EU Acts to Protect Whistleblowers

 

By Rosemarie Lally, J.D. May 9, 2019
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​Whistleblowers who expose violations of European Union (EU) law will soon be protected from retaliation throughout the EU under a new directive that the European Commission and member states have agreed to.

The commission proposes new laws, and the EU Parliament and Council of the EU adopt them.

The directive, which the European Parliament approved April 16, will set EU-wide standards of protection for whistleblowers for the first time, according to Jean-Francois Gerard, an attorney with Freshfields Bruckhaus Deringer in Brussels. Currently, only 10 EU countries—France, Hungary, Ireland, Italy, Lithuania, Malta, the Netherlands, Slovakia, Sweden and the United Kingdom—have comprehensive laws protecting whistleblowers. Remaining EU countries grant only partial protection, covering only public servants, specific sectors or specific types of wrongdoings.

"The directive is significant as another confirmation of the importance and value of a corporate 'speak-up culture,' " Gerard noted. "But it is just one part of the equation. Whistleblowing is on the rise. Companies will want to have a global approach to these issues, including clear and ambitious global policies and internal procedures, with the EU framework potentially being used as a reference worldwide."

Formal approval by the Council of the EU is required before the draft is finalized. The council's approval is likely to be delayed until the fall due to upcoming European parliamentary elections, according to Simon McMenemy, an attorney with Ogletree Deakins in London. But the European Parliament and the council have agreed on the content of the directive.

Specifics of the Directive

The directive will establish safe channels for reporting both within an organization and to public authorities. It will protect whistleblowers against dismissal, demotion and other forms of retaliation.

The directive seeks to introduce 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.

Areas covered include corporate taxation, data protection, public procurement, protection of the EU's financial interests, food and product safety, environmental protection, animal health and welfare, and nuclear safety. Member nations may extend the whistleblower rules to additional areas.

A whistleblower is defined as someone reporting or disclosing information on violations of EU law that he or she observes while performing work-related activities. To avoid penalizing people acting in good faith, whistleblowers who had reasonable grounds to believe the information reported was true at the time of reporting also are protected. The directive covers employees, consultants, contractors, suppliers, volunteers, unpaid trainees and job applicants.

Companies with 50 or more employees, or with an annual revenue of over 10 million euros (approximately US$11.19 million), will be required to establish internal procedures to handle whistleblowers' reports. States, regional administrations and municipalities with over 10,000 inhabitants also will be covered.

Each covered organization must designate a person or department responsible for receiving and following up on reports. Companies must acknowledge receipt of an internal complaint within seven days and must respond to the whistleblower within three months.

Initial Internal Reporting Encouraged

The directive encourages internal reporting as an initial step if the breach can be effectively addressed within the employee's organization and when the whistleblower doesn't risk retaliation. Whistleblowers may report directly to government authorities without first making internal disclosures, depending on the circumstances.

Whistleblowers may make a public disclosure if:

  • Imminent or manifest danger to the public interest exists;
  • They reasonably believe destruction of the evidence or retaliation against them is imminent;
  • Appropriate action wasn't taken in response to the whistleblower's initial report; or
  • Reporting to the authorities would not work, such as in cases of collusion with the authorities.

The impact of the directive will be significant for countries that don't currently have protections, McMenemy said, although it isn't likely to change much in the U.K.

Although the directive is an important development, it does have limits, Gerard cautioned. For instance, whistleblowers will be protected only when reporting breaches of certain EU laws. The directive may also clash with other EU laws, such as the General Data Protection Regulation (GDPR), he said.

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Will the Directive Be Uniformly Implemented?

Member states will have two years from adoption to transpose the directive into national law. Questions remain as to whether it will be uniformly implemented. "There are always nuances in the way member states implement directives," Gerard said. "As whistleblowing touches on culture, it is likely that there will be even bigger variations in the way the directive is implemented across the EU" compared to previous directives.

He noted that in the last round of negotiations, some member states, including France and Germany, wanted to give priority to internal reporting over external. "In implementing the directive, these countries are likely to try to limit the relative freedom to go public that the final text gives workers."

McMenemy observed that the Working Time Directive 2003 has been implemented differently across the EU, with countries adopting maximum workweeks of 35 to 48 hours, and suggested that the variation may be due to cultural differences. On the other hand, he said, the GDPR was implemented pretty uniformly, so it's hard to predict how the whistleblower directive will be implemented. "It comes down to politics and culture in each country."

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

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