Germany has finally implemented the EU Whistleblowing Directive. The German Whistleblowing Act (Hinweisgeberschutzgesetz – HinSchG) comes into effect on July 2, 2023. The German Whistleblowing Act’s key points are summarized below.
The German Whistleblowing Act (the “Act”) requires all legal entities in the private sector with at least 50 “workers” to set up internal reporting channels for whistleblowers. Since the Act does not specify that this number refers to full-time equivalents (FTE), it is likely that this threshold refers to the total headcount of employees, so companies should also take part-time employees fully into account when evaluating if they fall under the scope of the Act. Note that the term “workers” not only includes regular employees, but also executive employees, fixed-term employees, interns, and trainees.
The material scope of the Act goes beyond the requirements of the EU Whistleblowing Directive. While the EU Whistleblowing Directive is limited to reports of suspected violations of EU law, the Act also covers violations that are punishable by law (criminal offenses) and violations punishable by fine (administrative offenses); the latter, however, only insofar as the violated provision serves to protect life, limb, health, or the rights of employees or their representative bodies.
Companies that fall within the scope of the Act are required to set up internal reporting channels for written or oral reporting (e.g., on the phone or by another method). If requested by the whistleblower, the employer must enable a physical or virtual meeting. The reporting channel(s) must ensure confidential reporting but do not need to allow for anonymous reports.
Companies may assign employees or third parties to operate the internal reporting channels. Under the Act, group companies are allowed to implement a centrally organized reporting channel at one of the group companies for the entire group.
The persons responsible for the reporting channel must have a certain level of expertise and must be able to act independently. The persons can hold other functions as long as no conflicts of interests occur.
If a company fails to set up an internal reporting channel, a fine of up to EUR 20,000 could be imposed.
The Act stipulates that whistleblowers must not suffer retaliation for reporting suspected violations in good faith.
Further, the Act provides for a reversal of the burden of proof in favor of the whistleblower. If a whistleblower suffers a disadvantage following a report and alleges that this disadvantage was caused by the report, it is presumed that this disadvantage is a prohibited retaliation measure. It is then up to the company to demonstrate that its actions were not connected to the report. Whistleblowers can also claim damages against the company if they suffer retaliation.
The Act comes into effect on July 2, 2023. The obligation to implement internal reporting channel(s) will immediately apply to all companies with more than 250 employees. Companies with 50 to 249 employees will have until December 17, 2023, to comply with the obligation.
For more information on other implementing laws and the latest whistleblowing updates, visit MoFo’s Whistleblowing Resource Center.