can ultimately lead to a criminal offence being committed and enforced. If a worker thinks that their employer has provided a negative reference on the basis that they have made a public interest disclosure or blown a whistle, they have a route to redress through employment tribunals.

I am glad that the hon. Gentleman tabled this amendment, as we have been able to have a debate about blacklisting, which is important. However, I am not sure that the amendment is appropriate for the clause, which is about the role of regulators in particular. I assure the Committee that the Government will continue to evaluate all the information we receive in order to promote the value of whistleblowers and to ensure that we protect people who have the courage to come forward. On that basis, I hope that he is reassured and will withdraw his amendment.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I thank the Minister for her helpful response. It is genuinely helpful because it has allowed us to have a conversation about the serious issue of blacklisting and whether we should be pressing primary legislation in this House to firm up on some of those issues. Public Concern at Work has been quite clear that this is a missed opportunity. It is the second piece of primary legislation to go through Parliament that does not include something that helps with the issue of either the actuality of people being blacklisted or the perception of employees who wish to take a whistleblowing or public interest disclosure and subsequently leave their  job, or are sacked, and win or not a tribunal, as the case may be. These people fear for their applications to other employers. In the main, people are whistleblowing for health and safety or for being a member of a trade union or all of the other issues that we hear about, either anecdotally or otherwise. They are likely to stay in the same sector and it is likely that people will know of them or it will be very easy to find out who they are.

The Labour Party think that it will give added protection and comfort to allow applicants to make a public interest disclosure without fear of being blacklisted, either in the strong sense of being on a named list—which is and always has been against the law, as we know through the Information Commissioner’s Office and the blacklisting issues that this House has seen—or in the sense of being subconsciously blacklisted, because the individual has either been sacked or left their job because of a whistleblowing issue.

This is an incredibly serious issue. The Opposition feel that, while the Government have made some progress, they have missed the opportunity in the Bill to add more clauses that would assist with some of those issues. On the basis of the whistleblowing commission that it put together, Public Concern at Work provided the Committee with 15 different issues where it feels the Government could have taken steps to improve the whistleblowing issue further.

Photo of Stephen Doughty Stephen Doughty Opposition Whip (Commons)

I strongly support what my hon. Friend is saying. Blacklisting is a horrendous practice and we need to do all we can to protect whistleblowers. Does he agree that the Welsh Labour Government have taken a very positive approach on this issue, working closely with trade unions, including the GMB, of which I am a member? We have briefly spoken about this before; unions have shown the way in taking a strong stance on this issue.

Photo of Ian Murray Ian Murray Shadow Minister (Business, Innovation and Skills)

I am grateful for the intervention. Most of these issues are about people making a stand and not necessarily saying, as the Minister did in her response, “We have no evidence that this is currently taking place so there is no need for us to do anything about it.” A strong piece of regulation is a deterrent that says to employers clearly that any such activity is unacceptable. The Welsh Government have been very strong in their view that they will not give public sector contracts to people who have been involved in blacklisting. The Scottish Government, to their shame, voted against doing such a thing in Scotland, despite their rhetoric. I never miss an opportunity in this Committee to remind people that the SNP are not a left-of-centre party, but indeed talk left and act right. That is another example, in terms of blacklisting.

We have a piece of primary legislation that had a real opportunity to add significantly to the public interest disclosure regime and deal with some of the issues raised with this Committee by Public Concern at Work. We seem to have missed that opportunity, so I will test the will of the Committee and give the Government one last chance to strengthen the Bill slightly further.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 9.

Division number 24 Decision Time — Clause 135 - Protected disclosures: reporting requirements

Aye: 6 MPs

No: 9 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Clause 135 ordered to stand part of the Bill.