24.04.2019

EU Parliament votes on directive to protect whistleblowers

With this new directive, the EU Parliament wants to protect whistleblowers and increase transparency. Put simply, the directive leads to a need for action for all companies operating in Europe with more than 50 employees or more than € 10 million turnover, as well as for municipalities with more than 10,000 inhabitants. The companies and municipalities concerned must, among other things, set up an internal whistleblower system in order to give employees in particular the opportunity to report violations of the law.

On 16 April, the EU Parliament adopted the controversial directive on the protection of whistleblowers. The approval of the Council of Ministers shall be considered a formality. The Directive will result in medium-sized companies that do not yet have a whistleblower system being forced to introduce it. The new rules are intended to protect whistleblowers from dismissals and other reprisals by their employers.

The EU directive initially only covers infringements of EU law. Member States are, however, free, when transposing the Directive into national law, to include infringements of national laws. We assume that Germany in particular will make use of this opportunity. The Directive must be transposed in two years.

In principle, a three-step procedure is stipulated:

Step 1: Whistleblowers must first provide information within the company concerned.
Step 2: As the next step, if no change is made at first, whistleblowers can contact the competent authorities.
Step 3: In the last step, a communication to the media is allowed.

However, whistleblowers are free to choose whether they first report internally or immediately to an authority. They are not obliged to be the first to turn to an assigned person in their (own) company.

In order to make step 1 as simple as possible for whistleblowers, companies with 51 employees or an annual turnover of more than 10 million euros as well as municipalities with more than 10,000 inhabitants are obliged to set up an internal whistleblower system. For companies, the establishment of an initially purely internal system is also attractive because it does not force whistleblowers to involve an authority right from the start.

Schalast has been following the development for quite some time, so that we can already offer a solution for this additional compliance obligation today. Our legal service company CLARIUS.LEGAL AG has developed a service with which affected companies and local authorities can meet the new requirements.

With an online platform in their own design and, if desired, a hotline for reports via telephone, those affected are on the safe side. The service enables whistleblowers to initially report violations internally. The anonymity of the whistleblower is both secure and legally secure, because unlike software company services, CLARIUS.LEGAL as a law firm can defend the anonymity of the whistleblower even when sovereign investigations are taking place. For this purpose, a mandate relationship is established which guarantees confidentiality and will motivate every whistleblower to also follow the planned internal path. Compliance with the EU directive and future national implementation can already be achieved today.

Please feel free to contact us.