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JOINT COMMITTEE ON FINANCE, PUBLIC EXPENDITURE AND REFORM debate -
Wednesday, 13 Jun 2012

Protected Disclosures in the Public Interest Bill 2012: Discussion (Resumed)

I welcome Mr. Brendan Butler from IBEC. Mr. Butler is accompanied by Ms Siobhan Masterson and Ms Aoife Newton. I wish to advise members that briefing documents have been circulated via e-mail in advance of today's presentation. The format of the meeting will be that Mr. Butler will make some opening remarks which we will follow with a question and answer session.

I remind members, witnesses and those in the Visitors Gallery that all mobile phones must be switched off.

I advise the witnesses that by virtue of section 17(2) (1 ) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence that is connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Similarly, members are reminded of the long-standing ruling of the Chair to the effect they should not comment on, criticise or make charges against a person outside the House or an official in such a way as to make him or her identifiable. I ask Mr. Butler to begin.

Mr. Brendan Butler

IBEC is generally supportive of this legislation. We believe it is an important development and, if handled sensitively, it could lead to a much greater and more important level of governance in Ireland.

From our perspective there are two key issues on which I will focus. First, this legislation has been introduced in a number of countries throughout the world, including in many developed economies, but I put it to the committee that the structure of Irish industry is somewhat unique. As all the members are aware, we are a very small, open economy. We export over 80% of all produce and services and we are heavily reliant on our international reputation and on foreign direct investment, not only from the United States but, increasingly, from Europe and potentially from Asia.

Second, if we look at the key sectors within the Irish economy, we would tend to categorise them under five headings. The five key sectors are what we generally call the ICT sector, the technology sector. Alongside that is the medical devices sector. Third is the pharmaceutical sector, fourth is the rapidly expanding agrifood sector and fifth is the sector comprising international financial services. These sectors, in themselves, constitute a significant part of the Irish economy. Let us consider one or two. It is important to realise that in respect of the technology sector, all ten of the major technology companies in the world have a base in Ireland. Many have European headquarters in Ireland. We all know the household names Intel, Microsoft and Hewlett-Packard. Increasingly, particularly over the past year or two, we have seen the growth of the second wave of technology companies, new industries such as Google, PayPal, eBay and, more recently, Twitter, LinkedIn and Facebook. There is no doubt that Ireland has the potential to become a huge attraction in terms of the clustering of these companies here, thereby providing extraordinary job opportunities for the country.

Throughout the difficult period the Irish economy has gone through since 2008, the ICT sector has continued to grow. Today, it employs over 84,000 people. In the first five months of this year, that is, until the end of May 2012, there have been more job announcements in the technology sector than there were in all of 2011. It is a rapidly growing sector and international companies are considering Ireland as a location for a European base.

Let me refer to two other sectors, the first of which is the medical device sector, much of which is based on the western seaboard. Eleven of the 13 major medical technology companies in the world have European headquarters in Ireland. Quite importantly, although there is a considerable number of international companies, half of all the medical technology companies are Irish based. There are 200 companies here and 100 of them are Irish based. The sector employs over 25,000 people. Almost 60% of the companies expect to grow their number of employees this year.

The final sector of the five is the pharmaceutical sector. Eight of the ten largest pharmaceutical companies in the world have headquarters in Ireland. Twelve of the 25 top-selling drugs in the world are produced and manufactured here. There is huge growth in the sector. We are familiar with companies such as Abbott, Boston Scientific and Bausch + Lomb, and with Irish companies such as Creganna.

When considering the heads of the proposed legislation, we must realise that these companies invest enormously in research and development in Ireland. They take decisions on investment now that may not result in products for five or ten years. They take a huge debt in terms of their investment decisions. We ask the committee to consider very carefully, when dealing with the draft legislation, whether there is any potential risk that any of these companies or sectors could be exposed as a result of somebody taking an action or approaching the media in regard to very sensitive commercial information. At a time when Ireland is fighting day and night to survive, to continue to attract inward investment and hold on to what we have, what would befall our international reputation if a case were taken or the media were approached in regard to such information? This committee discussed previously the view that a definition of the media will not be made. We are, therefore, not just talking about Today FM or RTE. Could we be talking at The New York Times, The Wall Street Journal, Bild or some other international publication? We urge the members to be extraordinarily careful in terms of the creation of potential for a leak into the wrong hands of information of a very commercially sensitive nature. I refer not only to the exposure of the company or sector in question and Ireland because we need, at this time in particular, to protect our international reputation.

With regard to the legislation, we need to make a very special case for commercially sensitive information. I am not trying to be dramatic about it but we can see what happens whenever a story about Ireland circulates internationally. Even occurrences today have become international news. We must protect our reputation as it is vital. The companies in question are extraordinarily influential. Decisions are taken not in Dublin or elsewhere in Ireland but in the boardrooms in the United States, European capitals and, I hope, China.

IBEC's second point concerns the clear commitment in the programme for Government to subject important Bills to a regulatory impact assessment. We are not aware that any such assessment is being considered or conducted in respect of this legislation. Given the importance of the legislation, which we support, we believe very strongly that a regulatory impact assessment should be conducted and that the results should be made available.

IBEC believes Ireland has an extraordinarily strong base of international companies, supported by indigenous companies. Our international reputation is vital. We suggest respectfully that there should be no possibility under this legislation of having our international reputation, at company, sectoral or national level, put at risk.

The IBEC paper appears extremely helpful and quite detailed. Does Mr. Butler want to make comments on any of the various heads of the Bill?

Mr. Brendan Butler

If the Chairman believes it would be helpful-----

I have not had an opportunity to read the submission in great detail. I do not know whether my colleagues have done so. I had hoped Mr. Butler would address each of the areas so I could absorb what he is saying and then ask questions.

That is usual for the Deputy.

Alternatively, we can go straight to the various areas. It is up to Mr. Butler. We have his paper.

Mr. Brendan Butler

I do not know whether that is the best way of proceeding. With regard to the two key issues we referred to, I would be very-----

I would prefer if the delegation said at the outset whatever it wishes to say by way of general commentary, be it in respect of on the points already made or the various heads.

Mr. Brendan Butler

Does the Chairman mind if I allow my colleague, Ms Newton, to take the members through some of the points?

Ms Aoife Newton

I will skip the main issues in our submission. Our paper begins by referring to one of our main concerns, namely, the introduction of this legislation despite all the legislation that already exists governing the various sectors. It begs the question as to how we will proceed given this piecemeal approach. The new legislation will coexist with the current legislation. The draft heads refer to 16 Acts that deal with whistleblowing. If the new legislation were to be added to these, how would they all work together? Ideally, we would ask for a closer analysis of a more joined-up approach. Thus, the body of legislation would consist of but one whistleblowing protection, such that everybody involved would be much more clear on where their protections lay.

This leads us to the draft heads and the disclosure channels. I am sure members are all aware of the various disclosure channels that exist. They are built on the idea that there would be a stepped disclosure process. However, we are concerned that the stepped aspect is missing. We seek a more accumulative approach. While one can start with the first step of having an avenue to an employer under head 5, we do not want general or automatic bypassing of the employer such that the disclosure would suddenly be dealt with under heads 8 or 9. We seek a more accumulative approach. If there is a genuine disclosure to be made, it ought to be made to the employer in the first instance.

However, we are aware there would be exceptional circumstances in which this cannot happen for practical reasons. While that is fine, we ask that such exceptional circumstances be carved out of the initial head 5. Ultimately, employers should have the opportunity to rectify the wrongdoing in the first place before the matter goes further and before financial and reputational damage is incurred, which was never intended as a fallout of the disclosure but nonetheless with which the employer must deal. It is important to note we seek an accumulative approach, starting with head 5 and only working beyond its provisions in exceptional circumstances.

As members are aware, the various steps in respect of disclosure all are premised on having a good faith disclosure. I am aware the committee has had much debate on the concept of "good faith" and one could spend many hours discussing those two words in themselves. However, we submit, especially given previous discussions here at this committee, that good faith is not just about the accuracy of the information. It is very important to consider the motive of the employee or the worker and consequently, these two elements must be considered together rather than independently. Ultimately, the good faith element is to protect an employer from an employee or worker with a gripe or grievance from proceeding with such a grievance when acting mala fide, that is, when it is not about the information of disclosure at all but is about his her own personal antagonism. As I stated in the submission, there have been plenty of cases in the United Kingdom in which disclosures were not protected because they were all about personal antagonisms. It is important that these heads of Bill do not usurp in any way the normal industrial relations practices within employers' organisations in that a person with a grievance should raise that grievance in the ordinary course. One should not suddenly whistle-blow to get the protection of this Bill with the effect that the worker or employee concerned effectively is almost untouchable. This is precisely what IBEC does not want and it is important that normal grievances will happen in the normal way, regardless of this new protection.

