EU Adopts Whistleblowing Directive to Protect Whistleblowers
EU Adopts Whistleblowing Directive to Protect Whistleblowers
The whistleblowing rules in Europe are about to change dramatically. The new Directive on the protection of persons who report breaches of Union law, also referred to as the “Whistleblowing Directive,” will require Member States to create rules that mandate organizations with more than 50 workers to set up whistleblowing hotlines and accept reports about violations of the EU law.
The Whistleblowing Directive also provides for minimum standards on how to respond to and handle concerns raised by whistleblowers. These minimum requirements provide sufficient details so that organizations can start reviewing their existing whistleblowing hotlines (if they already have them in place) and adjusting their internal processes to align with the Whistleblowing Directive.
Below we provide an overview of the main requirements and takeaways.
WHICH ORGANIZATIONS WILL NEED TO COMPLY?
The Whistleblowing Directive requires organizations with more than 50 “workers” to set up reporting channels. This is a big change compared to the current situation, where the majority of Member States do not legally require the establishment of such reporting channels.
The concept of a “worker” in the EU is broad and, according to settled EU case-law, covers persons who, for a certain period of time, perform services for and under the direction of another person, in return for which they receive remuneration. This includes not only regular employees but also workers in non-standard employment relationships, including part-time workers, trainees/interns, and fixed-term contract workers. This may be problematic for certain organizations whose numbers of “workers” fluctuate around the 50 mark. If your organization is not certain whether it hits the 50 mark, or it does sometimes but not always, it might be prudent to take a “better safe than sorry” approach and set up the channels anyway.
The Whistleblowing Directive furthermore gives Member States the right to “encourage” organizations in private sectors with fewer than 50 workers to also establish internal reporting channels. If a Member State chooses to do so, it can impose less prescriptive requirements for such channels then currently laid down in the Whistleblowing Directive, provided that such requirements guarantee confidentiality and diligent follow-up. This is something to keep and mind and see what such “encouragements” will look like.
The Whistleblowing Directive does not specify whether the 50 workers need to be physically located in the EU. A reasonable interpretation is that any legal entity established in the EU that employs more than 50 workers will need to comply with the Whistleblowing Directive, no matter if such workers are located in or outside the EU. It is unclear whether non-EU entities that employ more than 50 workers who are located in the EU will need to comply with the Whistleblowing Directive. However, it is highly likely that such entities will be subject to the Whistleblowing Directive, considering that European labor law, including regulations on worker protection and other employee protection provisions, applies to employees located in the EU, regardless of their employer’s seat. EU Member States’ implementing laws will hopefully provide additional clarity on this point.
WHAT WILL BE THE ALLOWED SCOPE OF THE WHISTLEBLOWING REPORTS?
Unlike the current rules where the scope of the hotlines is generally quite narrow and varies per EU Member State, the whistleblowers will now be allowed to report, at a minimum, about a broad range of violations of the EU law including:
Note that Member States may extend the scope of reportable concerns when they implement the Whistleblowing Directive into their national law. The expectation is that some Member States might indeed take advantage of this option. This might, for example, be the case for the Netherlands, where the current House for Whistleblowers Act already requires organizations with at least 50 workers to allow for reporting of “suspicious wrongdoing” without limiting such wrongdoing to violations of the EU law.
IS THERE A PRESCRIBED FORM FOR THE REPORTING MECHANISM?
The Whistleblowing Directive requires organizations to enable individuals to report in:
Note that upon whistleblower’s request, such channels should also enable reporting by means of physical meetings, within a reasonable timeframe.
Third parties may also be engaged to receive reports on behalf of the organization, provided such third parties offer appropriate guarantees for independence, confidentiality, data protection, and secrecy. The Whistleblowing Directive suggests that such third parties could be external reporting platform providers, external counsel, auditors, trade union representatives, or employees’ representatives.
WHO WILL BE PROTECTED BY THE WHISTLEBLOWING DIRECTIVE?
The Whistleblowing Directive offers protection to whistleblowers who have acquired information on violations of the EU law in a “work‑based relationship.” This protection will be granted to the broadest possible range of categories of individuals, irrespective of whether they are EU citizens or third-country nationals, the nature of their activities, or whether they are paid. This includes:
WHAT TYPE OF PROTECTION WILL BE OFFERED TO WHISTLEBLOWERS?
The Whistleblowing Directive requires Member States to prohibit any form of retaliation. If whistleblowers do suffer retaliation, the Whistleblowing Directive requires the Member States to set up the following protective measures:
The Whistleblowing Directive also suggests that a clear legal prohibition of retaliation has an important dissuasive effect and would be further strengthened by provisions for personal liability and penalties for the perpetrators of retaliation.
WHEN WILL THE PROTECTION APPLY?
In order to be protected under the Whistleblowing Directive, the whistleblower needs to only have reasonable grounds to believe (in light of the circumstances and the information available to them at the time of reporting) that the concern reported is true. The motives of the whistleblowers are irrelevant in deciding whether they should receive protection.
IS ANONYMOUS REPORTING ALLOWED?
The Whistleblowing Directive notes that it does not affect the power of Member States to decide whether organizations and competent authorities are required to accept and follow up on anonymous reports. Thus, this issue is left to the Member States to decide in their national implementation. The Whistleblowing Directive, however, also notes that whistleblowers who reported or publicly disclosed information on violations of the EU law anonymously, but are subsequently identified and suffer retaliation, will still qualify for the Whistleblowing Directive’s protection.
HOW SHOULD THE REPORTS BE HANDLED BY ORGANIZATIONS?
These are the key obligations that organizations need to consider:
The whistleblower does not need to receive this feedback as long as providing it could prejudice the investigation or affect the rights of the implicated individuals. Where the appropriate action still needs to be determined, the whistleblower also needs to be informed accordingly. Note that in all cases, the whistleblower should be informed of the investigation’s progress and outcome.
DOES THE WHISTLEBLOWER HAVE TO REPORT CONCERNS TO INTERNAL WHISTLEBLOWING HOTLINE?
The Whistleblowing Directive notes that whistleblowers should be encouraged to first use internal reporting channels and report to their organization, if such channels are available to them and can reasonably be expected to work. If this is not the case, whistleblowers may:
WHAT CAN YOUR ORGANIZATION DO NOW?
The Member States will need to implement the Whistleblowing Directive into local law over the course of the next two years. Organizations with 250 or more workers will therefore need to comply with the new rules by December 17, 2021, while the organizations with 50 to 249 workers have an additional two years to become compliant (December 17, 2023). National implementation inevitably means that there will be no full harmonization, so the whistleblowing rules in the EU will likely remain segmented per country. This is, to a certain extent, bad news for multi-national organizations that have operations in various EU Member States. Over the next two years, organizations should continue monitoring the Member States’ implementation to identify specific local deviations and thereupon adjust their hotlines accordingly.
Considering that the minimum standards are set by the Whistleblowing Directive, organizations might already consider taking the following steps:
The entire text of the Whistleblowing Directive can be consulted at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CONSIL:PE_78_2019_REV_1&from=EN.