International Petroleum Ltd & Ors v Osipov & Ors (Victimisation Discrimination)

Factual and Procedural Background

The appeals and cross-appeal concern challenges to judgments of the London Central Employment Tribunal relating to claims by the Plaintiff, who was employed as CEO by Company A, an Australian domiciled oil and gas exploration and production company, from 23 February 2011 until his summary dismissal effective 27 October 2014. The Plaintiff alleged that he was subjected to detriments for making protected disclosures (whistleblowing) and was unfairly dismissed for that reason. The Tribunal found in the Plaintiff’s favour on these issues.

Company A’s principal activity involved production sharing contracts in the Republic of Niger, where financial difficulties led to unpaid fees and risks to licences. After the resignation of the previous CEO, the Plaintiff was appointed CEO. The Respondents included Company A, two individual directors of Company A—referred to as Respondent 2 and Respondent 3—and two other individuals associated with related companies who provided advisory and consultancy services.

The Plaintiff contended that senior management and related parties engaged in serious wrongdoing and that he made a series of protected disclosures about these matters. He alleged that as a result, he was undermined, excluded from key information, and summarily dismissed without due process. The Respondents argued that the Plaintiff failed to perform his duties properly, breached fiduciary duties, and caused disruption, leading to a breakdown in trust and confidence and ultimately to dismissal.

The Employment Tribunal issued two judgments, the first on 6 April 2016 and the second on 5 December 2016, finding that the Plaintiff made protected disclosures, was subjected to detriments on that ground, and was unfairly dismissed. The Respondents appealed on multiple grounds, and the Plaintiff cross-appealed on certain remedy issues. The Employment Appeal Tribunal heard the appeals and cross-appeal in May 2017 and handed down judgment in July 2017.

Legal Issues Presented

1. Whether the Employment Tribunal erred in its approach to determining whether the Plaintiff made protected disclosures under the Employment Rights Act 1996 (ERA 1996).
2. Whether the Tribunal erred in its approach to causation for the purposes of s.47 ERA 1996, specifically whether the protected disclosures materially influenced the detrimental treatment.
3. Whether the Tribunal erred in its approach to the burden of proof and drawing of inferences in protected disclosure and unfair dismissal claims.
4. Whether the Tribunal erred in finding individual liability of one of the Respondents (Respondent 3) for certain detriments.
5. Whether the Tribunal erred in finding joint and several liability of the Respondents for awards made in respect of protected disclosure detriments and unfair dismissal.
6. Whether the Tribunal erred in concluding that two individuals associated with Company A (Dr Lake and Mr Matveev) were not workers or agents of the Company for the purposes of individual liability.
7. Whether the Tribunal erred in its determination of remedy issues, including compensation for contributory fault, Polkey deductions, unpaid wages, injury to feelings, contractual salary increases, housing allowance, and Golden Parachute payments.

Arguments of the Parties

Appellants' Arguments

• Challenged the Tribunal’s finding that the Plaintiff made protected disclosures, arguing that some disclosures did not disclose information or did not tend to show breaches of legal obligations.
• Contended that the Tribunal applied an incorrect legal test for causation, using overly broad language implying a but-for test rather than assessing whether the protected disclosure was a material reason.
• Argued that the Tribunal failed properly to consider their evidence and wrongly drew adverse inferences against them without sufficient analysis.
• Asserted that certain Respondents (Dr Lake and Mr Matveev) were not workers or agents of Company A and thus not individually liable for detriments.
• Contended that dismissal damages could only be awarded against the employer and not against individual Respondents, challenging the joint and several liability finding.
• Argued that the Tribunal erred in remedy calculations, including failing to apply contributory fault, incorrectly assessing future loss under Polkey, and awarding unpaid wages without a proper claim.
• Maintained that the Plaintiff was not entitled to a guaranteed 10% annual salary increase or the full contractual housing allowance and Golden Parachute sums claimed.

Appellee's Arguments

• Supported the Tribunal’s findings that the Plaintiff made multiple protected disclosures and was subjected to detriments and unfair dismissal on that basis.
• Argued that the Tribunal applied the correct legal tests for protected disclosures, causation, burden of proof, and inference drawing.
• Contended that the individual liability of Respondents who were senior management or agents was properly found, including joint and several liability for compensation awards.
• Maintained that Dr Lake was not a worker or agent, but challenged the finding regarding Mr Matveev’s status and sought reconsideration.
• Supported the Tribunal’s approach to remedy, including rejection of contributory fault, proper application of Polkey principles, and appropriate awards for unpaid salary, injury to feelings, housing allowance, salary increases, and Golden Parachute payments.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court commenced by reviewing the statutory framework governing protected disclosures under the Employment Rights Act 1996, emphasizing the requirements that a disclosure must be of information, made in the reasonable belief that it tends to show a relevant failure, and made in the public interest. The Court acknowledged the extensive case law clarifying these elements and confirmed that the Employment Tribunal’s approach was consistent with these principles, despite some shorthand in reasoning.

