New European law promises to strengthen protection for whistleblowers

New European Commission proposals announced this week which aim to strengthen whistleblower protection across the Continent could have important implications for UK businesses.

The new Directive aims to establish safe channels of reporting both within an organisation and to public authorities. It will also protect whistleblowers against dismissal, demotion and other forms of retaliation.

All companies with more than 50 employees or with an annual turnover of over €10m would be in scope and the rules would also apply to all state, regional administrations and municipalities with over 10,000 inhabitants.

Under the proposed Directive, a whistleblower would be granted protection when reporting on breaches of EU rules in the areas of financial services, public procurement, product safety, transport safety, environmental protection, nuclear safety, public health, consumer protection, animal health and welfare, and the protection of privacy and personal data.  Among other areas, the rules would also apply to breaches of corporate tax laws.

The UK currently offers whistleblowers protection through the Public Interest Disclosure Act 1998, but the new EU proposals go further by proposing a number of separate protection mechanisms:

  • Clear reporting channels – within and outside of the organisation, ensuring confidentiality
  • A three tier reporting system – internally, to competent authorities and media.
  • Feedback obligations for companies and authorities - to respond and follow-up to the whistleblower's reports within 3 months by a designated person or department
  • Prevention of retaliation – including remedies in instances where a whistleblower suffers retaliation

The proposals would also widen the scope of individuals covered to include workers, self -employed, shareholders, volunteers, unpaid trainees, subcontractors, suppliers and those within the recruitment process

Akhlaq Ahmed, forensic partner at RSM UK said:

‘Currently the protection given to whistleblowers across the EU is fragmented and uneven. This proposal is designed to set a minimum standard of protection across the Continent.  

‘To what extent these proposals will affect the UK is currently unclear and may depend on the speed of the legislative process. The UK already has legal protections in place but the EU proposals introduce new measures to enhance the rights of whistleblowers which could be adopted in this country – whether in or out of the EU.

‘Recently, we have seen numerous incidences in the press in which whistleblowers have suffered as a result of speaking out, which could be attributed to the right mechanisms not being in place.

‘Businesses need to change the way they view whistleblowing and actively encourage a whistleblowing culture as a means of detecting fraud and corruption, highlighted as the most common types of wrongdoing reported. 

‘Having a structured and visible whistleblowing programme is a start, but often it is not enough. There needs to be a tone set from the top that empowers rather than intimidates.’ 

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