Directive to tackle “uneven and fragmented” protection for whistleblowers
27 October 2021
The European Union Whistleblowing Directive 2019 introduces minimum standards for the protection of whistleblowers and obliges many public and private entities to introduce their own internal whistleblowing channels. EU countries are required to transpose the directive by December 2021.
Poland has published a draft of what has become known as the Whistleblower Protection Directive on the website of the Government Legislation Centre.
It is reported the proposed new Polish law on corporate criminal liability will provide protection for whistle-blowers and this is in line with the most recent EU policy.
The EU has taken action as it believes the existing level the protection of whistle-blowers is “uneven and fragmented”. As a consequence, whistleblowers are often discouraged from reporting their concerns for fear of retaliation.
The Directive expects member states to introduce to their domestic legal systems instruments providing whistleblowers with adequate protection against retaliation.
The EU Directive provides for a three-step model of reporting paths available to the whistleblowers: internal reporting channels, external reporting channels and public disclosure.
The core feature of the Directive includes protection for employees who report their concerns, but also for job applicants, former employees, supporters of the whistleblower and journalists. Under the directive, they are protected from dismissal, degradation and other discrimination.
Significantly, the protection applies only to reports of wrongdoing relating to EU law, such as tax fraud, money laundering or public procurement offences, product and road safety, environmental protection, public health and consumer and data protection.
The Directive states that a whistleblower can initially choose whether to report a concern internally within the company or directly to the competent supervisory authority. If nothing happens in response to such a report, or if the whistleblower has reason to believe that it is in the public interest, they can also go directly to the public. They are protected in both cases.
The EU’s aim is to show that whistleblowers can act with confidence while encouraging individuals to report on company infringements.
Companies with more than 50 employees will be obliged to set up suitable internal reporting channels. Companies with 250 or more employees will be expected to comply within two years of adoption, companies with between 50 and 250 employees have a further two years after transposition to comply.
In the case of internal reporting, the employer will have the right to expand the scope of legal violations that may be subject to internal reporting, in particular those relating to internal regulations or ethical standards;
The legal position of the whistleblower will be strengthened by reversing the burden of proof, according to a model similar to the protection against unequal treatment in employment.
This means that if a whistleblower claims to have suffered harm as a result of reporting or making a public disclosure, the harm will be presumed to have been caused in retaliation for the reporting or public disclosure, and the person who took the action causing the harm will be obliged to prove that s/he took the action for duly justified reasons.
The Polish draft is currently in the process of inter-ministerial review and consultation.
Companies across the EU are looking carefully at how they adopt and comply with whistleblowing regulations.
In the US, the latest whistleblowing awards to two individuals amounted to USD 114M, including USD 110M to one individual, and the total amount awarded under SEC whistleblower regulations since 2012 exceeds USD 1 billion.
Worldwide, the regulations and compensatory damages are becoming more onerous and expensive to deal with.
Company boards need to ensure robust whistleblower procedures are in place, together with comprehensive management liability (D&O) insurance.
W Denis Europe has experts who can provide and arrange insurance protection for D&O risks. For more information or to obtain a quotation visit www.wdenis.eu or contact Vida Jarašiūnaitė Vida.Jarasiunaite@wdenis.eu