Mr. Brendan Butler has touched on the idea of trial by media under head 8, which simply refers to "other cases" without actually defining what are media. While everyone can come up with various creative ways in which a disclosure could be made, we are talking about the more severe cases that go to media and indeed to social media. This does not simply pertain to getting in touch with a journalist or suddenly taking time out to think about such disclosures. It is very easy for an employee to make a disclosure in the first instance and then in hindsight worry about whether it is protected. At that stage, however, the employer already has been damaged and regardless of whether it is reputational or financial, the damage already has been done. Consequently, it is important that these heads of Bill do not give the perception that it is okay to make disclosures to various avenues and one would be protected when doing that. I note the steps in respect of some disclosures are quite detailed and there are many boxes to be ticked before a disclosure can be considered to be a protected disclosure. Consequently, it also is important to promulgate the mindset that one should rein in from the idea of disclosure to the media in the first instance and that would tie in with my point about being obliged to go to the employer in the first place.

Members are aware that IBEC has a concern in respect of the references throughout the heads to the concepts of good faith and of reasonable belief. The latter occurs throughout the heads of the Bill and obviously, there always is a difficulty with referring to reasonable belief. While the point can be debated, ultimately it all will come down to the interpretation of the concept at rights commissioner or Labour Court level. As for reasonable belief, one must note that while the belief of the worker making a disclosure is subjective to that worker, the reasonableness of such a belief must be based on an objective standard. The glaring point is that even though the belief may be reasonable, it could be wrong and employers must be protected against that. While it could be reasonable for a worker to take a particular avenue with his or her disclosure, employers must be protected from being obliged to deal with unfounded or untrue complaints.

I refer members to page 5 of our submission, where we have asked for the inclusion of some practical wording pertaining to how we would tackle the "reasonable belief" issue. All this detail will form part of IBEC's written submissions to the Department.

On that point, if IBEC desires this committee to have regard to any points it makes to the Department, the witnesses must make sure the committee also gets them. While IBEC of course is free to go directly to the Department, if it want us to have regard to such proposals, we must see them.

Ms Aoife Newton

That is no problem and there is quite a lot of overlap anyway. While I will not go into the detail regarding the reasonable belief issue at this meeting, it is included in our submission to the joint committee anyway and so that will be fine.

Head 4 is the initial head pertaining to whether the information could be seen to be a protected disclosure. While I will return to our call for it to be a qualified disclosure in the first instance, we are concerned about a reference in head 4 relating to circumstances in which there is a criminal offence or a failure of a legal obligation. While I acknowledge it mirrors the United Kingdom's legislation, that does not mean it is perfect. In such circumstances, head 4 refers to one potentially being in breach of the obligation, whereby one could carry out or be likely to carry out such an offence or breach of obligation. It is important to focus on the word, "likely" because essentially, that means one is giving a charter to an employee or a worker to run with what he or she thinks an employer is likely to do wrong. This word is open to a huge amount of interpretation, as has been evident from the United Kingdom case law in this regard.

Which head is that?

Ms Aoife Newton

I refer to head 4. It is understandable that what is going on or what has been going on would be part of a protected disclosure. However, what is likely to go on means a particular worker will make his or her own judgment on whether his or her employer could be in breach of a particular Act or be committing or creating a criminal offence. One cannot have a position whereby mere conjecture is part of a protected disclosure. On page 6 of our submission, I have set out some detail regarding the references in the United Kingdom's legislation and case law to the word, "likely", and the difficulties it causes.

I will go into one specific issue in respect of head 4. At the bottom of page 6, I refer to head 4(4) and how, when a person makes a disclosure, that disclosure will not be protected if the person does so knowing the disclosure is false or misleading or where the person has made the disclosure recklessly without regard to whether it was false, misleading, frivolous or vexatious. We welcome this but we also seek that it should be extended to include the phrase, "ought to have known" that the disclosure is false or misleading. There must be an element of accuracy about the information the worker is disclosing. He or she cannot simply sit back and presume that what one thinks is the same as not acting misleadingly or is not misleading or that one is not acting frivolously. It is important that one must also consider questions such as what should one have known, given one's position within the organisation. I make a general observation on page 7 regarding the absence of any provision in the heads of the Bill to allow for a disclosure not to be considered protected if making such a disclosure would constitute committing an offence. The committee might wish to consider this point, especially as it is reflected in the United Kingdom's legislation. It is very important not to give carte blanche to make disclosures, the making of which could otherwise be an offence.

On page 7 of the submission, I go on to discuss the public interest aspect of the heads of Bill. This issue has been emphasised by the Minister and in the preliminary discussions on the Bill. However, IBEC is worried that the draft heads do not enforce that public interest sufficiently. It goes back to my point that IBEC does not want what has been described in this committee as a crank's charter. We do not want a scenario whereby people are airing the personal grievances or issues they have with their employers. This is supposed to be about disclosing serious improprieties about which the public needs to know. I refer to the point that the disclosures under heads 8 and 9 to other people outside the employer, relevant body or Minister and for exceptional serious improprieties are premised on the basis that they are not considered for personal gain. There is a significant issue when we look at the definition of "personal gain" which talks about excluding Saturday payments. If someone is due, say a worker under the payment of wages or working time Acts, a Saturday payment, then the mechanisms and the procedures for bringing that kind of claim are already there. Again, this is an example of a grievance that can be handled in the normal way under the normal mechanisms. They would not be able to raise it with the third party in the hope they would be protected and untouchable in the employment context after they make that disclosure.

It is important we get back to the basics of this public interest idea. In that regard, we would ask any adjudicator, whether that be a rights commission or the Labour Court who decides whether a worker would get protection from the disclosure they made, would have to look in the first instance at a preliminary point that there is a public interest disclosure to be made here. In other words, before they even go into ticking all the boxes under the various heads of disclosure, they would consider whether there is a genuine public interest to this which goes beyond the personal gain aspect.

There is much debate about head 6 which deals with the circumstances in which we can go beyond an employer in a disclosure. Clearly, that should only be in exceptional circumstances. When dealing with head 6, it refers to a relevant body. The problem with that kind of disclosure is that it does not have to be reasonable nor serious. For example, an employee does not want to raise an issue with the employer, so they go to Revenue or the Health and Safety Authority. That could be a minor impropriety that would come under head 4 and something the employer could have rectified quite easily with no repercussions for anyone. This is a classic example of a minor impropriety that could be dealt with at local level and not go beyond the employer. Head 6, if it is to remain, needs to be tightened up in that regard. It is good that we talk about disclosures beyond that in exceptional circumstances. However, that kind of disclosure under head 6 is open to an employee using it to gain the protections under this Bill.

I have referred to workers and employees interchangeably. The reason I do that is because the definition for "worker" is very broad. We are going beyond the normal employee definition here. If we want to think of worker definitions of the past, we can look at the old Industrial Relations Acts but that does not cover the type of worker one is considering here. While there is a good case to be made for the extension of this definition in particular circumstances, we would be concerned the extension of the rights to everyone included in the worker definition is beyond what we would ever deal with at a rights commission or Labour Court level.

The extension of that legal remit to those particular bodies will encumber the inherent employment law focus of these institutions. If we did accept contractors are to be part of the definition of worker, how is it envisaged that could be used in a detriment claim? If a contractor is claiming for penalisation before a rights commission or Labour Court – that wold be the first time they would be allowed to do that - will they be subject to the same areas of redress which are traditional employment areas of redress such as reinstatement, re-engagement and compensation of two years narration? This Bill envisages these areas of redress will be available to contractors. I am not sure how this will play out practically.

We also need to examine the commercial nature of these kinds of arrangement. By their commercial nature, they have to reflect an element of flexibility. If we start considering the protection of contractors, it could hamper commercial activity. At the end of the day, it could have anti-competitive consequences.

A serious issue concerns the burden of proof. I know the committee has discussed that particular aspect of the Bill. The burden of proof at the moment is placed on the employer to show that the employee or the worker has acted mala fides. We would say this presumption in favour of the complaint that their actions were reasonable and carried out in good faith is unjustified. The very knowledge of the reason for the disclosure and the process undertaken by the whistleblower is with that whistleblower and certainly not with the employer. In the normal course for an employee or worker who is going to have to tick the boxes of the avenue of disclosure that they have chosen to take, it is up to them to prove to a rights commission or the Labour Court that they have in fact ticked those boxes. At that point, it will be for the employer to respond, to show a reason, completely independent of their disclosure, for the detriment of which they complain. In other words, it means if an employer did actually dismiss an employee and that they could show at that point that it was independent of any disclosure that had been made but after the claimant can prove they have ticked the boxes in order to show they have a protected disclosure in the first place.

