Tomorrow the deadline expires: Now it's getting serious
Tomorrow, 17 December 2021, is the deadline for the national implementation of the EU Whistleblower Directive. This means that the national parliaments of the member states must have passed a national law implementing the requirements of the EU Directive by then.
However, most states are far from doing so. So far, only Denmark, Sweden and Portugal have passed a national law on whistleblower protection. The rest of the EU is lagging behind, including Germany.
What follows?
Before you lull yourself into a false sense of security: Even if no German law has been passed, the requirements of the Directive still apply. It is likely that German courts will closely follow the Whistleblower Directive, even without a German law. Moreover, companies with branches abroad are of course subject to the laws there.
So anyone who waits for German lawmakers to act before installing their own whistleblower systems is taking a risk. In the event of violations of the directive, managing directors may be personally liable. In addition, there are potential reputational damages.
Moreover, whistleblowers might even sue the Federal Republic for damages: an individual may not suffer damage simply because a state misses a deadline. For this reason alone, it is likely that German courts will provide whistleblowers with the same protection as the EU Directive.
However, the EU Whistleblower Directive does not apply to violations of German law. That would actually require national regulation. It applies to all grievances that indicate violations of EU law. However, this already includes quite a number of areas, for example environmental and animal protection, product safety, data protection, money laundering and terrorist financing and much more. The Directive applies to both the private and public sectors, for example to employees and civil servants.
How are companies reacting?
Surveys show that most companies are not calling the bluff. For the study "The Future of Compliance 2021", the auditing firm Deloitte, Quadriga University Berlin and Compliance Manager Magazin surveyed around 360 compliance officers. 92 percent of the respondents said their organisation would have a whistleblower system in place in the future.
The Whistleblower Protection Act
In the coalition agreement, the coalition government has already positioned itself with regard to whistleblower protection: According to this, the German law should go beyond the minimum requirements of the EU.
The Whistleblower Protection Act (HinSchG) is expected to be introduced by the end of the year. Without protected reporting possibilities, 30 percent of valuable information is lost in organisations. Companies must therefore be prepared to receive more reports after the introduction of a system.
However, the criticism that whistleblowing systems unnecessarily increase the workload for companies has been refuted many times. In most companies and public authorities, the number of reports per year is in the single digits.
Corporate governance is in demand
Despite the directive, many people do not feel safe to make a report. For example, they do not know whether they are actually protected or whether they have committed a crime because they have known about the wrongdoing for some time. In addition, whistleblowers often want to avoid the perpetrators being dismissed for their behaviour.
Therefore, in practice, whistleblower protection goes beyond systems. A digital whistleblower system is a good start and, above all, enables compliance with the EU Directive. Companies that really want to fight against wrongdoing must also create an open and trusting corporate culture.