MOST employees will think twice about bringing their bosses to book if they detect some serious malpractice at work. There are few benefits in blowing the whistle for the dutiful employee. Often the most obvious consequence is dismissal. Employment contracts are frequently drawn up so that an employee must respect a duty of confidentiality to his or her employer.

A new Bill, currently making its progress through Parliament, is designed to overcome the legitimate fears of employees and to encourage them to report serious malpractice. Although the Public Interest Disclosure Bill is sponsored by an Opposition back-bencher, it has the support of the Government and is likely to become law by the summer.

The proposed legislation, unofficially dubbed the Whistle-blowing Bill, seeks to protect workers from recriminations from employers if, when acting in good faith and in the public interest, they report actual or suspected wrongdoing. It will apply to most individual employees, including agency workers and homeworkers, though not to self-employed professionals (such as accountants), voluntary workers, the police and the armed forces.

For disclosures to be protected, the worker making them would need to have a "reasonable belief" that some crime or miscarriage of justice had taken place or was likely to take place, or that some legal obligation had been or was likely to be infringed. Disclosures would also be protected if the worker had a reasonable belief that information relating to these matters was likely to be deliberately concealed. The range of disclosures which would afford the worker protection under the Bill are referred to as "qualifying disclosures".

The Bill is framed to encourage employees who have "qualifying disclosures" to first approach their employer. In order to be protected when making a "qualifying disclosure" to one's employer, the employee would only need to act in good faith. In order to be protected when disclosing to a third party, the worker would have to meet additional criteria.

First, he would need to satisfy a higher test of belief that his information was accurate and not motivated by personal gain. Second, he would be expected to have first raised his concerns with his employer, although this would not always be necessary where the worker had good reason to believe that such action would lead to victimisation or to the destruction of evidence.

In cases of what the Bill calls "exceptionally serious failure", which could mean cases of major fraud or a very serious threat to health and safety, the worker can report externally straight away.

The protection which the new law would provide to whistle-blowers is twofold. Where a worker is victimised but not dismissed, he will be entitled to receive compensation assessed in the light of the circumstances of the case. The consequences in the case of dismissal are currently less clear. But however the detail of the new law works out, any positive contribution to the means available to combat fraud will be welcome.

John Davies

The author is senior technical officer at the Association of Chartered Certified Accountants