We also stated in our submission we have an issue with head 16 which relates to the confidential provisions. Head 16 is not sufficient to ensure that the employer will get the benefit of natural justice. The idea of natural justice works both ways. It is not just for the employee or worker, it is also for the employer. The natural justice requirements should apply to all aspects of the investigation involving the employer against whom a disclosure has been made. This would include having the right to know who has disclosed the information in question and the right to confront that person and speak in their own defence. I understand head 16 refers to the idea of natural justice. However, it is carve-out and not an automatic right to natural justice for an employer. We would be concerned that this idea of keeping the name of the whistleblower confidential is actually out of context regarding the general thrust of these heads of the Bill. If they are about protecting the employee from detriment and giving them that protection to bring a claim to a rights commission or the Labour Court for penalisation, they are going to be identifiable as the claimant. I am not convinced head 16 is actually relevant in the overall context of the rights of natural justice for the employer and the main thrust of the protection against penalisation envisaged by the heads of the Bill.

These draft heads create a perturbing environment for businesses to work in. We are concerned that employers, both small and large, will have to tackle the idea there could be cases where serious improprieties are brought to light in the public interest but that the kitchen-sink approach will lead to more than adequate information supplied to the public domain. It is all very well saying the employee will be protected if they reach certain hurdles or barriers throughout the various courses of disclosure that they take but the damage will have been done and the information will be out there. The two words used throughout heads 8 and 9 are "information" and "allegation". It is important we are focusing on what is the impropriety in that and it is not a kitchen-sink approach to disclosing information. We do not want sensitive corporate information being disclosed unnecessarily. Employers generally have legitimate business interests to protect and we need to ensure that they have the ability to protect those. If there is a serious impropriety about a certain element, these heads of Bill should work to protect the person making that disclosure and, indeed, rectify that issue but ultimately, it is important that we focus on what is essentially necessary for the disclosure and that we do not go beyond that information when an employee is making his or her disclosure. In this sense, we have asked for a carve-out for contractual provisions of confidentiality. Whether those provisions of confidentiality are expressed or implied, we would ask for those to be carved out of the general disclosure rules.

That is a whistle-stop tour of the paper.

Before I invite my colleagues to speak, I have a few questions.

The first relates to the points Mr. Butler made and which were echoed by Ms Newton. Members of the committee will understand this important question of reputation and integrity of corporate decision making. I was a little surprised that they did not state - I expect that this is their view but seek merely to balance the reasonable points they make about reputation - it is vital to protect reputation and the reputation of this country as a place to do business and it is for that precise reason that we need whistleblowing legislation in order to protect the integrity of good businesses and good public services. It seems the experience in this country has been that the good reputation that most businesses and public bodies have deservedly has been undermined by some serious wrongdoing and in order to protect the integrity of the overall system, we need whistleblowing legislation. It goes to enhance reputation as much as there is any risk of it undermining reputation. That would be an important point that, perhaps, ought to be brought out.

Mr. Butler spoke of the possible down side. In fairness, he did not state there is a downside; he stated that he is in favour of the legislation but that he would be worried that there could be a down side or risk. We are interested in hearing how that possible downside can be identified and dealt with in the Bill. We, and most who come before us, including IBEC, start from the proposition that this is important and necessary legislation. If it needs to be improved, let us see how it can be improved. That would be the approach that most would take.

On the specifics, I suppose we can only deal with Ms Newton's point about the relationship with other legislation and how it would co-exist with other legislation if she points to a possible conflict. There is always the point about the proliferation of regulation, protective legislation, etc. Is that merely a general point or are there specific areas at which we need to look where there is a possible conflict or an undue level of regulation that could be solved, in other words, is Ms Newton saying, why not amend existing legislation instead of bringing in this legislation?

On the question of stepped protection and the requirement, perhaps, with exceptional circumstances, to go to the employer first, the committee has discussed this with some of the other witnesses and there are definitely concerns on both sides of that argument. With the relatively small employer, for example, it would almost be absurd to suggest that an employee would go to his or her employer because maybe the employer is the only other person in the building or maybe it is the employer who is suspected of being involved in the wrongdoing. It seems there is a genuine problem for some employees in saying that they would be required to go to their employer first.

IBEC sort of states that it should be a requirement to go the employer first but there would be some exceptions. These exceptions are not particularly exciting. One would be where the employer has refused or omitted to deal with the matter within an agreed timescale and the other is where the worker is not satisfied that the matter has been rectified appropriately. The worry would be that this issue could be bogged down at the level of the complaint to the employer and there might never be a realistic opportunity for the employee because he or she may be ground down in whatever way. I am only trying to give the argument from the other perspective, that employees would end up being, or worry that they would be, ground down and the wrongdoing would never be exposed, which is the purpose.

The question of good faith and motive is one on which we held a debate here a couple of weeks ago. We understand that, in the reference to the making of the report in good faith, "good faith" refers to the belief in the truthfulness and validity of what is contained in the report, not to their motive. IBEC is saying that we should introduce the notion of the motive. That is quite controversial because an allegation can be true although made for a bad motive, and we take this on board. Somebody can do it for bad reasons but the allegation can, in fact, be true or otherwise necessary to bring forward. One needs to consider that. The legislation contemplates good faith going to the belief in the validity of the allegation rather than going to the motive and I think that is why IBEC states motive should be brought in to it. IBEC thinks it should be changed, and would agree that is what it means at present but that motive should be brought in.

Ms Newton used the word "grievance" at one stage. I appreciate this is like employment legislation but it is not about grievances. It can be characterised as a grievance, and person could have a grievance as well, but this is not a new set of legislation for persons to bring forward grievances. This is to get material that should be exposed out into either a regulator or, in certain circumstances, the media, and it would seem to some that it should not be to do with from where that individual worker comes in making the allegation. The objective is to get the bad stuff out and get it dealt with.

On the trial-by-media point under head 8, would Ms Newton accept that head 8 is replete with conditions. One must jump through a good many hoops in order to be protected for going to the media. That should be emphasised. There are the initial points, then there are three sets of conditions, etc. It is, rightly, a much more detailed head than any of the others. The protection that should be given to somebody for going to the media ought not to be as automatic, as Mr. Butler might say, as it would be, for example, for going to the employer, and it seems that it is not. It seems that there are a few boxes that must be ticked there.

On the question of including an apprehension that something was likely to happen, it seems the only difficulty about dropping that is that if there is an apprehension or concern that there is an imminent danger of some wrongdoing about to occur, it would be difficult to see a justification for excluding that completely, in other words, the wrongdoing would have to be wrongdoing that had already happened. A person could state that something very serious is about to happen, that somebody is about to do something which is seriously wrong and if he or she is not stopped within hours or days, the wrongdoing would go ahead. I would be uncomfortable about excluding completely the "likely" in that regard.

On where Ms Newton suggests that the subhead should be extended to include "or ought to have known", and then that the worker, essentially, really should be expected to conduct a certain level of inquiry into whether or not something is true, I might have a slight concern, depending on what she states in response, that we are requiring the worker to jump through a good many investigative hoops and to engage in an inquiry. I understand what Ms Newton means. If it is good faith to believe in truth, it is certainly true that it must be based on something, but to conduct inquiries into it before one makes the allegation is something that concerns me a little.

The public interest point is well taken but this all should be in the public interest. Corporate responsibility is in the public interest, even if it is a very small company. A business should be run properly, not improperly. Broadly speaking, that seems in the public interest. I do not know about the idea of the rights commissioners being asked to decide whether it is in the public interest. It is not a bad point. We do not want a crank's charter but sometimes cranks are useful. Look at what has happened over the past ten or 12 years. If there were a few cranks here or there, some of the wrongdoing might have been revealed. I am not advocating for a crank's charter but I think Ms Newton is referring the officious citizen who is inclined to complain compulsively. We should not discount the possibility that they can also perform a useful public function. I am merely trying to offer a balanced perspective.

Yesterday we were told the heads of Bill do not go far enough in protecting confidentiality. It was claimed that it would have a chilling effect because people will not come forward unless they are sure their confidentiality will be protected and an amendment to strengthen protections was strongly advocated. Is there not a danger that people will not come forward without at least some protection of confidentiality? They will not want to come forward if their identities are going to be exposed and they will face serious consequences for their careers.

