Employees Can Be Personally Liable for a Whistleblowing Dismissal
In Timis v Osipov the Court of Appeal has held that two non-executive directors were jointly and vicariously liable with their employer for compensation totalling over £2 million.
The Facts
Some of you may recall our previous article on the Employment Appeal Tribunal (EAT) decision in this matter. To summarise, Mr Osipov, the CEO of International Petroleum Limited (the Company), was found to have been unfairly dismissed by the Company having 'blown the whistle' in a series of protected disclosures. Two non-executive directors (Mr Timis and Mr Sage) were also found to have been heavily involved in the decision to dismiss and both the Employment Tribunal and the EAT found that they were jointly and severally liable with the Company for the compensation awarded.
The Court of Appeal (CA) had to consider whether or not the two non-executive directors could be held personally liable along with the Company. This question was of particular importance to all of the parties involved because the Company has since become insolvent and therefore unable to make the compensation payment awarded to Mr Osipov.
As the CA noted in its decision: 'In most discrimination cases the issue of the individual liability of a co-worker is of limited practical significance because the employer usually discharges the full amount of the award […] In this case we were told that IPL is insolvent and that the Claimant is accordingly looking to recover from the Appellants personally.'
In an important decision, which brings whistleblowing into line with discrimination claims in the workplace, the CA concluded that the two non-executive directors were personally liable due to having been party to the decision to dismiss because of the protected disclosures which had been made.
Best Practice
As we previously reported, this case provides a stark reminder that directors of a company and fellow employees can be held jointly and severally liable with the employer for any losses which arise as a result of a decision to dismiss an employee, where the dismissal is deemed to be on account of protected disclosures and is therefore, automatically unfair.
While it may remain unusual for employees to seek to take a claim against a fellow employee rather than the employer, this case highlights that were an employer has become insolvent or otherwise unable to pay an employee may well seek to pursue a co-worker personally.
In this particular instance both directors held directors' insurance which would cover the full compensation sum. However, there will be scenarios where this is not the case and where the dismissal involves a senior employee or a highly paid worker, the amount of losses may be considerable. Employers may wish to bear this example in mind when it comes to considering the insurance they obtain for the business and its employees.