Whistleblower alert phase one: Beware of abuse of rights!

08 June 2021
Knowledge Base

by Frank Staelens

The priority of European business owners today is fighting the effects of the pandemic, understandably, but as a result, a creeping danger remains hidden under the radar. We are in whistleblower alert phase one! The transposition of the new EU whistleblower rules by the EU Member States into national law is expected by December 17, 2021. Immediately thereafter, it is expected that these rules will apply to private and public organisations with more than 250 employees. Organisations with fewer than 250 employees will have two additional years of grace, but they will also be subject to the new regulations, with some exceptions for small businesses with fewer than 50 employees.

European and national policymakers are looking at the new rules with the goal of providing better protection for individuals who want to report on regulatory breaches and abuses. This is much needed because although 40% of all wrongdoing is discovered through tips, public consultations show that 80% of Europeans are reluctant to give tips due to a lack of protection. Not receiving tips about crimes, or not receiving them in time, is detrimental to the public interest and also distorts competition for companies. This initiative can therefore only be welcomed. However, I would I like to invite all policymakers to communicate more clearly and in good time when introducing new complex rights, and also to consider the risk of rights abuse.

A new right that will soon be introduced is the right to choose freely between internal reporting of violations of European rules within the company and reporting them directly to the competent authorities. This rule applies to everyone with reporting rights, from employees over company management and directors to third parties such as former employees, contractors and suppliers. Companies should look at how to create the ideal internal reporting conditions for all parties with reporting rights, without being able to force it.

The biggest risk resulting from non-compliance is not a possible fine, but rather the reputational risk. Not only will all parties with reporting rights be able to report with full protection directly to the authorities, but under certain circumstances of non-compliance they will also be able to do so with full protection to the press and post on social media.

There is also the right to confidential reporting, which means that the whistleblower should know in advance to whom he will report and that the recipient of the confidential information can only give further access to other internal or external persons with the approval of the whistleblower. Furthermore, the follow-up should be done according to the principles of governance by experienced and impartial persons. To my knowledge, most European companies today are not yet organised in this way.

Whistleblowers can report on the basis of reasonable suspicions. They can only be dealt with for false reporting if premeditation can be shown. Companies, on the other hand, will have to be able to prove at all times that there is no connection between a negative decision taken (no salary increase, non-renewal of a contract, dismissal, etc…) and the whistleblowing. This reversal of the burden of proof can give rise to high costs for additional investigations. Abuse is therefore possible here via staged whistleblowing or, in other words, quickly submitting a report if one is informed in advance of the negative decision in order to make it more difficult for the employer to take this negative decision. For this reason, it is also important to consider whether the identity management of whistleblowers is not better outsourced.

A secure reporting platform is a good start but not a complete solution. Organisations would do well to develop procedures that support a defensible position. It is best to assume as an organisation that decisions in whistleblower cases can be challenged. Any decision to take or not to take an action may be questioned by parties with reporting rights or those defending their interests, such as lawyers and labor unions. The elaboration of a methodology that provides for a consistent whistleblowing approach, from first response, probability and risk assessment, internal escalation up to external communication management, is therefore best placed on the radar of European companies in the second half of this year. Good corporate governance requires for organisations to anticipate on the risk of rights abuse!

The author, Frank Staelens is the founder of Whistleblowingmanagement.eu, a European network of experienced and impartial experts that provide support on whistleblowing management and technologies.

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