I do not quite understand Ms Newton's final point about contractual confidentiality. There is a common law duty of confidence between an employer and employee. Is Ms Newton arguing that if a confidentiality clause is included in a contract of employment or other contractual provision, nobody should be allowed to avail of the protections set out in this Bill? I would not agree with that assertion.

Ms Aoife Newton

The Chairman asked whether there is potential for conflict with existing regulations. As the Minister has noted, the heads of the Bill build on the pan-sectoral approach. Unless I have not yet discovered some of the minutiae, there is no major conflict between this Bill and what already exists other than that the current approach is a sectoral one. We would all like to work with legislation that is neat and in one place. It is more of a practical concern for better business and better regulation. We would prefer to consolidate the regulations than leave the sectoral approaches in place.

I agree that the Bill is not intended to deal with grievances. This goes to the heart of the public interest element. The phrase "public interest" is in the Title and referred to in the preamble but it is not mentioned in the body of the Bill. Something appears to be lacking in this regard. Perhaps it is not the responsibility of every employer to tick boxes on what he or she understands as the public interest but an adjudicator at Rights Commissioner or Labour Court level should certainly be allowed to ask whether a disclosure involves a grievance that could have been addressed in the ordinary course or if it is an issue about which the public needs to know. It is reasonable to request a rights commissioner to deal with this.

I agree there are a number of boxes to tick under head 8. Its requirements will not be easy to meet. Clarification will hopefully be provided to whistleblowers before they go down the route of head 8. We feel exposed in the sense that some of the boxes are too open to interpretation. The whistleblower is expected to have a reasonable belief that what he or she is disclosing is substantially true. Substantial truth is the standard applied in the UK, South Africa and New Zealand and it makes sense to provide for the same in the Bill but the Chairman will understand our concern that it is open to interpretation. If I have to defend an employer before a rights commissioner, I would be worried about how he or she defines "substantially true". It is all very well to decide what is substantially true in hindsight but I hope it will be judged based on what the employee thought at the time. In regard to whether I have better wording, I would clearly prefer to use the word "true" but, as the Chairman argued, we would then need to discuss whether the employee is expected to be an investigator. However, there must be some onus on employees to figure out information before making a disclosure. There will have to be some substance to a disclosure because it cannot be based on gossip or a mere hunch. The other boxes to be ticked under head 8 include personal gain. If we are genuinely interested in the public interest element of head 8 and we want to take out the personal gain element, why does the definition exclude statutory payments that might be owed to the worker? Statutory payments are for personal gain. If money is owed to an employee under payment of wages or working time legislation, he or she should go that statutory route. If the basis of disclosure is for personal gain it should form part of the disclosure.

Does Ms Newton refer to a disclosure that the employee was not paid the relevant payment?

Ms Aoife Newton

Yes.

That would be crazy but the head does not appear to contemplate that it would be used as a means of pursuing a right to a payment. If one is owned money under the Payment of Wages Act 1991, it would be a complicated way to seek redress.

Ms Aoife Newton

What would stop an individual from lodging both claims?

I believe an attempt is being made elsewhere to deal with that problem.

Ms Aoife Newton

I think we should focus on the definition.

Ms Aoife Newton

The Chairman was not enamoured by my suggestion on going beyond the employer. The most important issue for us is to give employers comfort that they will have the first opportunity to deal with a wrongdoing or impropriety. If a complaint is exceptionally serious we understand the employer should not be entitled to that right but our suggestion that it be brought to the local level of employer is based on the New Zealand approach. The employer is the first individual who can rectify an impropriety. We are not necessarily speaking about major scandals or improprieties of a large scale because the heads also cover minor improprieties. The provision to deal with issues at local level has worked in New Zealand.

In regard to the reference to "likely" in head 4, I appreciate the Chairman's concern that if something is likely to cause imminent danger it is appropriate in such circumstances. However, we might then consider likelihood under the individual elements of head 4(3). In other words, we are not simply saying an individual is likely to commit a criminal offence and then transposing it to the remainder of the head. For example, if the phrase "likely to breach a legal obligation" was used, each of us would have a claim against every employer. The phrase "legal obligation" covers a broad area. If it was "committing a criminal offence", it would arguably be fine, for example, a likely breach of health and safety laws. However, "legal obligation" is too broad an area for me to be comfortable with including the word "likely".

Will Ms Newton address contractual confidentiality? I want to allow other members to contribute and we have another subject to discuss.

Ms Aoife Newton

I am concerned that no space for contractual confidentiality clauses have been carved out. While an element of impropriety might form part of the disclosure, we do not want a kitchen sink approach to commercial information being disclosed when doing so is not necessary and can actually put an employer at an extreme disadvantage. Even if there is an element of impropriety, it could be solved without exposing an employer to further risk. A whistleblower could disclose commercially sensitive information that he or she incorrectly believes forms part of the impropriety.

For example, take a pharmaceutical company that mixes various drugs or ingredients for drugs and produces drugs A, B and C. If an unregulated or unauthorised product is used in mixing drug A and the employee believes it to be a serious matter of public concern, the employee might make a disclosure in the public interest and tick the boxes under whatever head that disclosure is made. However, must the employee bring information about drugs B and C into the mix? We are asking that there be some carve-out for the legitimate business interests of the employer. If drugs B and C form part of a company's trade secrets, should never be disclosed and are legitimate, they should remain outside the remit of the Bill.

Does Ms Newton disagree with head 19, that is, no contracting out of the Bill? That is what this matter comes down to.

Ms Aoife Newton

That is where the carve-out should be.

According to this provision, under no circumstances can an employer contract out of the Bill's measures, yet Ms Newton wants to remove that provision. That would be a big ask.

Ms Aoife Newton

No. That provision is a standard feature of many Acts and is fine, in the main. One does not want an employment contract that states that the whistleblower's legislation will not apply to a new employee. I would have no problem with the provision in that regard. However, I do not know whether my concern fits neatly into that area. There should be a carve-out to the effect that, if there are legitimate business concerns, we need to encourage the mindset or the employee needs to be aware that those concerns are not to be disclosed because doing so could hamper the employer's commercial activities. If there is an impropriety, the employer will need to address it as well as the disclosure. If there is no impropriety and general trade secrets are being protected, this situation should be reflected in the legislation.

Ms Newton's suggestion is interesting. Before calling Deputy McDonald, I wish to emphasise that if IBEC wishes to pursue anything mentioned in its submission or at this meeting, it should do so in writing within one week.

Mr. Brian Butler

I thank the Chairman.

It is a short time, but we are preparing a report for the Minister, who will decide on the matter. We are trying to tease out all of the Bill's aspects. Our guests' comments are important and we will take them into account, but pursuing matters within one week would be helpful.

I welcome our guests and thank them for their comprehensive whistle-stop tour of whistleblowing legislation. I liked that phrase.

In Ms Newton's points about the law's interpretation, she unsurprisingly raised the issues of good faith, reasonable belief and so on. However, the nature of any legislation is that it is open to interpretation. There is no way around that phenomenon. The legislation must be correctly balanced. It is fair to make points about potential reputational damage and so on. Ms Newton articulated those concerns well. Having due regard for the specifics that have been raised, though, the central issue is that this legislation will impose new standards, concerns and benchmarks for good corporate governance. That is what it says on the tin. There is no way around that. There is no way to introduce the legislation in a manner that does not create new obligations and potentially a level of discomfort for employers, whom IBEC represents.

Does the delegation have an appreciation from the employee's perspective of how serious it is to blow the whistle? Has it taken due consideration of the fact that whistleblowing is not a widespread phenomenon and that there are reasons for same? A legitimate point was made about the testing economic conditions, but those are also felt by employees who do not wish to lose their jobs. Will Ms Newton comment on the core principle of confidentiality, which is critical? The chill factor to which the Chairman referred is real. If workers believe that they will be exposed, punished and black-listed for doing the right thing, we could render all of our discussions and efforts null and void.

Ms Newton provided an example of a pharmaceutical company and whether including an unauthorised ingredient in drug A should compromise drugs B and C. In such a scenario, drugs B and C cannot be divorced from drug A because they are part of the commercial mix. According to all of the discussions that I have been following, the Bill's aim is to create a robust framework in which people can do the right thing. It is not intended to be a crank's charter or a substitute for any of the established industrial relations procedures. Perhaps there will be a communication issue if and when the Bill is passed, but the reality must be made clear. Will the delegates change hats, if they can, and consider matters from the point of view of the worker?

Confidentiality is critical. Other voices claim the Bill does not go far enough. If they are not happy with how this provision is couched, how would they deal with the issue of confidentiality and confidence in the process and the protections afforded?

