At the end of November 2020, the German Federal Ministry of Justice and Consumer Protection presented an initial draft bill on the implementation of the Whistleblowing Directive - the draft Whistleblower Protection Act. Accordingly, we reported optimistically as recently as March that the German Whistleblower Protection Act was in the starting blocks. However, negotiations on the implementation of the Whistleblower Protection Act broke down at the end of April. This was due to differing views on the scope of future whistleblower protection. According to the draft bill, whistleblowers were to be protected not only for reports of violations of European law, but also for reports of violations of German law. The CDU rejected this, citing additional implementation and cost burdens for business. In view of the coalition negotiations still required, it is doubtful whether the Whistleblowing Directive can be expected to be implemented on time after the Bundestag elections.

 

Consequences of untimely implementation for employers

This raises the question of what the consequences are if the Whistleblowing Directive is not implemented in good time, and in particular whether employers are nevertheless obliged to introduce appropriate reporting systems in such a case. 

It should be noted here that EU directives do not have a direct and binding effect. They must be transposed by national laws into the respective national law. If the member states do not comply, the European Commission will take legal action against the member states. The European Commission would therefore open infringement proceedings against Germany if the Whistleblowing Directive were not implemented in good time.

However, individual provisions of EU directives can have direct effect if the transposition deadline has expired unsuccessfully and the directive provision is formulated in sufficiently concrete terms. In this respect, it is questionable whether the Whistleblowing Directive is sufficiently specific. In any case, a possible direct effect would "only" apply to public employers, but not to private employers. In any case, private employers would therefore not be obliged to implement reporting systems if the Whistleblowing Directive was not implemented in time.

 

Consequences of untimely implementation for whistleblowers

However, the consequences for whistleblowers in the event of untimely implementation of the Whistleblowing Directive are also not sufficiently clear.

If the Whistleblowing Directive is not implemented on time, there is no comprehensive normative protection for whistleblowers. Under the current legal situation, whistleblowers must expect to be dismissed for breach of contractual duties of consideration if they report wrongdoing to third parties and thereby damage the employer's reputation. It is true that the labor courts, following the case law of the ECtHR, grant a certain degree of protection if, after weighing the mutual interests, a report to third parties is to be permissible by way of exception. However, this protection is insufficient in view of the difficulty of weighing individual cases. 

It is therefore sometimes argued that whistleblowers will be able to invoke the Whistleblowing Directive directly after the transposition period has expired. In view of the lack of normative effect of directives, however, this must be rejected. However, it cannot be ruled out that labor courts will nevertheless take the Whistleblowing Directive into account when considering a dismissal in order to ensure that European law is applied as effectively as possible. However, this would only be relevant in the case of reports of violations of EU law, as this is the level of protection provided by the Directive.

 

Nevertheless, employers need to take action!

Even if (at least private) employers are not obliged to introduce whistleblowing systems if the Whistleblowing Directive is not implemented, they should nevertheless take the necessary measures quickly. Employers should make internal reporting systems as transparent and attractive as possible from the outset in order to create an incentive for internal reporting and thereby prevent a loss of reputation due to the disclosure of any wrongdoing. Implementation should begin at an early stage in order to cover not only the technical requirements but also the legal framework conditions such as the co-determination rights of the works council and data protection requirements. Employers can use the draft bill as a framework for an upcoming implementation.

 

Group's central reporting office not sufficient

However, existing reporting systems should also be adapted to the upcoming requirements. This applies in particular to existing Group-wide systems. In June, the EU Commission issued two statements on the implementation of the Whistleblowing Directive. According to these, a central reporting system within a group - as is already frequently the case - does not meet the requirements of the Whistleblowing Directive. Instead, the Whistleblowing Directive requires a separate reporting system for each company with more than 50 employees. A central reporting system for a corporate group is therefore not possible. 

However, the Commission confirmed that group companies with fewer than 250 employees can join forces to receive reports and conduct subsequent investigations, thereby pooling resources such as a lawyer of confidence. Group companies with more than 250 employees should not be able to pool resources. It is mandatory that these companies set up their own reporting and investigation units.

 

Please join our webinar on October 7, 2021 at 12:30 pm CEST for more up-to-date information or visit www.vangard.de/whistleblowing.

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