Whistleblowing: What Small Business Owners Need to Know

What polices small and medium enterprises need to have in place to handle whistleblowing

Whistleblowing: What Small Business Owners Need to Know

The majority of employers are well aware of ‘whistleblowing’, and interest in the subject has grown significantly in recent months following a series of high-profile cases.

In one recent employment tribunal, Cambridge businessman David Best was awarded £3.4m after being dismissed for exposing fraudulent activities by his former employer.

With other stories about whistleblowing at the NHS and other public-sector bodies hitting the headlines recently, many business owners have been prompted to brush up on their knowledge of this tricky and often controversial area.

What is whistleblowing?

In a nutshell, whistleblowing is when an employee discloses certain information, usually to their company’s senior management, a regulator or external official, concerning allegedly illicit activities within the business.

Such information may surround the alleged conduct of a fellow employee, their employer or a client/third party, in connection to matters such as:

  • health and safety dangers
  • damage to the environment
  • a criminal offence
  • failure to work within regulations
  • covering up of wrongdoing.

This information is often deemed to be in the public interest, due to the dangers, immorality or illegality of such malpractice.

Legislation – then and now

The introduction of whistleblowing legislation in 1998 followed a raft of banking/financial services controversies and rail disasters throughout the 1980s and 1990s.

For years, the legislation offered no legal protection to the whistleblower. Thanks to a recent modification that came into effect on 25th June 2013, this has now changed.

However, for a whistleblower to be protected, their disclosure must be deemed to have been made in the public interest, rather than for personal reasons.

This caveat is intended to protect employers from malicious and/or personally-motivated claims.

However, with no clear guidance as to what is deemed ‘public interest’, it will be left to judges to use their discretion and treat each case individually.

Whistleblowing policies for small businesses

Having a clear whistleblowing policy in place will help to reduce any risks to your business. This should clearly state the kind of actions that are considered unacceptable, and offer directions on what an employee should do if they encounter any malpractice.

Many employers make the mistake of simply adding whistleblowing onto an existing grievance policy. However, we strongly recommend implementing a stand-alone policy devoted entirely to whistleblowing – especially given the potential risks and high stakes involved.


Many employees shy away from whistleblowing, especially if doing so could place a colleague’s jobs in danger. However, as an employer you have a legal duty to support a potential whistleblower.

As the employer, it’s your responsibility to investigate cases and put matters right, therefore whistleblowing policies should be backed up with proof that you’re actively dealing with any malpractice claims.

Effective policies also help to support your efforts as an employer to comply with ethical and legal standards. Any policy should be clearly communicated to all staff within the organisation, regardless of seniority or length of service.

With more legislative changes on the cards – including possible harassment charges for colleagues who bully a whistleblower – it’s more important than ever for employers to be on their toes when it comes to whistleblowing.

Any updates to current legislation will require your policies and procedures to be updated to ensure you remain compliant.

For help and advice on this, along with how to deal with any whistleblowing claims that you may be facing, have a look at ClearSky’s website.

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