On 7 October 2019 the European Council approved the Whistleblower Protection Directive. The Directive guarantees a high level protection to whistle-blowers across a wide range of sectors including public procurement, financial services, money laundering, product and transport safety, nuclear safety, public health, consumer and data protection.
The new rules will require the creation of safe channels for reporting both within an organisation – private or public – and to public authorities. It will also provide a high level of protection to whistle-blowers against retaliation, and require national authorities to adequately inform citizens and train public officials on how to deal with whistle-blowing.
With the new Directive , the EU aims to set new European-wide standards. The new law will establish safe channels for reporting both within an organisation and to public authorities. It will also protect whistleblowers against dismissal, demotion and other forms of retaliation. In addition, national authorities are required to inform citizens and provide training for public authorities on how to deal with whistle-blowers under the new legislation
Areas covered by the Directive include:
- Creation of channels of reporting within companies/administrations: there is an obligation to create effective and efficient reporting channels in companies of over 50 employees or municipalities of more than 10 000 inhabitants. This will contribute to the development of a healthy corporate culture;
- Hierarchy of reporting channels: whistle-blowers are encouraged to use internal channels within their organisation first, before turning to external channels which public authorities are obliged to set up. In any event, whistle-blowers will not lose their protection if they decide to use external channels in the first place;
- A large number of profiles protected by the new rules: Persons protected include those with a range of profiles who could acquire information on breaches in a work-related context. e.g. employees, including civil servants at national/local level, volunteers and trainees, non executive members, shareholders, etc.
- A wide scope of application: the new rules will cover areas such as public procurement, financial services, prevention of money laundering, public health, etc. For legal certainty, a list of all EU legislative instruments covered is included in an annex to the directive. Member states may go beyond this list when implementing the new rules.
- Support and protection measures for whistleblowers: the rules introduces safeguards to protect whistle-blowers from retaliation, such as being suspended, demoted and intimidated. Those assisting whistle-blowers, such as colleagues and relatives are also protected. The directive also includes a list of support measures which will be put in place for whistleblowers.
- Feedback obligations for authorities and companies: the rules create an obligation to respond and follow-up to the whistleblowers’ reports within 3 months (with the possibility of extending this to 6 months for external channels in duly justified cases);
- Consumer protection
- Protection of privacy and personal data, and security of network and information systems
- Breaches or avoidance of corporate tax
Who is protected?
The Directive protects not only employees, but also protects trainees, volunteers, and self-employed workers.
What is protected?
The Directive specifically protects disclosures relating to ten key areas including fraud / money laundering, tax evasion and data breaches provided that: (1) The disclosure was made in good faith; and (2) The whistleblower had reasonable grounds to believe the information was true at the time of the disclosure.
How are they protected?
The Directive forbids retaliation in the form of suspension, demotion or dismissal and any other form of intimidation. The Directive further mandates that member states must provide whistleblowers access to comprehensive independent information on both whistleblowing procedure and remedy. If legal proceedings occur against someone who has blown the whistle in one of the ten protected areas, then member states are also obliged to provide legal aid as well as financial and psychological support to the whistleblower.
Reporting Process
There is a three-tier reporting system put in place:
Tier One: The Directive mandates that companies (both private and public) with 50 employees or more set up an internal reporting system. Whistleblowers are encouraged in the Directive to use this method and it is, of course, intended to be confidential and dealt with within 3 months.
Tier Two: National Authorities are also required to establish independent external reporting channels. Reports to this channel are to be dealt with within 3 months (or 6 in “duly justified” cases)
Tier Three: Whistleblowers are also permitted to report publicly, but only in cases of imminent danger to public interest, because of a risk of retaliation or where no appropriate action was taken in response to the initial report at either tier one or two.
The Public Interest disclosure Act 1998 (PIDA) already provides protection for whistle-blowers from dismissal or detriment as a result of reporting a “protected disclosure”, though it does not require workplaces to encourage whistleblowing. In addition, in the financial services arena, the FCA introduced, in 2017, new self-reporting and whistleblowing rules which encourage employees to speak up and challenge poor practice or unlawful behaviour within their business. UK branches of PRA-regulated banks are expected to have in place a strong framework to facilitate whistleblowing by employees, primarily ensuring that all concerns reported are property investigated with no personal repercussions.
In Gilham v Ministry of Justice [2019] UKSC 44, the Supreme Court expanded the whistle-blower protection to the judiciary, following a claim made by a district judge against the Ministry of Justice for detriment following her expressing her concerns over public sector cuts in the justice system. The Supreme Court held that the PIDA protection applied to her and to other noncontractual office holders; if she was not granted the protection that employees enjoyed then this treatment would be incompatible with the European Convention of Human Rights Articles 10 and 14. The judgment may allow other non-contractual workers, such as company directors, to benefit from the PIDA protection.
Much of the content of the Directive is already contained in the existing UK whistleblowing frameworks but there are some areas where the Directive goes further, such as the requirement for companies that have 50 or more employees to set up internal and external reporting structures or for Member States to provide free access to independent advice.
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