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EU Institutions agree on protection of Whistle-blowers

EU Institutions agree on protection of Whistle-blowers

In the future, companies will have to put in place internal reporting structures for whistle-blowers. To facilitate reporting of breaches of Union law, the European Parliament approved a compromise agreement with Council on 16 April on a Directive for the legal protection of whistle-blowers – responding to a call of civil society organisations and trade unions.  

Companies with more than 50 employees and public authorities will have to put in place clearly defined internal reporting structures for whistle-blowers. Following scandals such as LuxLeaks or the Panama Papers, which shed light on large-scale corporate and individual tax avoidance schemes, EU institutions agreed on a Directive for the legal protection of whistle-blowers.

The Directive sets minimum standards for their protection in case of reporting actual or potential breaches of Union law concerning, among others, public procurement, transport and nuclear safety, distortion of competition and the internal market, as well as data protection and network security. Member States are free to extend these rules to other areas and shall designate responsible national authorities that deal with whistle-blower reporting.

Far-reaching protection of whistle-blowers

The Directive encourages whistle-blowers to first report breaches of law internally. However, they will also have the right to report to public authorities directly and, if either no action is taken or the breach presents an imminent danger to public interest, may make a public disclosure. 

Whistle-blowers will not be liable for breaching restrictions regarding the disclosure of information and in judicial proceedings. The acquisition of information must however be legal. They will benefit from legal protection and penalties will apply both if a company or a public authority hinders the whistle-blowers from reporting or takes retaliatory measures. EU negotiators further agreed that reporting persons will be protected even if the work relationship has ended or has yet to start. Also, the final text extends the scope to people assisting the reporting persons (‘facilitators’, e.g. journalists) and third persons connected with the reporting persons and who may suffer retaliation.

SMEs (between 50 and 250 employees) will have up to four years to adjust to the new rules and companies with less than 250 employees will be able to share resources for the handling of complaints. 

The agreement is a blow to business groups and a number of Member States, which insisted that whistle-blowers should use internal channels first under all circumstances before calling on public authorities and, eventually, going for public disclosure. European employer groups, including BusinessEurope, of which CoESS is a member, have criticised the Directive for not ensuring a fair balance between protecting whistle-blowers and the need for safeguards against misuse and disclosure of company sensitive information to competitors.

While the European Parliament was very successful in the negotiations, it failed to include violations of workers’ rights and working conditions in the final text. The Commission will however review the matter in the future, in case the Directive is redrafted. Also, a new Article 1bis makes it clear that Member States will remain able to protect national security interests, also with procurement rules involving defence and national security potentially being out of scope of the Directive.

Next steps

Parliament has adopted the agreement during its last plenary week on 16 April. Now it is up to Member States in Council to approve the text. Member States would have two years to transpose the Directive into national law.

It will be interesting to see for CoESS what Member States will do when implementing the Directive. Experience shows that implementation may differ from one country to another and we encourage CoESS members to closely follow the transposition process in their country.

 

You can find the preliminary agreement on the following link: https://data.consilium.europa.eu/doc/document/ST-7242-2019-INIT/en/pdf

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