The European Commission (EC) is proposing a new law to strengthen whistleblower protection across the EU. The changes are mighty and may well set a precedent for the United States to follow.
Věra Jourová, EC Commissioner for Justice, Consumers and Gender Equality explained: “The new whistleblowers’ protection rules will be a game changer. In the globalized world where the temptation to maximize profit sometimes at the expense of the law is real we need to support people who are ready to take the risk to uncover serious violations of EU law. We owe it to the honest people of Europe.”
According to their press release, the proposal will guarantee a high level of protection for whistleblowers who report breaches of EU law by setting new, EU-wide standards. The new law will establish safe channels for reporting both within an organization and to public authorities. It is also written to protect whistleblowers against the usual retaliation, that of dismissal, demotion and other forms of retaliation. It will also require national authorities to inform citizens and provide training for public authorities on how to deal with whistleblowers.
“The European Commission’s proposal is a bold step forward with global ripple effects for compliance. So many companies have tendrils in Europe now,” said Suelette Dreyfus, executive director of Blueprint for Free Speech, an advocacy group. “This planned directive is important because it will impact 28 countries [in the E.U.].”
EC First Vice-President Frans Timmermans said: “Many recent scandals may never have come to light if insiders hadn’t had the courage to speak out. But those who did took enormous risks … There should be no punishment for doing the right thing.”
The scope of the new legislation sets a very high bar, and also protects those who act as sources for investigative journalists, thus “helping to ensure that freedom of expression and freedom of the media are defended in Europe.”
The definition of a “whistleblower” under the proposed new Directive would encompass any person who has “privileged access to information about breaches that can cause serious harm to the public interest and who may suffer retaliation if they report” (i.e., not just employees, but also self-employed people, contractors, unpaid trainees and even job applicants).
The European Commission press release notes that whistleblowers should not be punished as a consequence of their action, and they point out that 36% of workers who reported misconduct did experience retaliation (2016 Global Business Ethics Survey). And although 10 EU countries supposedly already offer full protection to whistleblowers, it was noted in employee surveys that 81% of employees said they did not report fraud they had witnessed and 85% of employees said workers would not report “threat or harm to the public interest” for fear of “legal and financial consequences.”
The proposed legislation is in the form of a directive and must still be ratified by both the European Parliament and European Council. It sets out requirements for each member state to incorporate into their own national laws. EU companies with more than 50 employees would be covered and it would include governmental bodies.
The legislation would also cover companies with an annual turnover of over €10 million, with covered companies required to set up an internal procedure to handle whistleblowers’ reports. All state, regional administrations and municipalities with over 10,000 inhabitants will also be covered by the new law.
Employees would of course have to follow certain channels and first make claims of wrongdoing to their employer, however if those channels are compromised they can turn to outside sources, including the media.
Here’s what is even more far-reaching. In cases of alleged employer retaliation, the burden of proof is reversed and the company must prove they are not acting in retaliation! Whistleblowers are also protected in judicial proceedings through an exemption from liability for disclosing the information.
- Clear reporting channels, within and outside of the organization, ensuring confidentiality.
- A three tier reporting system of:
- Internal reporting channels;
- Reporting to competent authorities – if internal channels do not work or could not reasonably be expected to work (for example where the use of internal channels could jeopardize the effectiveness of investigative actions by the authorities responsible); and
- Public/media reporting – if no appropriate action is taken after reporting through other channels, or in case of imminent or clear danger to the public interest or irreversible damage.
- Feedback obligations for authorities and companies, who will have to respond and follow-up to the whistleblowers’ reports within 3 months for internal reporting channels.
- Prevention of retaliation and effective protection: all forms of retaliation are forbidden. If a whistleblower suffers retaliation, he or she should have access to free advice and adequate remedies (for example measures to stop workplace harassment or prevent dismissal.)
According to Nicholas Aiossa, a policy officer at Transparency International EU who had campaigned for the plan, “There was never going to be a magic-bullet solution that covers all whistleblowers at all times … [but] the proposal went further than I expected.” Some backers of a whistleblower law worried the commission would produce nonbinding guidance on how EU governments should protect tipsters. “I think it’s a big day,” said Mr. Aiossa. “It’s quite an ambitious text.”
Various entities are praising the far reaching legislation. Transparency International said the proposal was a bold step in recognizing the importance and rights of informants.
Jo Iwasaki, head of corporate governance with the Association of Chartered Certified Accountants (ACCA) said increasing whistleblower protection will help businesses. “Companies have to see speak-up as something that would help them manage risks and avoid more serious issues such as violation of law, inappropriate conduct, crime or any type of harms.”
Keep in mind that the European Commission proposed directive to protect whistleblowers is finally being proposed almost five years after such a demand was first floated by the European Parliament. As Věra Jourová also forcefully stated “so many often feel helpless against the power of corporate giants or the corruption they witness.”
This is something I can personally attest to. Yet if governments and companies do not encourage free and honest discourse when an employee witnesses wrong doing the entire economy suffers. Feedback is critical to assure employee engagement and stakeholder trust.
In Europe, as here in the USA, the dishonesty, fraud and corruption we have witnessed for far too long is not acceptable. I applaud the EU for a real game changer- and we need to follow their lead.
More information for your reading pleasure:
The proposed new Directive will be adopted using the ordinary legislative procedure (i.e., the European Parliament and the European Council both need to adopt the final text of the proposed Directive before it is published in the Official Journal of the European Union and implemented). The EC has invited the public to provide feedback on the proposed new Directive by the June 20 deadline via its “Have Your Say” webpage.
The EC’s “Have Your Say” webpage and the package of new measures to protect whistleblowers, including the proposed new Directive, is available here.
European Commission Fact Sheet on Whistleblowing is here.
The outlined process and whistleblowing legislation reference links can be obtained here.