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A new EU directive will protect informants in the workplace who report offences against EU laws only. The EU is encouraging its member states to pass laws to protect tipsters when they report offences against national laws as well.
EU member states have until the end of the year to enshrine the new Whistleblowing Directive in their laws. Payments companies, alongside all other businesses in the EU, will have to review their policies and procedures.
The directive affords some protection to employees who report their concerns about dismissals, degradation and various forms of discrimination in the workplace.
It also affords protection to new groups of people, notably job applicants and former employees, as well as supporters of whistleblowers and journalists.
The directive applies to businesses with 50 or more employees in the EU, but the deadline for compliance depends on the size of each business' headcount in the EU.
For example, businesses with 250 or more employees must comply by December 17, whereas those with 50-249 will need to be in compliance by December 17, 2023.
"The protection system that is offered up by the directive offers an international standard to be followed,” said Jan Tibor Lelley, partner at the German law firm BUSE.
“The big point of criticism, however, is that it only covers EU law. In countries like Germany, whistleblower cases often revolve around national law, not EU law. I would like to see the scope expanded so that national laws are covered. At the moment, this all depends on how EU member states implement the directive as to how much protection a whistleblower will receive,” he said.
Most EU countries have yet to implement the directive. Nobody knows whether any of them will use the directive to protect informants who voice concerns about breaches of national — as opposed to EU — law.
“It is uncertain how the final legislation will look per EU member state. National implementation by the EU member states will not result in full harmonisation," said Stefanie Tack, counsel at Crowell & Moring in Brussels.
She pointed out that directives leave it open for EU countries to take different decisions.
"It is possible in some member states that whistleblowers will be able to do anonymous reporting but overall, there could be differences on that topic," she added.
"The directive is more of a general framework with the basic principles to provide a whistleblower protection framework,” said Tibor Lelley.
Politicians have suggested changes to the German law, but this is now off the agenda because of the upcoming election, he said, noting that other national governments have yet to do any work on their own laws.
In fact, according to Transparency International, very few countries among the 27 member states have made significant progress in this field. The group believes that only Sweden, the Netherlands, Latvia and the Czech Republic have progressed with national legislation.
In comparison, countries such as Portugal, Italy, Poland and Germany have made no or almost no progress in transposing the directive into their own laws.
To comply with the directive, companies will have to provide whistleblowers with internal reporting channels that have enough safeguards to keep the information away from prying eyes.
In addition, they will have to encourage employees to make internal “whistleblowing reports” before they make external ones.
These employees must be aware that whistleblowing is a safe option and that their companies could face penalties if they do not provide safeguards.
"If companies have no policy in place, our advice is to already start putting internal reporting channels in place based on the directive and to think now about what needs to be done internally," said Tack.
“For example, this includes what stakeholders need to be involved when crafting a whistleblowing policy, and how to communicate the policy to employees. There are a lot of obligations involved in this process or companies to begin thinking about," she said.
Tibor Lelley said: “It is unlikely that international companies will have to make way for as much new compliance. However, what will happen to small family businesses? There would be a substantial change for them as many don't have anything in place at all."
Sanctions against recalcitrant companies might differ between jurisdictions, said Tack.
"Actions taken against companies and/or individuals who retaliate against whistleblowers or hinder the reporting could be monetary but other measures could also be taken. In addition, member states should also ensure sanctions against bad-faith reporting and knowingly reporting false information."
However, regardless of the confusion surrounding implementation, the EU’s Whistleblowing Directive will usher in a brave new world of protection for whistleblowers throughout Europe, according to Mary Inman, head of the international whistleblower practice at law firm Constantine Cannon.
“Covering such a large swathe of European employers, the requirement is projected to lead to an increase in individuals speaking up internally to report wrongdoing,” she said.
What about the UK?
Now that the United Kingdom has left the EU’s regulatory orbit, it will not be taking steps to enshrine the directive in its law.
However, that does not preclude parliamentarians from considering legislation of their own.
“At recent debates in parliament, it has become clear that a significant number of UK lawmakers across parties in both Houses have concluded that the UK’s current whistleblower legislation, the Public Interest Disclosure Act [PIDA], which is now over 20 years old, is no longer fit for purpose,” Inman said.
PIDA is an employment law that seeks to protect whistleblowers against retaliation by their employers for speaking up. However, Inman pointed out that this protection is only one of the rules that countries ought to make to promote whistleblowing.
“In addition to being protected against retaliation, whistleblowers want the issue that they have raised to be addressed by the regulator or government body responsible for addressing the alleged wrongdoing,” she pointed out.
Baroness Susan Kramer, a Liberal Democrat and co-chair of the All-Party Parliamentary Group for Whistleblowing, has introduced a bill in the House of Lords that calls on the government to form an Office of the Whistleblower to handle “the administration of arrangements to facilitate whistleblowing”, among other things.
“Since whistleblowers are frequently unsure of where to report and waste time and energy reporting to the wrong entity, an Office of the Whistleblower serves as a clearly demarcated channel to receive their reports,” said Inman.
Now that the UK has departed the EU, it is at risk of falling behind its European peers in its protection of, and support for, whistleblowers.
“This fear of falling behind is a prime motivator behind this latest push for legislative reform of whistleblower laws,” said Inman.