Ms Aoife Newton

I will address the last point first before discussing the other matters. Deputy McDonald is right about the confidentiality issue, as there are many examples of whistleblowing being difficult for employees. For this reason we welcome the legislation. While it is important that we cater for the whistleblower, we must also ensure that protections are in place against an employee who uses these provisions as a defensive tactic in an employment dispute and does not deserve the legislation's protection. As the Deputy stated, the wording is open to interpretation, but it is important that we tighten up the wording as much as possible at this stage so that we might leave as little as possible open to interpretation. This is the reason that we are trying to tackle some of the wording of the legislation. I can understand why some people want head 16, which deals with confidentiality, to go even further. If we are basing the heads of the Bill on the UK approach, as far as I am aware the UK whistleblower legislation does not include any such protection of confidentiality. I understand, based on the wording, that the approach in the heads has been lifted from the New Zealand approach and its whistleblowing Act of 2000. However, this is very different. That Act not only deals with the detriment side of issues, but also deals with an obligation to investigate the substance of the disclosure. Therefore, it goes a step further and has a type of ombudsman system where the information is disclosed and sent to an ombudsman for verification of its veracity.

This Bill is not about that and the information does not go to a particular body. This Bill is about the protection of the whistleblower, no matter what happens to the information that is disclosed. In that regard, when talking about protection and the worst case scenario, where the whistleblower ends up being a claimant before a rights commissioner or a labour court, the claimant is at that stage quite identifiable. Keeping the identity of the whistleblower confidential must work in the New Zealand model, because the information disclosed is subject to an investigation, but we do not have an investigation here that will allow for that. Therefore, if the whistleblowing goes wrong, the whistleblower here ends up being a claimant, at which stage he or she will be identifiable.

That is by their own choice. They will decide whether they want to bring a claim. They are the ones who decide to make their identity known.

Ms Aoife Newton

Absolutely, yes.

Ms Newton appears to suggest that ought to be done in any event.

Ms Aoife Newton

Yes. An employer cannot penalise an unidentified person who has made a disclosure.

I understand the argument Ms Newton is making in favour of the point. However, to use the argument that the identity would be revealed anyway when the person makes the complaint is not a clincher, because that would be somebody who was deciding himself or herself to bring a claim in any event.

Ms Aoife Newton

Yes, I appreciate that, but the person will never have a complaint to bring if he or she has not suffered detriment and in order to suffer detriment, the person would have to have been identified. An employer, for example, could dismiss a group of people, among whom there is a whistleblower. If the employer does not know that, there will never be a claim, because employers can only adversely treat the whistleblower if they know who is the whistleblower. That is what we need to cater for. Perhaps we need to reconsider the draft further, but my reading is that head 16 is out of context for our particular heads of Bill.

Mr. Brendan Butler

With regard to Deputy McDonald's point concerning increased governance and that, to some extent, this legislation may result in better practices by companies, I am not sure that is the case. We would make the point strongly that significant numbers of companies operate within the law and adopt high standards. People may have a different view, but our view is that a significant number are very considered in their operations and with regard to how they deal with their employees. Therefore, in a sense this Bill will not make a difference to them in terms of governance. They are not going to change their practices as a result of this Bill, if they already operate to high standards. The Chairman raised a "what if" concern. Our concern is that if a company already operates to high governance standards and best practice, but for some reason this company, through this legislation, finds itself exposed on the basis of somebody coming out and saying something that is incorrect, that company is immediately damaged, even though it already operates to increased governance. Once the claim or the allegation is made and once it appears in the media, that company is damaged. Therefore, that sector and Ireland are damaged.

There is not a huge amount between us in terms of the point the Chairman made. We make exactly the same point, but from the opposite perspective. We are trying to make the point from an international reputation point of view. It is our view that if we talk about companies in those particular sectors - pharmaceuticals, medical devices, technology - they tend to operate at a very high level of governance and have very high standards, both technical and professional. Our concern is that if in some way this legislation means that one of those companies which complies with everything is exposed, albeit incorrectly, we may damage the company. That is the point and it is a very moot point. The fundamental concern we have with the legislation is that we have enough safeguards in place to protect companies. We agree that where there is bad practice taking place, that should be exposed. We have no problem with that. Our fundamental concern is about what may affect the substantial number of businesses that operate to high standards.

Is Mr. Butler saying he envisages a scenario where a whistle is blown and the matter is entirely bogus and is established to be so, but the employer or corporation concerned is completely robbed of any sense of vindication through the process? We should not work on a false premise here and there are considerable hoops and hurdles to be gone through when a claim is made. If, for example, a false claim or allegation is made and is then proven to be false, that is the net outcome of the process. Would that be an unpleasant or regrettable experience and would it cause the kind of reputational trauma suggested? I do not think it would. I suggest we could equally argue against having grievance procedures on the same basis. Somebody could make a claim and the claim might not be upheld. However, this does not diminish the necessity of having the process, the protections and the procedure.

Mr. Brendan Butler

The problem arises if in taking that whistleblowing action the person taking the action provides commercially sensitive information.

That is the issue.

Mr. Brendan Butler

It might be possible afterwards to show that the claim was bogus and it must be decided whether there is any damage as a result of that. However, in making the case, commercially sensitive information is exposed. I have mentioned companies that spend five or ten years on major research and development decisions and investments. If commercially sensitive information is provided as part of the claim, it is giving information to competitors.

So that is the point.

Commercially sensitive information may come out as the result of a report, but nevertheless the report is a legitimate and useful report. The fact that commercially sensitive information has come out must, in some perhaps rare circumstances, take second place to the fact that wrongdoing has been exposed. Is Mr. Butler suggesting that irrespective of potential wrongdoing or of how bad the wrongdoing was, the wrongdoing should not be exposed if the information is commercially sensitive?

Mr. Brendan Butler

Absolutely not.

The other point is that wrong or bad things can be said about a company anyway. The change with regard to this legislation is that it gives protection to people in certain circumstances for making these kinds of reports. Mr. Butler's legitimate concern is that the protection should be qualified and that is what we are trying to home in on here. We must consider whether we have got these qualifications right and whether the conditions under which somebody is protected are right, robust and reliable enough to set the correct balance. That is all we are doing. Terrible things can be said anyway and Mr. Butler's concern is that protection might be provided for that.

Mr. Brendan Butler

They are being said under a sense of legitimacy that does not apply at present. In other words, somebody can come make a statement and provide, for example, the formula for Coca Cola.

Mr. Brendan Butler

To an extent a framework is being provided in which it is legitimate to make those claims.

It is difficult to see how the formula in a secret manufacturing process could comply with any of the definitions of information that would be protected in this Bill.

Mr. Brendan Butler

At the outset I said this was a genuine concern and we are asking the committee to consider it.

We will certainly do so.

I thank witnesses for the submission. I would take a slightly different view on many of the issues raised but they have helped to illuminate the discussion about legislation, which needs to be tackled quite a bit. I accept that there are many aspects where phrases, definitions and so on are grey or open to interpretation. The delegation has at least helped to illuminate the issues.

There is one area - and perhaps others - where I have sympathy with the witnesses. I do not know much about the other sectoral agreements mentioned by Mr. Butler and perhaps he will say what they are. The idea that we should not have a piecemeal approach is a reasonable point, not just from the perspective of employers but from the perspective of employees. There should be a streamlined system. Does Mr. Butler agree that we should not let the need for consolidation of whistleblowing agreements slow us down as it is important to bring forward whistleblowing legislation to encourage or create an atmosphere for legitimate whistleblowing? Confidence should be instilled in people who want to make legitimate disclosures, and in addition the Government should consider how other matters could be consolidated. It would not be right to slow the process down and perhaps the delegation could be a bit more specific about the other sectoral agreements. Are there particular reasons for sectoral whistleblowing agreements that are specific and how would that relate to the general effort to establish a whistleblowing process? I can see there is a logic to what Mr. Butler said.

There was another issue I agreed with but I cannot remember what it is now. I will try to get back to it. Much of the thrust of the submission regarded protecting the interests of the employers against what may be seen by them as potentially damaging or vexatious disclosures or complaints from employers. IBEC exists to protect the interests of business. Does the delegation agree that the biggest problem we have - even in the context of the central issue highlighted at the beginning of the submission - is that our international reputation is in shreds? Why is that? It is not because there is an army of cranks and vexatious complainants who are trying to do companies down that are otherwise engaged in best practice. Our international reputation is in shreds because of the reckless behaviour of senior management and executives, particularly in the financial sector, who were engaged in the most appalling practices and reckless lending. The culture was such that nobody blew the whistle on this. That is the problem we must remedy.

