Corporate Insolvency reminder about personal liability for employment claims: not just discrimination but also now whistleblowing

Insolvency law and the concept of limited liability has developed to shelter the individual officers of a limited company from the claims of creditors of all kinds in the event of a corporate failure.

There are particular rules which protect and guarantee certain minimum employment rights of employees, which are, ultimately, underwritten by the State in the form of the National Insurance Fund.

What is often overlooked in these circumstances are the effects of Section 110 of the Equality Act 2010 which can make employees and agents personally liable for discrimination and harassment irrespective of the solvency of the employer company. Where the tribunal finds an employee liable for discrimination, it must decide whether to order the employee and/or the employer to pay compensation, and the amount of any such compensation.

In addition, the Court of Appeal in Timis and another v Osipov [2018] EWCA Civ 2321 considered whether individual co-workers could be personally and jointly and severally liable with the employer for a whistleblower’s post-dismissal losses.

On the basis of their decision, the law now seems clear that in addition to the employer, individuals may be personally, and therefore financially, liable for their actions towards whistleblowers.

In the ordinary course of events, the claimant employee will prefer to proceed against the company employer which has ‘deeper pockets’ to afford to compensate him/her, but in that case, the employer was insolvent, so it made sense for Mr Osipov to join in the directors, Mr Timis and Mr Sage to the proceedings.

It should, however, be remembered that a corporate insolvency is just one possible reason for pursuing individuals for example, where a company employer is in its infancy or not asset-rich, it makes sense to pursue co-workers who might have greater financial resources. With the increasing trend in whistleblowing claims, this is an area of law which is set to develop further.

Contact our HR Consultants today

If you need specific advice or would like further information, please get in touch with our specialist team by filling out our online enquiry form or by calling 0333 222 0989.