In the decision of Timis and anor v Osipov and anor, the Court of Appeal has held that two individual directors, who were responsible for dismissing a senior employee for blowing the whistle, were liable to pay him compensation, in addition to the company itself, under section 47B of the Employment Rights Act which deals with “detriment” against co-workers.
Basic facts
Mr Osipov, who was employed by an oil exploration company called International Petroleum Ltd (IPL) as its CEO, was summarily dismissed by two of its directors, Mr Timis and Mr Sage in late October 2014. He brought claims for unfair dismissal and detriment for making a protected disclosure (blowing the whistle) with regard to governance arrangements within IPL.
Decisions of tribunal and EAT
The tribunal agreed that he had been automatically unfairly dismissed for making a protected disclosure under section 103A of the Employment Rights Act 1996 (ERA). It also held that the two directors had subjected him to an unlawful detriment by virtue of their conduct in relation to his dismissal contrary to section 47B(1A) of the Employment Rights Act (ERA) which proscribes detriment by individuals employed by the same employer, along with the company itself which was liable under section 47B(1).
As such, the tribunal held that the directors were jointly and severally liable, along with IPL, to compensate him for the losses he had suffered as a result of his dismissal which it quantified at just over £1.7 million. The Employment Appeal Tribunal agreed but increased the compensation to just over £2 million.
As IPL was insolvent by this stage, Mr Osipov looked to recover the money from the two directors. They appealed, arguing that only IPL could be held liable for any losses as a result of his dismissal (not them as individuals); and that, in any event, section 47B(2) ERA did not apply where the detriment in question was dismissal. As the tribunal had found that the detriment to Mr Osipove amounted to a dismissal, it followed that his claim was excluded under section 47B(2).
Decision of Court of Appeal
Acknowledging the apparent anomaly between the different sections in the ERA, the Court of Appeal held that it would only be significant if it could be shown that there was a positive statutory intention to disallow claims advanced under section 47B where the detriment took the form of dismissal, even if it could not be advanced under section 103A. However, the Court did not believe that was Parliament’s intention, not least because under the 2010 Equality Act, individuals could be found liable to pay compensation in discrimination cases.
The Court of Appeal therefore dismissed the appeal, holding that, although section 47B(2) excludes a claim against employers for dismissing an employee on whistleblower grounds, it did not exclude a complaint under sub-section (1A) against an individual. Indeed, according to the Court, the Act had created a framework for individual liability of a fellow worker for detriments “without restriction”. As such, it did not exclude individual liability for “detriments amounting to termination of the working relationship”.
If that was not the case, co-workers who carried out acts short of dismissal which then resulted in a claimant being dismissed would be liable for those acts; whereas an individual with the same motivation and who decided on the actual dismissal would escape scot-free.