Another area where people are grappling consequences is the appalling behaviour of many, although not all, developers and builders engaged in reckless breaches of building regulations and health and safety issues. These have led to the terrible consequences we have seen in places such as Priory Hall and other developments. They might be the tip of the iceberg if we consider some of the stuff built out there. I know from speaking to those who worked in the building industry at the height of the boom that they thought some developments would be the tenements of the future or would fall down in ten years because of reckless practices and a lack of regulation. Building workers knew that was being done was wrong and in breach of fire and safety regulations but they did not feel confident enough to speak out about what was going on or blow the whistle. They were in fear that they would lose their job.

We also know about the appalling cases we have witnessed in private nursing homes and the questions raised about State-run residential care and so on. In those difficult cases, people found it very difficult to speak up about what was ongoing, and when they did, they have even recently found retaliation from employers and a lack of protection in legislation. It seems that is the context in which we are working. IBEC seems to be summoning something of a straw man in the argument or implication that there is an army of cranks out there waiting to make vexatious complaints about companies generally engaged in best practice. That does not add up. If companies are engaged in good practice, it is not likely there will be a host of people making unnecessary or vexatious complaints. We must deal with a position where most people do not feel confident enough to speak up and where our international reputation has been damaged precisely because of the reckless behaviour of employers in the public and private sector. Employees who probably knew about certain issues were afraid to speak out about them.

Against that background as I and many others see it - perhaps the delegation would disagree - IBEC has emphasised that there must be accuracy in the complaints, which seems unreasonable and an obstacle to people raising concerns. In all the instances I mentioned, and particularly what went on in the banking and building sector, it may well be the case that people do not know absolutely whether their concerns or suspicions are accurate, but they would have grave concerns. It is not just that we should not go where IBEC wants us to go but that we should go in the opposite direction where people have concerns.

It is almost certain that people at all kinds of levels within the banking sector must have had grave concerns - and did not know if they were unfounded - about the reckless lending practices with regard to developers. Such people may not have been sure if their concerns or suspicions were justified. It would have been good for the entire country if the people with those concerns, whether right or wrong, would have felt confident enough to make complaints or disclosures and raise concerns. It seems that the approach is not allowing for that necessity.

To whom would they have expressed those concerns? Would it have been the Financial Regulator?

Yes, or the Central Bank. The other point which I agreed with related to adjudication and what is done with the information. I agree with the witness that it is not just about the protection of those who make disclosures but also what will happen with the information they disclose and how that will be adjudicated on. That is another question.

I remind members that we have still to hear another witness.

Yes. My last point is more or less the same. The proposal of excluding things that are likely to happen follows on from the previous point I made. What we should be encouraging is preventative disclosures, where people think something may be done by an employer or company which could be criminal or that the perpetration of such an act would be damaging to the public interest or is something the public needs to know or be warned about in advance. I do not see what the problem is. Would the witness not accept that point?

Is it agreed that we call Senator Hayden now and then conclude with the witnesses? Agreed.

I thank the witnesses for the presentation. It is a very interesting counterbalance to some of the other presentations we have received. What we are looking at here is a balance between the rights of the employer, the rights of the employee and the public interest, which is the important factor in this. I noted the witnesses' comments that we live in tough economic times for doing business in Ireland and so forth. Ultimately, however, irrespective of how tough times are, it is very important that we do not undermine the reputation of this country even further. I do not believe that doing business in Ireland is more important than doing good business in Ireland. There are many examples internationally of countries that ignore environmental standards and so forth to ensure their companies are competitive on the international stage.

The witness appears to be concerned that this legislation will provide an avenue for employees who have grievances to be used as an additional arm to the existing employment legislation. My view is that existing employment legislation is inadequate and is not a sufficient deterrent to employers, particularly given that the "maximum" sentence an employer will be liable to incur is two years' salary. All the research on whistleblowing is that people who have very sensitive information will not come forward because they think they will not be believed and, most importantly, fear the retribution element. The reality is that existing sanctions are not sufficient. I believe everybody would agree on that.

I am concerned that these and other witnesses who have appeared before the committee say there should be a stronger impetus within the legislation to ensure employees must exhaust internal procedures first. In other words, it is down to the employer in the first instance to remedy the situation. However, one should not underestimate corporate culture. People who are in a situation where they have information are working within a corporate environment and, in many instances, it is not feasible for them to go through an internal complaints procedure. As the Chairman pointed out, with an internal complaints procedure there are steps, stages, time lags and other elements. The witnesses must accept that, for better or for worse, it has been shown there is a fear among employees that they cannot go to their employer.

I am also concerned about this idea, and some of the other speakers have mentioned this, that it is necessary to not disclose beyond what is absolutely required. The Chairman would be more familiar than me with existing procedures in commercial cases in the courts. I accept what the witnesses are saying about very commercially sensitive information. As Deputy Boyd Barrett said, there is a wide gamut of instances where there could be potential whistleblowing. Let us take the Coca Cola scenario or the wine production in Germany, where anti-freeze was being put into the wine or another product. Let us say there are products A, B and C. I take the point that product A is totally outside the pale, but one does not want to give up the contents of products B and C. Is there a suggestion the witnesses can put forward to use some of the existing procedures, or procedures similar to them, whereby somebody in that situation can have a decision made in camera as to whether the additional information should be disclosed? In other words, split the components of the case without damaging the exposure of the wrongdoing. Could the witnesses propose some system or way in which we could separate the good from the bad, taking account of what the Chairman said, that sometimes the good has to come with the bad in order to prove the case?

Ultimately, we will be dealing with different types of cases, including cases where the public interest well outweighs commercially sensitive information. I take the point that there will be occasions, probably quite limited, when it will be necessary to split commercially sensitive information. Can the witnesses offer something specific on that point?

Mr. Brendan Butler

That is worth exploring. It is a suggestion that could offer a solution to our legitimate concern.

I am aware of time constraints. On Deputy Boyd Barrett's point about our international reputation being in shreds, a huge amount of work has been done in the last two or three years to try to restore our international reputation. I believe we have made progress on that. I do not dispute the reason for it being in shreds in the first place; I agree with the Deputy. We have made extraordinary efforts, across a range of sectors in our society, to try to get that reputation restored. We have made progress on that and we should not ignore that fact.

Ms Newton will respond on one point. Before I finish, I wish to return to the two points I made at the outset. One was about the international reputation and the other was in respect of the regulatory impact assessment.

Is it additional to what you said?

Mr. Brendan Butler

No.

We will take your initial remarks as being strongly meant.

Mr. Brendan Butler

I would like to hear the views of the Chairman and the committee as to whether this legislation should be subject to regulatory impact assessment.

That would be a matter for the Government.

Mr. Brendan Butler

Could the committee recommend it?

We will consider recommending that.

Mr. Brendan Butler

It is part of the programme for Government.

That is correct. I believe there is a requirement that legislation be subject to it.

Mr. Brendan Butler

It would be very important that this committee-----

I believe it ought to be. I would imagine that we will be recommending that, but we have not discussed it yet. It makes sense.

Mr. Brendan Butler

It would be helpful.

We can see when we discuss the draft.

Ms Aoife Newton

I wish to respond to Deputy Boyd Barrett and the second point on which he is in agreement with us. I am not so sure we are in agreement in the sense that while I referred to adjudication of the information disclosed, that was in the context of examining the New Zealand model. It is certainly not a model I would wish to see replicated here. This Bill goes far enough in the context of disclosures. I do not envisage the Bill also developing an adjudicating process surrounding the information, the disclosure and what happens to the impropriety part. When I talk about adjudication, I am merely referring to the rights commissioner or the Labour Court with regard to the detriment suffered on foot of the penalisation. I hate to scupper an agreement on two points but that had to be clarified.

I thank Mr. Butler, Ms Masterson and Ms Newton for attending this meeting. We have had a very interesting discussion and it has helped.

Mr. Brendan Butler

We will give the submission to the committee within a week.

Yes. Thank you. We will suspend the sitting to allow Mr. Devitt to take his place.

Sitting suspended at 5.50 p.m. and resumed at 5.51 p.m.

The format of the meeting will be opening remarks from Mr. Devitt followed by a question and answer session. I remind members, witnesses and those in the Visitors Gallery that telephones should be switched off. I welcome Mr. Devitt.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against any person(s) or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. John Devitt

I thank the members for staying on so late in the evening. I am grateful for the opportunity to present our preliminary observations to the committee on the general scheme of the protected disclosures in the public interest Bill. We have been very encouraged by the Minister's statements to the House and to this committee that he wishes to see the legislation set the gold standard for whistleblower protection worldwide. Combined with a range of measures aimed at promoting ethics and openness in government, we hope such reform will send positive signals to international observers concerned with standards of governance in Ireland. Given the importance of whistleblowing to the exposure and prevention of corruption, fraud and malpractice, it is critical the legislation is brought forward with urgency but without haste. It is important to get it right. I will briefly explain the background to our work on this topic and our submission.

