Deadline for Transposition of the EU Whistleblowing Directive Fast Approaching

The deadline for transposition of Directive 2019/1937 of 23 October 2019 on the protection of persons who report breaches of Union law (hereinafter "the Whistleblowing Directive" or "the Directive") is 17 December 2021. The Whistleblowing Directive imposes on all undertakings in the private sector employing 50 or more people an obligation to provide an internal reporting channel for whistleblowers and protection against retaliation. Numerous entities are concerned by the Directive, which will lead to major internal changes in many businesses.

This article discusses the main principles of the Whistleblowing Directive and some the key points for attention by entities.

BACKGROUND

The Whistleblowing Directive was adopted as a direct consequence of scandals such as Dieselgate, LuxLeaks and the Panama Papers. On the one hand, these scandals revealed that major wrongdoing was taking place in companies, which was harmful to the public interest in the EU. On the other hand, they demonstrated that whistleblowers could play a key role in exposing and preventing such wrongdoing and breaches of law.

Potential whistleblowers are often discouraged from coming forward due to fear of retaliation. Indeed, a lack of effective protection deters potential whistleblowers, who are therefore less likely to report illegal acts. Until the Whistleblowing Directive, there was no proper protection for whistleblowers in the EU, only insufficient and fragmented rules. Needless to say, however, if more people come forward with information about unlawful activities, this will improve the detection, investigation and prosecution of violations of EU law. 

Consequently, on 23 October 2019, the European Parliament and the Council of the European Union adopted the Whistleblowing Directive, which provides extensive protection against retaliation to persons reporting breaches within companies.

THE GUIDING PRINCIPLES OF THE DIRECTIVE

The Directive sets out common minimum standards to ensure that persons reporting breaches of Union law are effectively protected.  

• - It establishes three reporting options for whistleblowers. First, it indicates that all entities in the private sector with 50 or more employees should set up an internal reporting channel as well as procedures for follow-up. This is intended to allow persons to report breaches of Union law within the organisation itself. Second, Member States must ensure an external reporting channel by facilitating reporting by whistleblowers to the competent authorities. The third option is public disclosure. The Directive includes provisions applicable to the internal and external reporting channels, such as those intended to ensure the confidentiality of the whistleblower's identity.

• - In addition, the Directive sets out various protective measures for reporting persons who had reasonable grounds to believe that the reported information was true at the time of reporting. It prohibits retaliation against whistleblowers and shifts the burden of proof. This means that if a whistleblower is the object of retaliation, the employer must be able to prove that the retaliatory acts in question were not related to the whistleblower's reporting. The Directive also lists measures to support whistleblowers, such as the provision of comprehensive and independent information and advice as well as legal aid in criminal and cross-border civil proceedings. Furthermore, the Directive declares that Member States should impose dissuasive penalties on persons that hinder reporting or retaliate against whistleblowers.

TRANSPOSITION INTO NATIONAL LAW

The Member States must transpose the Whistleblowing Directive by 17 December 2021. However, they can postpone the transposition deadline until 17 December 2023 for entities in the private sector with 50 to 249 employees.

In Belgium, the PVDA-PTB issued a legislative proposal on 24 June 2020. The proposal establishes protection for whistleblowers that is more extensive than that set out in the Directive. It states, in particular, that criminal or civil proceedings against persons who have acquired the status of whistleblower through a specific judicial procedure will not be admissible. The proposed law, which is the only one to date, is still being discussed. We assume that other legislative proposals will be prepared as the deadline for transposition of the Directive draws nearer. For example, according to the Walloon minister for local authorities, a preliminary draft decree aimed at transposing the Directive at the level of local authorities will be submitted to the government for a first reading in the coming weeks.

EFFECTIVE INTERNAL REPORTING CHANNEL AND PROCEDURES

The fact that employees are not obliged to first use the internal reporting channel and can directly report violations to the competent authority should serve as an impetus for companies to provide effective internal reporting procedures. Indeed, if employees opt for the internal reporting channel, this can help the employer take the necessary actions and quickly rectify the reported breach. In addition, it mitigates the risk of sanctions for the breach. Accordingly, all companies should have a good internal reporting channel, even those with fewer than 50 employees.

As the implementation of the Whistleblowing Directive will lead to major changes in business organisation and the transposition deadline is fast approaching, companies should already start preparing an internal reporting procedure, researching how to manage the reporting systems and discussing draft policies on the internal reporting channel.

It is important to bear in mind that an investigation must be carried out with discretion and rigor immediately after each report. The investigation must be independent and be carried out by persons who inspire trust (if needed, an outside party can be appointed). Furthermore, all documents relating to the investigation must be preserved and kept as evidence in the event of legal proceedings regarding the reported breach.

CONCLUSION

Although there is still no Belgian legislation on the protection of whistleblowers, this will certainly be a hot topic in the coming months. Indeed, all companies with more than 50 employees will have to create an internal reporting channel for potential whistleblowers. In addition, it is advisable to do so even in companies with fewer than 50 employees. Effective internal reporting procedures help to prevent the reporting of internal breaches to external authorities and allow these breaches to be dealt with at the local level, which is often more efficient. Consequently, it is recommended that companies already start reflecting on this topic and discussing the possibilities.  

Philippe (P.) François | NautaDutilh, Alix de la Barre d’Erquelinnes