Tribunal chairman warns whistleblower law could cost firms up to £200,000 in salary

Employers on the island could be left paying a former employee’s salary for years, with no prospect of getting the money back, under whistleblowing rules introduced last year, an employment tribunal chairman has said.

The warning came in a ruling by tribunal chairman Douglas Stewart, who rejected an application for interim relief brought by a former company secretary at a financial services firm, according to Isle of Man Today.

Under legislation that took effect in April 2025, an employee who claims they were dismissed for whistleblowing can apply for interim relief. That can mean being reinstated, re-employed, or continuing to receive their salary as though suspended, until the dispute is settled or tribunal proceedings end.

As Isle of Man Today reported, an employer could therefore be required to keep paying a former worker even if it goes on to defend the unfair dismissal claim successfully. Those payments cannot be recovered.

In his ruling, Mr Stewart said: “As a remedy, interim relief has been described as draconian.”

He noted that, in the tribunal’s experience, a number of whistleblowing cases had run for three years. Had the new law applied, he said, respondents in those cases could have faced reinstatement or re-engagement, or paying claimants “£100,000-200,000 as salary for no work in return”.

Mr Stewart said such applications needed particularly careful scrutiny, and he noted that most made in other jurisdictions had failed. Relief can only be granted where the tribunal considers it “likely” that the main reason for dismissal was a protected disclosure.

He said the tribunal had to use its “crystal-ball” to forecast how a later hearing might turn out. At that early stage it works from first impressions, because the facts have not yet been tested. A different panel then hears the full case.

The application was brought by Jane Passey, who resigned from Tufton Management Ltd on 1 September. She is pursuing claims of constructive unfair dismissal and automatic unfair dismissal, and says she was effectively forced out after raising concerns as a whistleblower.

According to Isle of Man Today, Miss Passey alleges that Tufton’s board refused to submit a mandatory Suspicious Activity Report about a client involved in cross-border bankruptcy proceedings. She says this left her exposed to personal criminal liability under the Proceeds of Crime Act.

She says local directors overruled her concerns, and that she then took them directly to the Financial Services Authority. She alleges the company went on to sideline her. She says the decisive moment came when her contractual sick pay was stopped.

The allegations have not been tested, and the full claim has yet to be heard.

Rejecting the interim relief application, the tribunal said it “could not be satisfied that Miss Passey had a pretty good chance of success”, according to the report. Isle of Man Today did not publish a response from Tufton Management.