Transparency International Ireland is the Irish chapter of Transparency International, an independent global anti-corruption organisation. Since 2004, we have an undertaking research, training and awareness reason raising on mechanisms aimed at stopping corruption in Ireland and overseas. We are funded by the Joseph Rowntree Charitable Trust in the UK and European Commission projects and supported by members and volunteers.

In 2009, with the support of what was then the Department of Justice, Equality and Law Reform, we published the national integrity systems study, which looked at how legislation and institutions work together to stop corruption. We came up with five key recommendations, one of which was the protection of whistleblowers and robust whistleblower legislation. Some 40% of fraud and corruption cases are exposed by whistleblowers so it is a vital step to be taken in tackling the problem. We believe fraud and corruption costs the Irish economy up to €3 billion in lost investment and through fraud and corruption in the private sector. Our work to promote whistleblowing Ireland continued in 2010 with the publication of a report entitled An Alternative to Silence, which examined whistleblower legislation in ten European Union countries, including Ireland. The report exposed a confusing patchwork of legislation that provides unequal and largely weak protection against whistleblower reprisal.

In May 2011, we launched western Europe's first free ethics and anti-corruption helpline with the support of a small grant from the European Commission. It offers free guidance and information to individuals reporting fraud, corruption or other concerns at work, as well as victims of wrongdoing. So far, we have received 220 calls through our freephone helpline and our online secure e-mail system. We have not finalised figures for 2011 but most of the calls relate to concerns in the health service, the education system, the legal profession, banking and local government. A number of patterns emerge in the calls received. Most people want to report anonymously and they want a guarantee of confidentiality. In a number of cases, the identities of whistleblowers or witnesses have been needlessly disclosed without their permission and with little justification. In all of these cases, the whistleblower has suffered to his or her detriment. Workers have had their good name questioned or found themselves isolated by colleagues. In one case, the client's dismissal was directly related to his disclosure being made known to his colleagues.

Our helpline volunteers deal with a wide range of issues and subjects reported across the professional and economic sectors. Allegations have been made about bribery, false accounting, whistleblower retaliation, nepotism and softer forms of corruption such as cronyism. It is worth bearing in mind that no sector is immune, including the public and non-profit sectors. Most calls do not relate directly to allegations of a criminal nature. Most relate to poor governance or conflicts of interest, issues that traditionally have not been tested under existing whistleblower legislation. That reports have made about behaviour not falling within the scope of criminal law should not render them any less eligible for protection.

Many of the callers fall outside the relationship between employers and employees. We received a number of calls similar to the case of Louise Bayliss, an agency worker who reported concerns about how patients were treated in a Dublin hospital. Many people have made the mistake of reporting directly to the hospital or care home, not to the agency, and found themselves falling outside the scope of existing protections in the Health Act. The majority of people preparing to make a report are fearful of making a false report. Most of them have been overly scrupulous in preparing to submit information to regulatory or law enforcement agencies. I hope the debate will recognise the underlying will of most workers to do the right thing. The caricature of whistleblowers as cranks does this debate no service.

We sent some preliminary observations to committee members in advance of the presentation of the Minister for Public Expenditure and Reform, Deputy Howlin, in April. I will take questions on any recommendations on which members want further detail. Under head 11, we recommend the legislation protects a worker making an anonymous disclosure where the worker can be identified as the source of a protected disclosure. The burden of proof should rest with the employer to prove any retaliation was not a result of the protected disclosure. Under heads 5, 6, 7, 8, 9, 10 and 12, we recommend the legislation include a definition of good faith. Under head 4, we recommend the protected disclosures include a report of negligence, not just grossly negligent or irregular use of public moneys. Under Schedule 4.1(3)(c), we recommend the level of awards to whistleblowers that have been subject to reprisal should be an amount just and equitable in the circumstances and not limited to the equivalent of two years’ salary.

Under head 26, we advise that the requirement to have whistleblower policy extends to all organisations in the public, private and non-profit sector in receiving and dealing with information about a serious impropriety in or by that organisation. The Labour Relations Commission, in consultation with employers, unions and civil society, might be well placed to draft a framework code of practice which could then be adapted by employers, taking into account the size of the organisation and the different and significance of risk associated with the work of the organisation. The legislation must also be supported by awareness-raising, communication and training of employees, employers and statutory bodies responsible for the oversight and adjudication of cases.

We would urge the Minister to consider a provision of vicarious liability of the employer for any detriment suffered by a worker as a result of informal or formal retaliation by co-workers. We also recommend that remedies for persons who suffer future workplace discrimination, including unjust denial of work opportunities, on the grounds that they made a protected disclosure during the course of previous employment be provided for under the Employment Equality Acts 1998 to 2003.

I thank Mr. Devitt. In regard to anonymous reporting, he recommended that the legislation protect a worker making an anonymous disclosure where the worker can be identified as the source. Is that not an oxymoron? If it is anonymous, how can the person who made the allegation be identified? Does Mr. Devitt mean if his or her identity emerges later?

Mr. John Devitt

Exactly.

Mr. Devitt said the burden of proof should rest with the employer to prove that any retaliation was not as a result of the protected disclosure. It loses the character of anonymity if the person's identity emerges later. Is that right?

Mr. John Devitt

Exactly.

So it is not anonymous, but it was anonymous at the time.

Mr. John Devitt

It was anonymous at the time. The heads of the Bill were unclear on this.

In respect of whistleblower discrimination, is Mr. Devitt saying that under the Employment Equality Acts, the making of a whistleblowing report or this type of disclosure would be a new prohibited ground under the Acts?

Mr. John Devitt

Exactly.

In regard to interim relief - I made this point to ICTU - Mr. Devitt will know that there is no provision under the Unfair Dismissals Acts for interim relief. The point I made to ICTU, which I will make to Mr. Devitt, is that there are many people who believe there should be interim relief in the Employment Appeals Tribunal where somebody is about to be dismissed in really atrocious circumstances or circumstances which are manifestly unfair but it cannot be stopped in advance other than by going to the courts. It cannot be stopped by the tribunal. One cannot get interim relief under the unfair dismissals legislation, so, I suggest, it would be strange to introduce it only in the whistleblowing context. I am not saying it is not a legitimate demand to make in this context but it would stick out like a very sore thumb if it was only available in whistleblowing situations where there is manifestly a strong argument for it to be there for other types of dismissals as well. One would have to amend the Unfair Dismissal Acts to include that. One could not just carve out whistleblowing; it would have to be available more broadly.

I can see where Mr. Devitt is coming from in regard to protected persons. I refer to the extension of the protections against civil liability to volunteers and students. We are trying to get the legislation enacted. There is the old problem of the perfect and the good being enemies of one another. One could make the argument that in certain circumstances - perhaps rare - that there should be protection for volunteers, students, interns and other categories. However, it becomes a bit difficult and problematic to extend the protections to people who are not in any kind of employment contractual relationship with an employer as does the question of retaliation against family members, co-workers and employers. There is a logic to what Mr. Devitt said but in order for the legislation to comprehend those sorts of scenarios, one is talking about casting the net more broadly and about having to write more rules and details. Surely we should get on with what we have here, see how we get on with it and perhaps take Mr. Devitt's point that there should be reviews on the operation of the legislation in the future rather than try to get everything into it at this stage.

Mr. John Devitt

As far as I am aware, the Employment Rights Act in the UK provides a carve-out for the Public Interest Disclosure Act in respect of interim relief, so there are exceptional circumstances-----

Interim relief is available in the employment context in the UK which is not available at all here. There is already a regime of interim relief which is not just confined to whistleblowing.

Mr. John Devitt

We would argue that should not serve as a deterrent not to introduce it here in the employment legislation.

Only in the case of whistleblowing?

Mr. John Devitt

Not just in respect of whistleblowing. I would argue that this might be an opportune to time to explore the possibility of introducing it.

Good luck with that. I take Mr. Devitt's point.

Mr. John Devitt

We referred to protection for students and other categories of persons who might be afforded protection against civil liability based on precedent elsewhere. In Norway, for example, there is protection against civil liability for students. This is particularly apposite where a student, in particular a research student, is working on an assignment where he or she may uncover wrongdoing. He or she may find it very difficult to secure other research opportunities in the future and may suffer from a legal action taken by the university. There are cases where students have reported sexual offences or abuse by members of faculty and have found themselves in difficulty with the educational body for having made that report.

