Everything you need to know about the new EU Whistleblower Legislation

Enacted by the European Union Parliament on 16 December, 2019, the EU Whistleblower Directive is yet to achieve its purpose due to discrepancies in its adoption and implementation. More than half of the 27-member political institution are already transposing the EU Whistleblower Protection Directive into national law. But there are widespread concerns that all Eurozone countries will meet the December 2021 deadline. This highlights the need for lawmakers, including management board of every multinational corporation and private/public companies that will be mandated to follow the new rules, to hasten preparation against litigations such as COVID-19 retaliation lawsuits.

The EU Directive (also known as the Act) will affect thousands of organizations as well as Small and Medium-scale Enterprises (SMEs) within Europe, especially those with over 50 employees. However, only organizations/businesses with up to 250 workers are obligated to comply first. Companies with 50-249 employees have about 2 years to implement the legislation. Basically, the Directive is mainly focused on protecting a wide range of whistleblowers, especially those reporting violation of EU laws. This legal provision, in turn, is expected to increase accountability, equity and commitment to good corporate governance among organizations. But achieving these objectives depends on proper adoption of safe reporting channels—such as whistleblower websites and hotlines. The Act clearly stipulates that EU Member States should design, establish and operate reporting channels that guarantee protection of private information. Apart from the emphasis on confidentiality of the identity of whistleblowers, the Directive also offers protection to any third party mentioned in the report.

Further, according to Article 9, Directive (EU) 2019/1917 of the European Parliament and Council, every affected organization is also required to:

  1. Enlighten employees of reporting options available to them.
  2. Implement strategies to protect whistleblowers from any form of retaliation—such as dismissal or demotion.
  3. Engage services of a competent and unbiased person to receive and investigate reports.
  4. Ensure that every report is investigated with 3 months.

According to the 2018 EU General Data Protection Regulation (GDPR), slow national adoption of the Directive limits awareness due to the fact that each member state is free to transposed individually until December 2021.  This creates room for differences in each local version of the Act. But, despite the setback, the Directive’s main aim is to provide minimum level of protection for whistleblowers in Eurozone countries.

  • Sweden on 29 June, 2020 recorded notable progress in its effort to protect whistleblowers. The Exploratory Committee delivered a 802-page report containing detailed plan for transposing the new Whistleblower Protection law, and remarkably, reduced the scheduled date by one month. New date is1 December, 2021.
  • Similar proposals presented in Denmark and Finland set Spring of 2021 as their implementation period. Their impressive efforts were slowed by the coronavirus pandemic as was the case in Portugal.
  • In June 2020, the Republic of Ireland commenced public consultation towards adapting the EU Directive.
  • Latvia called for public opinion to enable preparation of a proposal that will facilitate amendment of its Whistleblowing Protection Act within the same month.
  • Accordingly, the Ministry of Justice, Slovenia reiterated its desire to prioritise transposition of the EU Directive.

Other Eurozone countries such as Bulgaria, Estonia and Greece have taken proper steps toward adapting the new law before the end of 2020. But setbacks to the implementation of EU Directive isn’t only poor commitment to the establishment of the required confidential reporting channels.  Most Eurozone countries are yet to find a solution notwithstanding evidence of COVID-19 fraud and whistleblower retaliation. On this backdrop, an independent research from George Washington University argues there’s link between increased use of reporting channels and improved business performance. It is also a truism that the world’s most successful organisations agree that whistleblowers are an indispensable tool for building trust with employees and managing costly-and-avoidable business risks. This is more so because employees are crucial in early detection of actionable misconduct within an organization.

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