Timis & Anor v Osipov & Anor

Factual and Procedural Background

The Claimant was employed as CEO by Company A, an oil exploration company. Two directors of Company A, the Appellants, were involved in the decision to summarily dismiss the Claimant in October 2014. An Employment Tribunal (ET) found that the dismissal was principally due to the Claimant having made protected disclosures, classifying him as a whistleblower, and held the dismissal to be unfair under section 103A of the Employment Rights Act 1996. The ET also held that the Appellants had subjected the Claimant to detriment in breach of section 47B of the same Act and were jointly and severally liable with Company A for compensation related to the dismissal. The Employment Appeal Tribunal (EAT) upheld this decision, adjusting the compensation amount. The main issue on appeal was whether the ET was entitled to award compensation against the Appellants personally for losses caused by the dismissal, given that only the employer can be liable for unfair dismissal. There was also a subsidiary issue regarding the extent of liability of each Appellant. Company A initially sought permission to appeal but withdrew prior to the hearing. The Appellants and the Claimant were represented by counsel, and a whistleblower charity was permitted to intervene.

Legal Issues Presented

1. Whether compensation for losses caused by dismissal can be awarded against individual directors under section 47B of the Employment Rights Act 1996, or only against the employer under unfair dismissal provisions.
2. Whether both Appellants could be held liable individually for the dismissal or only one of them.

Arguments of the Parties

Appellants' Arguments

• Section 47B(2) excludes liability for dismissal to individuals, limiting compensation for dismissal losses to the employer only.
• The act complained of as detriment was effectively the dismissal itself, so individual liability should be excluded.
• One Appellant argued that he was not responsible for the dismissal decision and merely implemented instructions, thus should not be liable.
• Allowing individual liability for dismissal would undermine the statutory distinction between Part V and Part X of the Employment Rights Act 1996.

Claimant's Arguments

• Section 47B(2) should be interpreted to exclude only claims against the employer for dismissal, not claims against individuals involved in dismissal decisions.
• Individual co-workers can be liable for detriments amounting to dismissal as they are liable for their own acts under amended legislation.
• Allowing claims against individuals for dismissal-related detriments is consistent with the purpose of whistleblower protection and avoids anomalies in the law.
• Both Appellants were parties to the dismissal decision and thus liable.

Intervener's Arguments (Whistleblower Charity)

• Supported the Claimant's construction of section 47B(2) to allow individual liability for detriments amounting to dismissal.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by examining the statutory framework of the Employment Rights Act 1996, particularly Parts V and X, which respectively govern protection from detriment and unfair dismissal. It considered the legislative history, including amendments introduced by the Enterprise and Regulatory Reform Act 2013, which imposed individual liability on co-workers for whistleblower detriments under section 47B(1A) and created a form of vicarious liability for employers under section 47B(1B).

The court acknowledged the statutory provision in section 47B(2), which excludes claims where the detriment "amounts to dismissal (within the meaning of Part X)". A central question was the scope and effect of this exclusion.

The court analyzed prior authorities, including CLFIS and Jhuti, to understand whether losses flowing from dismissal caused by prior unlawful detriments could be recovered from individuals. It concluded that while unfair dismissal claims must be brought against the employer, claims for detriment under section 47B(1A) can be brought against individuals, even where the detriment amounts to dismissal.

The court rejected the Appellants' argument that the exclusion in section 47B(2) barred claims against individuals for dismissal-related detriments, reasoning that the exclusion applies only to claims against the employer for dismissal acts, not to claims against co-workers who were parties to the dismissal decision. It emphasized the legislative purpose of protecting whistleblowers and avoiding anomalous results where individuals responsible for dismissal-related detriments would escape liability.

The court also considered the Appellants' argument that the Claimant's cause of action was effectively the dismissal itself, but concluded that the Claimant could pursue claims for detriment amounting to dismissal against individuals. It highlighted that the statutory scheme creates parallel but complementary regimes in Parts V and X, and that section 47B(2) was intended to avoid overlapping claims against the employer, not to exclude individual liability.

Regarding compensation for dismissal consequent on detriment, the court held that losses flowing from dismissal caused by a prior detriment are recoverable against individuals responsible for that detriment, subject to usual rules on causation and remoteness.

Turning to the specific liability of the Appellants, the court found that although one Appellant was the primary decision-maker, the other was a party to the dismissal decision by agreeing and implementing it with improper motivation. Thus, both were liable under section 47B.

Holding and Implications

The court DISMISSED the appeal.

The holding confirms that individual directors or co-workers can be held personally liable under section 47B of the Employment Rights Act 1996 for detriments amounting to dismissal, including losses flowing from that dismissal, despite the exclusion of employer liability for dismissal under section 47B(2). This interpretation preserves the coherence and effectiveness of whistleblower protections by ensuring that individuals involved in dismissal decisions motivated by protected disclosures cannot avoid liability. The decision clarifies the distinction between claims against employers under unfair dismissal provisions and claims against individuals under detriment provisions, emphasizing their complementary roles. No new precedent beyond the interpretation of section 47B(2) is established, but the ruling has significant practical implications in cases where employers are insolvent or otherwise unable to satisfy compensation awards, allowing claimants to seek redress from responsible individuals personally.