Can directors be personally liable for employment tribunal awards?

Napthens - December 20th 2018

In a landmark ruling the Court of Appeal has upheld an earlier decision in Timis & Anor v Osipov & Anor 2018 in which two individual directors were found to be liable for the unfair dismissal of a whistleblower.

Alexander Osipov was the former Chief Executive of Australian-based International Petroleum (IPL). In October 2014, Osipov was fired by email and without notice, after a series of disagreements with two non-executive directors, Frank Timis (IPL’s largest shareholder) and Anthony Sage (IPL’s Chairman).

The disagreements stemmed from Osipov being excluded from the decision-making process relating to the award of contracts in Niger. In 2016, the Employment Tribunal found that Osipov had raised concerns in good faith and expressed the need for IPL to protect themselves from accusations of bribery and corruption. In addition, he raised concerns over the handling of data which could have breached Niger’s petroleum code and result in losing the right to operate in the country. Following the original finding of unfair dismissal, the Employment Tribunal initially awarded Osipov £1.7m and held that Timis and Sage were individually liable as, along with IPL, they had subjected him to a detriment for making a protected disclosure.

Timis and Sage subsequently appealed to the Court of Appeal who upheld the earlier ruling and Osipov was awarded in excess of £2m for unfair dismissal, injury to feelings and unpaid salary.

Employees could previously bring a claim against their employer for automatic unfair dismissal where whistleblowing was the sole or primary reason behind their dismissal. However, the impact of this case is that individuals can now be liable personally for a whistleblowing dismissal.

As such, employers should ensure that they are following a strict process when handling whistleblowing allegations and ensuring that the employee suffers no detriment as a result of raising a whistleblowing concern. Further to this, care should be taken to ensure that the process being followed is fair and detailed records are kept. If in doubt, take advice.