Summary of the legal and regulatory obligations for firms operating in the UK

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Summary of the legal and regulatory obligations for firms operating in the UK

Summary of the legal and regulatory obligations for firms operating in the UK

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January 10, 2024

There is a legal duty under the PIDA (which is applicable to all employers) to ensure that no worker suffers negative treatment or unfair dismissal as a result of making a protected disclosure. If a worker or an employee claims to have been subjected to negative treatment or dismissal by their employer, either directly, or through a failure to act, due to making a protected disclosure, they have the right to bring a legal claim at an employment tribunal.
There is no general legal obligation on employers to have a whistleblowing or "speak up" policy or procedure in place, although it is good practice to do so. A clear, effective and implemented whistleblowing policy helps employers create an open, transparent and safe environment for workers, and enables them to speak up without fear of reprisal. This assists firms in increasing their awareness of, and ability to root out, issues of poor culture and compliance early and may help to avoid more serious misconduct and reputational damage.
Although there is no general legal requirement, various quasi-regulatory and oversight bodies, such as the Royal Institution of Chartered Surveyors, the Institute of Chartered Accountants and the Institute of Actuaries, strongly encourage effective "speak up" procedures and open culture of speaking up for firms acting within their relevant sectors. In addition, the availability of prescribed persons for many firms, including those operating in the charity, energy, environment and health sectors, means that it is generally thought to be more beneficial to provide a system for internal reporting and investigation – and most therefore will opt to put such a framework in place.
Of course, reports may be made openly in any firm. A whistleblowing framework provides workers with the option of reporting matters either confidentially or anonymously. There is no general legal requirement for firms to permit anonymous reporting and many firms will direct speak up reports to internal HR or compliance teams. However, the UK Corporate Governance Code requires certain listed companies to have a means for their workforce to raise concerns in confidence and (if they wish) anonymously. The UK Corporate Governance Code applies to all companies with a premium listing on the London Stock Exchange, regardless of where they are incorporated.
International firms, with offices in Europe, should note the significantly more extensive and structured legal obligations imposed on firms under the EU Whistleblowing Directive. The UK has not implemented it. However, the Directive ought to be considered as best practice, particularly for firms with a global presence. Key requirements of the directive include:
- a wider applicability of protections than the current PIDA UK framework – for example, self-employed people, shareholders and board members (including non-executives) who make a protected disclosure would all be protected under EU but not UK legislation;
- all organisations with 50 or more employees in the private sector must establish an internal whistleblowing procedure, regardless of the nature of their activities; and
- the identity of the whistleblower cannot be disclosed without explicit consent to anyone beyond those dealing with the report, unless this is necessary and proportionate in the context of the investigation – providing legal protections for whistleblowers in the context of investigations which go far beyond those available in the UK.