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How whistleblowing policies can help protect corporate reputation

Whistleblowers can alert companies to hidden issues before they escalate and pose a risk to reputation.

Whistleblowers play an important role in uncovering unlawful activities that damage the public interest and the welfare of citizens and society. This has been particularly pertinent in light of the COVID-19 pandemic, in which a deluge of new regulation, ever-shifting guidance and operational challenges coupled with extreme financial pressure, and consequent closures and redundancies, has led to a marked increase in whistleblowing across all industries.

For example, in August last year, it was reported that HMRC had received over 8,000 whistleblower complaints in relation to “furlough fraud” by businesses who they alleged were claiming government assistance from the Job Retention Scheme whilst forcing or pressuring furloughed staff to work. In exposing such unscrupulous behaviour, whistleblowers contribute to a system of checks and balances, identifying problematic actions which may otherwise have gone undetected. While in this instance these disclosures were made to HMRC, a responsible third party, where concerns are raised internally companies have an opportunity to investigate before the issue escalates or becomes public.

The provision of this insight, however, is not risk-free – there may be underlying institutional or cultural issues behind the conduct concerned which could deter workers from coming forward. This is why whistleblowers are given protection under the Public Interest Disclosure Act 1998 (PIDA) against dismissal or reprisal as a consequence of their whistleblowing, provided they blow the whistle in the right way and for the right reasons. Where a concern reported relates to a particular type of wrongdoing – such as the commission of a criminal offence, damage to the environment or endangerment of health and safety – and it is in the public interest, it is likely to be considered a ‘protected disclosure’ under PIDA and this protection against retribution will be brought about.

If a worker can be assured of these protections and that their concerns will be heard, then they are more likely to come forward within the company to raise the alarm. This means having an effective whistleblowing policy in place is essential. Conversely, ineffective or unclear whistleblowing policies mean workers will be more likely to side-step internal reporting, which may see them go straight to the press with devastating consequences for that company’s reputation. While disclosures such as this are much less likely to be protected under PIDA, the circumstances may be such that workers are willing to take this risk.

For busy and overstretched companies, developing whistleblowing policies, delivering training and conducting investigations can all seem onerous and an unwelcome drain on resources, particularly during these unprecedented times. However, it should be considered a key part of reputation protection strategy. Whistleblowing can help organisations to improve and to root out hidden problems. Being alerted to problems in their early stages and having the opportunity to address them internally in a controlled way can avoid a damaging crisis down the track.

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How we work with companies to protect reputation