Regarding the specific disclosures made by the Plaintiff, the Court upheld the Tribunal’s factual findings that four disclosures qualified as protected: emails concerning the Arkex contractor and tendering process, a letter to the Board dated 9 October, emails about data held unlawfully in a data room, and emails concerning a meeting with a potential investor excluded from an advisory agreement. The Court rejected challenges that these disclosures merely expressed opinions or failed to disclose information tending to show breaches of legal obligations.

In assessing causation, the Court recognized that although the Tribunal occasionally used imprecise language such as “arises out of” or “sufficient link,” the substance of the Tribunal’s reasoning demonstrated application of the correct legal test: whether the protected disclosure materially influenced the detrimental treatment. The Tribunal’s findings that the Plaintiff was viewed as an obstacle due to his disclosures and that this motivated a series of detriments culminating in dismissal were supported by evidence and properly reasoned.

The Court also addressed the burden of proof and inference drawing, affirming that the Tribunal correctly applied the statutory scheme whereby the Plaintiff bore the initial burden to show that protected disclosures were a reason for detriment, after which the burden shifted to the Respondents to provide a satisfactory explanation. The Tribunal’s rejection of inconsistent and contradictory Respondent evidence justified adverse inferences and supported the conclusion that dismissal was principally due to protected disclosures.

On individual liability, the Court upheld the Tribunal’s findings that one Respondent (Mr Sage) was liable for certain detriments, including implementation of dismissal instructions, because he exercised independent judgment rather than merely acting as a messenger. However, the Court found that the Tribunal erred in concluding that Dr Lake and Mr Matveev were not workers or agents for the purposes of individual liability. While it agreed with the Tribunal’s reasoning regarding Dr Lake, it found the reasoning concerning Mr Matveev’s status inadequate and remitted this issue for reconsideration.

Regarding joint and several liability for compensation, the Court analyzed statutory provisions and relevant authorities, concluding that individual liability extends to detriments amounting to dismissal not falling within Part X ERA 1996 claims against employers. The Court rejected arguments that individuals should be immune from liability for dismissal-related detriments and upheld the Tribunal’s decision to hold Respondents jointly and severally liable for awards (excluding the basic award payable only by the employer). The Court also upheld the Tribunal’s power to apply a statutory uplift under s.207A TULRCA against individual Respondents responsible for procedural failures in dismissal.

In relation to remedy, the Court upheld the Tribunal’s rejection of contributory fault, accepting that the Plaintiff’s termination of the advisory agreement was not blameworthy conduct justifying reduction. The Court found the Tribunal’s approach to Polkey deductions and future loss adequate, noting that the Tribunal adopted a safe date for dismissal and made a broad assessment consistent with established principles.

The Court accepted the unpaid salary award as properly flowing from dismissal and contractual terms, rejecting arguments that no claim existed or that the award was inappropriate. It also upheld the injury to feelings award within the middle Vento band, finding the Tribunal’s assessment reasonable and supported by evidence of a sustained campaign of victimisation and exclusion.

However, the Court found errors in the Tribunal’s refusal to award a guaranteed 10% annual salary increase and in the calculation of housing allowance and Golden Parachute payments. The Court held that the Tribunal misunderstood the contractual provisions and failed to apply them correctly, resulting in under-awards. These findings were set aside and remitted for recalculation consistent with the contractual terms and the Tribunal’s other findings.

Holding and Implications

The Court DISMISSED the Respondents’ appeals save for the finding that Company A is liable for the actions of Dr Lake in respect of detriments, which was overturned. The Court UPHELD the majority of the Employment Tribunal’s findings, including that the Plaintiff made protected disclosures, was subjected to detriments on that ground, and was unfairly dismissed for that reason.

The Court SET ASIDE certain findings on individual liability concerning Mr Matveev’s status and REMITTED that issue for reconsideration. It also SET ASIDE the Tribunal’s refusal to award the Plaintiff a 10% annual salary increase, correct housing allowance, and full Golden Parachute payment, ordering substitution of awards consistent with the contractual terms.

The direct consequence of this decision is that the Plaintiff’s compensation award will be increased to reflect these corrections, and that individual liability for detriments will be reconsidered as to Mr Matveev. No new precedent was established beyond clarification and application of existing whistleblowing and unfair dismissal principles, and the judgment reinforces the importance of proper legal analysis in protected disclosure and remedy assessments.