Maltese law does not specifically provide for the exhaustion of internal procedures of an employer before an employee can blow the whistle on the employer.
This means that even if the employee could have reported the illegal activity to his direct superior or to an appropriate board set up by the employer himself, he is not bound by the law to go through those channels.
However, employees will definitely be encouraged by their employers to solve the matter internally if possible, thus avoiding their employer any unnecessary embarrassment particularly if the employee's claim is simply the result of a misunderstanding.
From the employee's perspective, the downside of this would be that, in following such internal procedures, the employee may be jeopardising his position with no real legal protection.
It is suggested that our law should have directed the employee to go through an internal procedure before referring to the appropriate authorities so as to spare the employer from having his dirty linen washed in public before having had the opportunity to make amends through internal remedial action.
In the UK, a Fraud Hotline Website has been set up by a team of accountants with expertise in fraud investigations. The idea is to provide a safe, anonymous means for employees to bring their knowledge suspicions of fraud and malpractice to senior management's attention without having to get personally involved.
A Maltese equivalent of limited application seems to be the Financial Intelligence Analysis Unit enacted under the Money Laundering Act of 1994. Perhaps a comprehensive unit of the sort, or a site or hotline based on the UK model is called for.
European policy
An excellent guide to the correct procedure to be adopted is given by a press release issued in November 29, 2000, in which the European Commission announced that it was setting up its own internal whistleblowing arrangements (EC Press Notice DN: IP/00/1380).
Following allegations of corruption within the European Commission, the 'new' commission issued a press release with a detailed description of a new proposed "Whistleblower's Charter for the EU and its institutions".
The purpose of this Charter is to protect all those in employment with the Commission and European Institutions from the repercussions of whistleblowing by providing both "inside" and "outside" channels through which they can report concerns about wrongdoing. It also aims to protect a person's career security so that, as far as possible, the whistleblower's career will not be disrupted in any way.
The Charter sets out reporting channels available to EU officials who identify the possibility of serious wrongdoing at their places of work. In fact, it makes it clear that all staff have a duty to report such concerns whenever they arise (inexistent in the Maltese scenario) and managers have a duty to follow up the reports made.
Firstly, the officials may report internally to: their immediate supervisor; or their Director General; or the Secretary General of the Commission; or to the President of the Commission; or the Independent Anti-Fraud Office (OLAF)
Secondly, the officials may report externally, but only if one or more of the internal channels did not function properly, to the President of one of the EU institutions and/or the European Ombudsman.
If the official does not respect this procedure, the Commission will consider the seriousness of the wrongdoing, the extent to which the reporting channels were used and whether the official made reports in good faith, allowing reasonable time for a response and examining whether the reports were made for personal gain. The seriousness that was given to the official's reports by those receiving them should also be taken into consideration.
As vice-president in charge of administrative reform, Neil Kinnock stated in the press release: "like any other responsible organisation, the Commission needs to ensure that members of staff understand their duty to report genuine concerns about possible wrongdoing, are provided with reliable means of fulfilling that duty, and have the confidence to raise those concerns in the knowledge that their information will be treated thoroughly and that they can make substantive reports without jeopardising their career".
Such whistleblowing provisions are in the interests of the institutions, of their staff, and of course, the public at large who deserve to know that the European institutions have effective arrangements for identifying and dealing with wrongdoing which, however untypical, is possible in any organisation.
Unfortunately, to date, the Charter still remains nothing more than a proposal.
Good faith
To qualify for protection under English law, the employee must act in good faith and have reasonable grounds for believing that the information disclosed indicates the existence of a breach of an obligation by the employer. Maltese law does not appear to make such a qualification.
Nonetheless, it is doubtful whether a Maltese industrial tribunal would afford protection under the new Act to an employee blowing the whistle on his employer in bad faith in view of the fact that bad faith is not expected to be favourably looked upon by the law. It would probably be a matter of degree. If, in a particular case, the bad faith is tantamount to fraud then the legal rule of thumb might be applied: fraus omnia corrumpit.
The statutes of the UK, New Zealand and South Africa usually deny protection to those who are in bad faith. Also, with respect to Maltese Law the question arises as to whether an employee should only spill the beans upon reasonable grounds and upon the belief that the information he/she has is true. Unfortunately, the new Act is silent on this.
Section 54 of the Queesland Whistleblower Protection Act, 1994 makes it a criminal offence "to intentionally give information to a designated public regulating body that is false or misleading in a material particular". While whistleblowers are to be afforded all the protection they deserve it is nonetheless submitted that our law should follow suit.
