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.

And now, since the Court of Appeal’s decision 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.

Usually, a claimant will prioritise a claim against the employer on the basis that it will be better able to afford any compensation, but in this case the employer was insolvent, so it made sense for Mr Osipov to join Mr Timis and Mr Sage to the proceedings. However, an employer’s insolvency is only one reason why a claimant might also make a claim against co-workers. Small or new companies may also lack the necessary funds, making individuals a more desirable target.