Draft Bill of the Whistleblower Protection Act published
Things are slowly becoming more concrete: After a draft bill failed in the last legislative period due to disagreements in the grand coalition about the scope of the law, the legislative process is now picking up speed. After the draft bill was published in April (see our blog post from April 12, 2022), which did bring some changes compared to the preliminary draft, the draft bill issued by the government is now available (see here in German). It is about time, because the underlying Directive (EU) 2019/1937 (EU Whistleblower Directive, see our blog posts of March 18, 2019 and October 9, 2019) was to be implemented into national law already by December 2021.
Scope
Compared to the draft bill issued by the German Ministry of Justice, the government draft bill brings hardly any innovations. The scope of application has been expanded somewhat. Thus, notifications of infringements of national and EU antitrust law are now also covered (cf. Section 2 (1) No. 8 HinwSchG, Hinweisgeberschutzgesetz, HinwSchG). This makes sense, because the general catch-all provision for administrative offences in Section 2 (1) no. 1 HinwSchG could not cover cartel violations. The latter only includes administrative penalties for the protection of life or limb or the rights of employees or their representative bodies. In view of the considerable legal consequences with which cartel violations are typically punished, there would otherwise be a clear imbalance, for example if reports of minor violations of the Working Hours Act were protected but reports of hardcore price fixing agreements were not.
However, the limited scope of application of the Whistleblower Protection Act due to the EU’s restricted legislative competence in setting directives will continue to contain certain contradictions in value despite the extension to all criminal offenses and individual administrative offenses. For example, employees who report cases of sexual harassment below the threshold of the criminal offense of Section 184i of the Criminal Code, e.g., purely verbal harassment, are not protected, even though such forms of harassment are considered discrimination against which an employee must be protected under Section 3 (4) of the General Equal Treatment Act. An employer must nevertheless investigate corresponding allegations. In designing their whistleblower systems, companies would therefore do well to open up their whistleblowing system and the associated protection of the reporting person against discrimination (Section 36 HinwSchG) to all conceivable legal violations and circumstances, irrespective of the catalog of legal violations to be reported.
Anonymous Reports
Although widely criticized in the legislative process, the draft law still does not impose a hard obligation on companies to investigate anonymous reports. However, an optional provision has now been introduced stating that anonymous reports must at least be clarified if this does not jeopardize the priority processing of non-anonymous reports, Section 17 (1) sentence 4 HinwSchG. However, there is still no obligation on the part of the companies to design the reporting channels in such a way that anonymous reports are made possible. With this addition – if it becomes law – the legislator is effectively giving users cold comfort only. What looks like a relief for companies, namely to be allowed to postpone anonymous reports for the time being, will hardly be implemented in practical handling. As soon as an anonymous report is received, it will always have to be evaluated in terms of the severity of the alleged violation and how concrete the report is despite its anonymity. If it is a serious violation and the report offers concrete indications for further investigations, it will hardly be possible to justify postponing the investigations on the basis of general compliance considerations alone; not even on the basis of capacity considerations, as provided for in Section 17 (1) sentence 4 HinwSchG. If such capacity problems arise, the accusation of an inadequate design of the compliance management system quickly becomes obvious. It will therefore be permissible to take into account during the report intake and the initial plausibility check and evaluation of the reports if a report was only submitted anonymously. However, it will not be possible to ignore or defer them completely, even if the number of other reports is high.
Centralized Investigation Unit in Groups
The draft also makes it clear that in groups of companies and corporations not only can a central reporting office be set up, but also a central unit for investigations. Section 18 no. 4 lit a) HinwSchG expressly provides that the internal reporting office can pass on the procedure for further investigation to a designated work unit at the employer or at the respective organizational unit. According to the explanatory memorandum to Section 14 HinwSchG in the draft bill, this was somewhat less clear. It did mention a reporting unit set up centrally within the group, which would have “technical reporting channels and personnel at its disposal and could also conduct internal investigations in the respective parts of the group concerned, whereas the responsibility and obligation to remedy the legal violation would remain with the respective subsidiary” (Government draft, p. 91). However, this central investigative unit was only mentioned coyly in the explanatory memorandum, not in the text of the law itself. The addition to the text of the law is therefore welcome, if only because a centralized unit for receiving reports and implementing investigations for companies that are also obligated under the German Supply Chain Duty of Care Act (Lieferkettensorgfaltspflichtengesetz – LkSG) establishes a certain parallel with the complaints management system provided for there under Section 8 LkSG. This is because Section 8 (1) Sentence 6 LkSG already provides for external – and thus also group internal – outsourcing of the reporting office.
The explanatory memorandum to the Act also includes a note stating that if the whistleblower system is set up centrally within a group, reports must be made possible in the working language of the subsidiary concerned.
Non-Retaliation
The explanatory memorandum also contains a welcome clarification on the reversal of the burden of proof in the case of suspected repressive measures. Here, the draft bill already provided for a presumption in Section 36 (2) HinwSchG that disadvantages suffered by the whistleblower in connection with the professional activity constitute inadmissible reprisal because of the report. This provision has not been amended. However, the explanatory memorandum to the law provides for situations that are suitable for rebutting this statutory presumption. The most significant situation in practice is the whistleblower’s own involvement in the reported violation. This clarification is also welcome. The legislator thus removes the possibility for the whistleblower to obtain immunity, as it were, by submitting a whistleblower report, even in the case of serious violations of her own, for example if she has to fear that the violation will be discovered. Nevertheless, it remains important in the implementation of the law to provide for a non-retaliation management process, for example in such a way that intended personnel measures by HR must be coordinated in advance with the reporting office or Compliance. This is the only way to avoid unintentional reprisals.
There were also minor changes to the priority security interests, which excluded certain reports from the scope of the law. Now, reports on classified information of the “official use only” level are also to be possible, at least vis-à-vis the internal official reporting office. Classified information of a higher level, such as secret and top secret, is still not protected. Prominent political whistleblowers such as Edward Snowden, Chelsea Manning or Julian Assange would thus remain unprotected under German law.
Short Time for Implementation
The law is to be negotiated in the Bundestag immediately after the summer break and passed before the end of November 2022. It is then to enter into force three months after promulgation. This will initially cover companies with 250 or more employees in a first step – then probably from February 2023. Smaller companies with 50 to 249 employees will have until December 2023 under the transitional provision in Section 42 HinwSchG. In view of the considerable regulatory effort required for the introduction of a whistleblower system – the works council must be involved; an independent body must be set up with the necessary processes for plausibility checks and evaluation of incoming reports and for their clarification – this time is short.