Finally, it appears safe to state that if a complaint is vexatious or frivolous, this will not exclude protection of the employee although the authority involved could well refuse to act upon the employee's report.
Some UK cases
Bladon v ALM Medical Services Ltd (2000) was one of the first cases in which the new provisions of the Public Interest Disclosure Act 1998 as incorporated in the Employment Rights Act 1996 were invoked. In this case, the employee, Mr Bladon was dismissed for raising concerns with the social services inspectorate over the mismanagement of a nursing home.
The Employment Tribunal concluded that he was subjected to a detriment and his dismissal was held to be automatically unfair under section 103A of the Employment Rights Act. The tribunal held that the employee was entitled to make the protected disclosure about a criminal offence to the inspectorate and that he had a professional obligation to "exhibit zero tolerance to any question of ill-treatment or abuse of patients." Also the tribunal held that the employer ill-treated his employee in the process of dismissal and awarded the employee £23,000.
In Azmi v Orbis Charitable Trust (1999) the employee was dismissed for what the employer termed lack of performance, as the employee was not satisfactory or meeting expectations. The tribunal held that the real reason for her dismissal was not lack of performance but her persistent attempts to raise concerns with the director of the trust about the running of the charity and breaches of UK charity law. She was awarded compensation not reinstatement, while the director of the trust retained his job. Indeed this case highlights the ineffectiveness of remedies that offer a mere Pyrrhic victory to the employee and allow the wrong-doing to go on.
In Fernandes v Netcom Consultants (UK) Ltd (2000) the employee was a chief financial officer. He was dismissed for gross misconduct. However, it transpired that the employee was only asking his superior to give him receipts for his expense account and that his superior, instead of cutting down expenses when the company was in financial difficulty, decided to incur more personal expenses. When the employee persistently warned his superior that his behaviour was against company policy he was dismissed after a disciplinary hearing.
The Employment Tribunal gave the employee £293,441 in compensation taking into consideration that he was 59 years old and that he was unfairly dismissed for making an internal disclosure in good faith to his employer.
In A vs X, the Employment Tribunal awarded a manager £140,000 for having been victimised after he blew the whistle on sexual assault and acts of gross indecency by a senior officer of his company. The Employment Tribunal held that instead of complimenting the applicant on his proper behaviour, he was subjected to a detriment.
In Parkins v Sodexho Ltd (2001) the employee claimed that his dismissal was automatically unfair in that he was dismissed due to a protected disclosure under the Public Interest Disclosure Act since he had raised a matter of health and safety. Mr Parkins also alleged that he was dismissed because he reported a breach of contract by the employer.
The Employment Tribunal dismissed the employee's claim in that it held that a breach of contract is not a failure to comply with a legal obligation within the meaning of 43 (1) (b). The Employment Appeals Tribunal however disagreed and held that "there is no reason to distinguish a legal obligation which arises from a contract of employment or from any other form of legal obligation". Therefore, the appeal was to be upheld and the Award in First Instance was reversed.
Under English Law, precedent indicates that dismissal for alleging breach of contract by the employer would be tantamount as 'unfair' under the whistleblowing provisions. If the tribunal had gone for a strict interpretation of the law, it could have held that the law is aimed at protecting disclosures of a legal nature emanating from an Act of Parliament and consequently contractual obligations are not to be included. At first it seems that this is the intention of the Maltese legislator in the new Act but, on further examination, the generality of the provision encapsulating all "illegal and corrupt activities" indicates otherwise.
These cases show that it might be well worth the effort of employers in this country to introduce effective whistleblowing procedures in order to save them the embarrassment of having to face external disclosures which could well be more efficiently tackled behind closed doors.
Only time will tell
Whistleblowing raises a multitude of issues from a Labour law as well as from a constitutional and human rights point of view. Although issues arising out of one's freedom of expression ought not to be underestimated, the purpose of this article was to highlight the importance of this concept in view of its introduction under Section 28 of the Employment and Industrial Relations Act, 2002 which is expected to come into force in the not too distant future.
It is not clear whether a dismissal for whistleblowing under the present legal regime ought to be held 'unfair' even in the absence of specific stipulation of law. Whatever the case, the new law now makes specific provision for this matter. Did it change anything? If it did, to what extent did it change?
Unfortunately, as there are no known cases on whistleblowing in Malta for an objective comparative study, these questions may never be satisfactorily answered. Only time will tell us what lies in store for the future of this provision of law.
Dr Frendo and Dr Brincat form part of the Labour Law department at Ganado & Associates, Advocates, Valletta. They may be contacted by e-mail at sfrendo@jmganado.com or mbrincat@jmganado.com