Will the UK follow the US in paying whistleblowers?

The government has launched another consultation, this time on potentially introducing US-style financial rewards for whistleblowers who report economic crime, alongside proposals to strengthen employers’ obligations to maintain effective whistleblowing procedures.

The proposals form part of a broader review of the UK’s whistleblowing framework under the Employment Rights Act 1996 and could represent one of the most significant reforms to whistleblower protection in quite a while.

Under the government’s preferred model, individuals who provide significant and original information about fraud, bribery, corruption or other economic crime to the Serious Fraud Office could receive a financial reward where their information leads to a corporate conviction or other enforcement outcome. The proposed reward would be calculated as a percentage of the financial penalty imposed, mirroring schemes already operating in the United States and, to a more limited extent, Canada.

What happens in the US and Canada?

The government’s preferred model has been heavily influenced by the success of whistleblower reward schemes operating in North America. In particular, the US Securities and Exchange Commission (SEC) whistleblower programme, introduced under the Dodd Frank Act in 2011, has become one of the most prominent examples of financial incentives being used to encourage the reporting of corporate misconduct.

Under the SEC programme, eligible whistleblowers can receive between 10% and 30% of monetary sanctions recovered in successful enforcement actions where the sanctions exceed $1 million. Since its introduction, the SEC has awarded more than $2.2 billion to whistleblowers and has received tens of thousands of reports relating to securities fraud, accounting irregularities and other corporate wrongdoing.

Several high profile awards demonstrate the scale of the programme. In 2023, the SEC announced its largest ever whistleblower award of approximately $279 million. In 2024, two whistleblowers shared an award of approximately $98 million. The programme is widely credited with generating valuable intelligence that may otherwise never have come to the attention of regulators.

Canada has adopted a more measured approach. The Ontario Securities Commission’s whistleblower programme, launched in 2016, provides awards of between 5% and 15% of monetary sanctions, subject to a maximum award of CAD $5 million. According to figures published by the regulator, whistleblower disclosures have contributed to enforcement action against 19 respondents, resulting in approximately CAD $48 million in sanctions and voluntary payments, with more than CAD $9.3 million paid to whistleblowers.

While the Canadian scheme is significantly smaller in scale than its US counterpart, both programmes are cited as examples of how financial incentives can encourage the reporting of misconduct that may otherwise remain concealed within organisations. It is this perceived success that has prompted the UK government to consider whether a similar model could assist the Serious Fraud Office in uncovering and prosecuting economic crime.

The case for financial incentives

Supporters argue that economic crime is often difficult to detect because it is concealed within organisations. Employees, consultants and advisers may possess critical evidence that regulators would never otherwise obtain. Importantly, reward schemes recognise that whistleblowing can carry significant personal consequences. Individuals may suffer damage to their careers, workplace ostracism, lengthy litigation and financial hardship because of blowing the whistle. Financial incentives, supporters say, acknowledge these risks and encourage individuals to come forward earlier.

Proponents also point to the success of the SEC programme, which has generated a substantial volume of actionable intelligence and led to significant enforcement outcomes. The government has noted that UK nationals are already among the largest overseas users of the SEC’s whistleblower programme, suggesting that valuable intelligence may currently be flowing overseas rather than to UK regulators.

The arguments against

Critics argue that introducing financial rewards may alter the motivation for whistleblowing, encouraging reports driven by personal gain rather than genuine concerns about wrongdoing. Some employers fear that it could discourage internal reporting, with individuals choosing to bypass internal whistleblowing processes in favour of a potentially lucrative external reward. There is also concern about an increase in speculative or weak allegations, placing greater strain on regulators and employers. While regulators can filter out unmeritorious complaints, the cost and disruption associated with investigating allegations can still be significant.

However, these concerns should be viewed in the context of the safeguards already built into many overseas schemes. For example, the SEC only rewards whistleblowers who provide original, credible and useful information that directly contributes to a successful enforcement outcome. Awards are not automatic and are determined by reference to the value of the information provided and the whistleblower’s cooperation.

How does an individual qualify for whistleblowing protection in the UK?

Importantly, the government’s proposals regarding financial incentives should not be confused with the existing legal protections available to whistleblowers under employment legislation.

The current consultation is primarily concerned with encouraging the reporting of economic crime and strengthening the wider whistleblowing framework, including whether financial rewards should be available where information leads to successful enforcement action by bodies such as the Serious Fraud Office. By contrast, the statutory protections most commonly relied upon by workers are contained in the Employment Rights Act 1996. These protections are designed to protect workers from suffering detriment, dismissal or other forms of retaliation because they have raised concerns about wrongdoing.

To qualify for protection under the Employment Rights Act 1996, an individual must make a protected disclosure; it is not sufficient to gather information or threaten to make a disclosure. The individual reporting must also reasonably believe that the information relates to one of six categories of wrongdoing listed in The Public Interest Disclosure Act 1998 (PIDA): a criminal offence, breach of a legal obligation, miscarriage of justice, danger to health and safety, environmental damage or the deliberate concealment of the above. Importantly the individual must also reasonably believe that the disclosure is in the public interest.

Accordingly, whilst the consultation proposes potential incentives for reporting economic crime, this is a separate question from whether an individual qualifies for whistleblowing protection under employment law. A person may be entitled to statutory protection from detriment or dismissal regardless of whether any financial reward scheme is introduced. Equally, any future incentive scheme is likely to focus on the value and outcome of the information provided to enforcement authorities, rather than replacing the existing legal tests that determine whether a disclosure attracts protection under the Employment Rights Act 1996. Both regimes may operate alongside one another, but they serve different purposes.

With the above in mind, the introduction of financial rewards would not fundamentally alter the existing legal test for whistleblower protection. Rather, it would provide an additional mechanism aimed at encouraging the reporting of serious economic crime, while preserving the existing safeguards against detriment and dismissal for those who make protected disclosures.

What about ‘good faith’?

Historically, UK whistleblowing law required disclosures to be made in good faith. That requirement was removed by the Enterprise and Regulatory Reform Act 2013. Today, a worker can still qualify for whistleblowing protection even if their motives are mixed, provided they reasonably believe the information tends to show wrongdoing and that disclosure is in the public interest.

The proposed incentive scheme reflects a similar practical reality. Regulators are often less concerned with why someone reports misconduct than whether the information is accurate, original and leads to enforcement action. The experience in the US suggests that financial incentives and public interest motivations are not necessarily mutually exclusive. Many whistleblowers report wrongdoing for a combination of ethical, personal and financial reasons.

Looking ahead, what might we expect?

The consultation raises important questions about the future of whistleblowing in the UK. While financial reward schemes may sit uneasily with the traditional view of whistleblowers as individuals acting solely in the public interest, international experience suggests that carefully designed incentives can significantly enhance the detection and prosecution of economic crime.

The challenge for the government will be striking the right balance of encouraging high quality disclosures, protecting genuine whistleblowers and preserving confidence in the integrity of the reporting process. If implemented with appropriate safeguards, a UK incentive scheme could become a powerful addition to the existing enforcement toolkit, which many feel lacks teeth.