Is that where they were the victims?

Mr. John Devitt

It is where they were the victims or were reporting an offence committed against a fellow student. There are grounds for protecting individuals who would fall outside the employment-employee relationship and that would not necessarily be protected by employment legislation. This would be particularly needed where there is a risk of civil liability accruing from a report made in good faith. This is based partly on our own experience of dealing with people who have found themselves victims of detriment or retaliation by an employer. Colleagues and family members of whistleblowers must be afforded some safeguard in legislation against retaliation, particularly against civil liability. We are aware of a case where the partner of a whistleblower was targeted for both informal and formal sanction by the employer and the co-workers after the whistle had been blown on wrongdoing. We are also aware of cases where employers of workers have been nervous about the risk of losing a contract because an employee has reported wrongdoing in the contracting party's organisation. We believe this has led to retaliation by employers and we believe there should be some civil safeguard for workers against retaliation on those grounds.

Thank you, Mr. Devitt.

I welcome the witnesses and thank them for being here. The presentation is very useful because it sets out the position clearly.

O item 2, the question of good faith, the witnesses recommend that the legislation includes a definition of good faith. Do they have a particular wording in mind?

Ms Lauren Kieran

Yes, we have an example of a definition of good faith from the United Kingdom. Section 61(3) of the Sale of Goods Act 1979 and section 90 of the Bills of Exchange Act 1882. In both cases Parliament defined that term as, "A thing is deemed to be done in good faith within the meaning of this Act when it is in fact done honestly, whether it is done negligently or not." There have been recommendations by the OECD in its compendium of best practice and guiding principles for legislation. This was on foot of the decisions by the G20 in Seoul in 2010, which recommended that there should be a definition for "good faith" and "reasonable belief" within legislation for whistleblowing protection. We would recommend that something along the lines of the United Kingdom legislation I quoted would be contained in the Irish legislation on whistleblowing. Within the UK legislation on whistleblowing protection, there is no definition of good faith and this has led to difficulties and controversy in applying the Public Interest Disclosure Act 1998.

Is the absence of a definition of "good faith" in that Act a concern that qualitatively good faith in terms of commercial transaction might be cast slightly differently in this type of legislation?

I think it is useful where one has a concrete recommendation that wording is given, where possible. It would be of major assistance to me to have a proposed wording for "good faith".

One of the issues raised by the previous witness was around the concept of commercial sensitivity and commercially sensitive information. This was a deeply felt concern and the point was made very reasonably that this might not just be a Trojan horse for the cranks of this world, among whom I am proud to number myself, but perhaps more dangerously something which might unintentionally expose corporate bodies to various serious matters. I share the concern expressed by the Chairman in respect of the protected person and extending that provision. I understand entirely where he is coming from. I just wonder whether that would run us into difficulties when framing this legislation? If we could secure an amendment on interim relief in this legislation, it would be a good start. The points are made logically and are very interesting.

I would find any suggested wording very helpful. I ask the witnesses to respond to the issues I raised?

Mr. John Devitt

I am not familiar with any case where commercially sensitive information has made its way into the newspapers as a result of a whistleblower. This argument has been made time and again. It was made in the case of National Irish Bank v. RTE, where documents related to tax evasion were deemed to be shrouded in commercial confidentiality. The court threw that argument out and based its judgment on the common law principle of there being no confidence in inequity. I think the grounds for that argument are somewhat shaky. Let me digress to deal with the fear that this legislation will do damage to our international reputation. I served as trade representative in New Zealand and worked for Enterprise Ireland trying to attract investment into Ireland. I found that the headlines about tribunals here were doing far more damage to our international reputation than any legislation that was in place or red tape that might have been tying up business.

I will respond to the comment on expanding the scope of the legislation. Another definition of a whistleblower is a member of an organisation who brings to light information that is in the public interest and should be acted upon by other members of that organisation. What we are calling for is safeguards against civil liability for making a good faith report, such as legal action, or a defamation suit. Some of that is already contained in existing legislation such as the Defamation Act but there are other circumstances where somebody may suffer detriment by virtue of the fact that the person may have made a good faith report and fall outside the employee-employer relationship. I am more than happy to go into more detail and offer precise wording on this issue. We will be making a submission to the Department on this and we will forward it to the committee before the submission is made.

We will be preparing a report for the Minister quite soon. If Mr. Devitt would like us to have regard to anything else apart from the contributions in April and today, we would need to have it within a week. Mr. Devitt will still be able to make a submission to the Minister, but if he would like us to have regard to it for our report we would need it within one week.

I asked Dr. Elaine Byrne a question last week and will repeat it so that Mr. Devitt will answer it. Frequently, whistleblowing leads to a prosecution, either civil or criminal, and the whistleblower is required to give evidence. Have the witnesses considered whether there would be a requirement to change the procedures of court reporting, so that a judge would have the power to give a direction that a whistleblower would not be identified in any subsequent proceedings? Have the witnesses consider that or do they think it is a necessity?

Mr. John Devitt

The measure would have to be proportionate to the risk to the whistleblower, where his or her life may be endangered. Provisions are already in place to prevent the name of a witness being disclosed where there is such a risk. If there was due cause for introducing measures that do not already exist, we would be happy to look into them further.

I will be brief as I agree with virtually everything Mr. Devitt said. I thank the witnesses for their presentation which provides an excellent summary of the relevant issues. Mr. Devitt indicated that fraud and corruption cost Ireland €3 billion per annum. I ask him to elaborate on how Transparency International Ireland arrived at that figure. Which aspects of fraud and corruption cost most?

On the issue of extending the scope of the Bill to people outside the employer-employee relationship, as is the case in Norway and elsewhere, will the witnesses explain what difficulties are anticipated in this regard? Is the problem primarily related to defamation? Would extending the scope of the legislation to protect those who make reports about another person's behaviour create a problem? Is the problem that it would be trickier to legislate in the case of persons who are not employees because making a disclosure could cause reputational damage to an individual?

Mr. John Devitt

I missed the final part of the Deputy's question.

Transparency International Ireland argues that it is relatively easy to extend the scope of the Bill to include members of organisations as well as employees or employers. Those who oppose such a move will argue that the issue is more complicated. Is the problem one of defamation in that by moving beyond the employer-employee relationship, one enters a slightly trickier legal area where there is a danger of defamation? An example would be a student making a disclosure or report about another student.

Ms Lauren Kieran

We do not anticipate a circumstance in which a student would make a protected disclosure against another student. We could, however, have a circumstance in which a student who is engaged in work experience in a company would be penalised on foot of a disclosure he or she might make.

I see what Ms Kieran means.

He or she should be able to rely on the protections afforded in the Bill.

Ms Lauren Kieran

Yes, we recommend that such persons should be able to rely on protections.

That would require the introduction of a new category of persons who could rely on such protections.

Ms Lauren Kieran

Yes, the protections would be provided in the employment context and would not necessarily-----

The definition section would have to include a category of person who would be entitled to rely on the protections afforded by the legislation.

Ms Lauren Kieran

That could be one way of addressing the issue.

Would it be easy to do this?

Ms Lauren Kieran

Yes.

Mr. John Devitt

Deputy Boyd Barrett referred to the cost of corruption and economic crime. The €3 billion figure I cited comes from two sources. First, in 2005 a survey was conducted in 2005 by RSM Robson Rhodes, now known as Grant Thornton-----

Will Mr. Devitt repeat the name?

Mr. John Devitt

Yes, the source was RSM Robson Rhodes. I can share the background document with the Deputy. Second, approximately €1 billion of the €3 billion estimate refers to potential lost investment by virtue of Ireland's relatively low ranking on the corruption perceptions index in comparison with competing countries. The index is a measure of perceptions of corruption taken from international observers and public opinion. It is used by risk analysts, including Standard & Poor's, to measure political risk and calculate credit ratings. Using a formula devised in Harvard University, it has been calculated that Ireland is losing in the region of €1 billion per annum as a result of our lack of reputation for good governance.

It is interesting that, having started our discussion of the issue of reputation from a somewhat different perspective, we have finished it on the question of reputation from the perspective of Transparency International Ireland. I thank Mr. Devitt and Ms Kieran for their paper and the responses they provided to the various questions members raised. The meeting has been extremely useful to the joint committee. As I noted, we are taking a close interest in the legislation on which we will prepare a report for the Minister.

The joint committee adjourned at 6.25 p.m. until 3.30 p.m. on Tuesday, 19 June 2012.
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