Recruiters have been urged to review indemnities in commercial contracts with clients, as well as their insurance policies, in the wake of an employment tribunal ruling meaning whistleblowers can bring claims against end-user clients.

The warning follows a ruling by the Employment Appeal Tribunal (EAT) in the case McTigue v University Hospital Bristol NHS Foundation Trust.

McTigue was employed by recruitment agency TMS, which supplied her as an agency worker into the Trust and also was subject to the Trust’s standard form contract. After her engagement with the Trust ended, she brought whistleblowing claims against the agency and the Trust, but subsequently abandoned claims against the agency.

McTigue’s case rested on showing she met the definition of a ‘worker’ of the Trust in order to be able to continue with her claim under whistleblowing legislation – s.43K Employment Rights Act 1996. 

But the Trust argued that the Employment Tribunal did not have jurisdiction to hear the whistleblowing claim because it was a matter for the agency alone. The EAT decided that the definition of worker under the whistleblowing legislation was wide enough to cover an agency tripartite relationship. McTigue was able to be a worker of the Trust, at the same time as being an employee of the agency and continue with her claim, because both the agency and the Trust could “substantially determine” the terms of McTigue’s engagement.

Commenting on the case, John Hayes, principal at law firm Constantine Law, called on agencies in the wake of the Tribunal’s decision, to recognise that the engagement of an agency worker under an agency’s contract of employment will not necessarily shield the end user from whistleblowing claims. 

“Whistleblowing claims by agency workers against end-user clients are likely to become more common (and require no minimum period of service),” Hayes added. “If an agency or end-user receives a whistleblowing complaint then they need to be fully investigated before action is taken to terminate the contract of the agency worker.”

Consequently Hayes recommends agencies work collaboratively with end-users and align two sets of whistleblowing policies. “Damages for whistleblowing claims can be uncapped but the main exposure is likely to be in terms of legal fees and management time. 

“Agencies will need to review the indemnities in place in their commercial contracts with clients, as well as their insurance policies. There is a risk that insurance premiums could increase following this decision.”

Phillippa Canavan, senior associate at law firm Squire Patton Boggs, agrees, arguing that agencies often include indemnities in their client contracts spanning all potential employment claims brought by an agency worker against the client. 

“This case serves as a helpful reminder that agencies should exclude from such indemnities any decisions taken by clients to terminate an agency worker’s assignment on the grounds of his/her whistleblowing. If agencies don’t take this step, they could find themselves footing the bill for the agency worker’s uncapped compensation,” she warns.

The message for hirers, Canavan adds, is not to take detrimental action against an agency worker who raises a whistleblowing complaint any more than they would take such action against any member of their own staff. 

“Agency workers should be assumed for practical purposes to have the same whistleblowing protection as your own people,” she added.

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