News from Pohlmann & Company

18.03.2019

EU Whistleblower Protection Standard

European Parliament and Member States agree on Whistleblower Protection Standard

After having presented a first and broadly discussed draft bill of the EU Commission in April 2018, the European Parliament and representatives of EU Member States reached an agreement on new rules that shall guarantee a high-level of protection for whistleblowers who report breaches of EU law on March 11, 2019.

The new rules aim to improve the protection of whistleblowers in order to encourage reporting of breaches to EU law including corruption, tax fraud, money laundering, environmental pollution as well as non-compliance to data protection, public health, product safety and further kinds of misconduct.

In a press release of March 12, 2019, the European Parliament emphasizes the importance of safe reporting channels and safeguards against retaliation as key aspects of the new rules in order to ensure the security of potential whistleblowers and the confidentiality of disclosed information. First, companies of a certain size shall be obliged to install internal reporting systems. Second, besides using internal reporting channels, in certain cases potential whistleblowers shall be also protected when they decide to directly report to national authorities, EU organizations or even the media. These cases include allegations of misconduct which have not been investigated after internal reporting or where the whistleblower perceives there is an imminent danger to the public interest or a risk of retaliation.

In addition, retaliation against whistleblowers are prohibited under the new directive. This shall be ensured by enacting several safeguards against suspension, demotion and intimidations of whistleblowers and their supporters.

The new rights established by the directive further requires the Member States to provide potential whistleblowers with comprehensive knowledge on reporting channels and procedures, receptive organizations and where to find advice and support in financial, legal and psychological questions.

The provisional agreement on the minimum protection for whistleblowers is an important step towards passing the directive. Over the next few months, the new rules must be formally approved by both the European Parliament and the Council to become an official EU directive. Once the directive comes into force, all Member States will then have to transpose the new directive into their national law within two years.

Although many companies have already set up whistleblowing channels as part of an effective compliance program, the compromise that has now been reached, which aims to protect whistleblowers and facilitate the dissemination of information, is welcome as the Directive creates EU-wide legally binding rules on whistleblowing for the first time. At the same time, however, the directive creates structures whose functionality still has to be proven in practice. The main challenge will be the transposition into national law. It remains to be seen how in particular the German legislator will implement the directive and whether it will go beyond the minimum protection for whistleblowers laid down in the Directive and in what form it will protect companies from whistleblowers who report or disclose information with malicious or abusive intent in order to damage a company.

The press release of European Commission can be found here and the press release of the European Parliament can be found here.

Materials relating to new rules on protection for whistleblowers across the EU, including a fact sheet and the proposal for the directive on the protection of persons reporting on breaches of Union law (as of April 23, 2018) can be found here.