EU’s Whistle-Blower Directive Provides Broad Protections

By Rosemarie Lally, J.D. January 13, 2020
one face out of many blowing a whistle

​Whistle-blowers who expose violations of European Union (EU) law are protected from retaliation under the terms of a directive adopted Oct. 7, 2019, by the Council of the EU. The directive establishes EU-wide standards of protection for whistle-blowers for the first time—protections that are broader than those for whistle-blowers in the United States.

The council's action finalizes the directive, which was approved by the European Parliament in April. "No significant changes were made to the final text between April and October," according to Jean-Francois Gerard, an attorney with Freshfields Bruckhaus Deringer in Brussels. EU member states must integrate provisions of the directive into national law by the end of 2021, he said.

The directive introduces common minimum standards to protect people working in the private and public sectors from retaliation for reporting breaches of laws in a wide range of significant EU policy areas, including corporate taxation, data protection, public procurement, financial interests, environmental protection, food and product safety, and nuclear safety. Individual EU member states may choose to extend coverage to other areas.

A whistle-blower is defined as "someone reporting or disclosing information on violations of EU law which they observe in their work-related activities." The directive covers employees, consultants, contractors, suppliers, volunteers, unpaid trainees and job applicants. In addition, its protections extend to people assisting the whistle-blowers as well as their family members, Gerard said.

Companies with 50 employees or more, or with annual net sales of €10 million (approximately $11.13 million), as well as member states, regional administrations, and municipalities with over 10,000 inhabitants are required to establish internal procedures to handle whistle-blowers' reports confidentially. Companies must acknowledge receipt of an internal complaint within seven days and respond within three months.

Although the directive encourages whistle-blowers to use internal reporting channels first, workers may report directly to government authorities without first making internal disclosures, depending on the circumstances.

Member states must prohibit any form of retaliation—including dismissal, demotion, suspension, transfer, negative appraisal, intimidation and damage to reputation—against a whistle-blower. States must designate competent authorities to handle external complaints and provide follow-up notifications.

In addition, states must establish appropriate penalties against persons who hinder reporting, retaliate against whistle-blowers or divulge the identity of a whistle-blower. Sanctions also may be imposed on persons who make malicious reports; compensation may be paid to persons damaged by such reports.

EU Directive Compared with U.S. Law

Although the United States was at the forefront of developing whistle-blower protection laws, "the new EU law is broader and provides more whistle-blower protections than any current U.S. law," noted Greg Keating, an attorney with Choate Hall & Stewart LLP in Boston. For example, the EU directive requires only that a whistle-blower believes the misconduct reported is true, while under U.S. law the whistle-blower must believe he or she is disclosing a violation of law.

Further, the new EU law provides a lower burden of proof than U.S. law. The directive requires only that the employee show that he or she was engaged in protected speech when the retaliation occurred, placing the burden on the employer to prove there is no connection between the two. Under U.S. law, a whistle-blower must prove a causal connection between the protected speech and the employer's adverse action.

Considering the differing burden of proof, Keating suggested that for U.S. employers in the EU "the best offense is a strong defense." "Develop new reporting systems, conduct training, set up an effective investigation protocol, collect contemporaneous records and documentation," he said. "Take every complaint seriously and act on it. Otherwise, you'll be facing a very tough uphill climb regarding the burden of proof."

Gerard suggested that the directive "could potentially trigger far-reaching changes to European whistle-blowing regulations across various sectors and even become a new global standard."

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What This Means for Employers

"The final directive makes it advisable for companies not just to do the bare minimum of adopting reporting mechanisms but to consider a broader commitment to protecting whistle-blowers," Keating said. Proactive measures should include comprehensive training for corporate officials, managers and employees.

"The time is now to develop reporting mechanisms, set up hotlines, and create investigation protocols," Keating counseled. "Investigations are the flip side of reporting. Companies should set up an internal investigation protocol in advance, laying out the roles of HR, audit, compliance and loss prevention personnel as well as the legal department."

Create multiple avenues for employees to report misconduct, such as web-based, phone-based and in-person systems, he recommended, suggesting that even anonymous reporting should be considered.

"Employers shouldn't see this as a new dark cloud over their workplaces," Keating said. "Putting effective anti-retaliation processes in place builds trust."

Gerard suggested several steps employers can take to lessen their risks regarding the whistle-blowing law, including:

  • Consider offering incentives to report internally.
  • Ensure that internal procedures comply with data protection and trade secrets laws.
  • Review disciplinary and dismissal procedures.

Since employers bear the burden of proof in retaliation claims under the new directive, a worker may try to protect himself against dismissal by making a timely and possibly indisputable whistle-blowing report. Having appropriate documentation from as early in the disciplinary process as possible can prove that any action taken against the individual is unrelated to whistle-blowing.

Rosemarie Lally, J.D., is a freelance legal writer based in Washington, D.C.



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