Shilpen Savani participates in the IR Global Virtual Series – Exposing the Truth: What the EU Whistleblower Directive means for global business

Foreword By Editor, Andrew Chilvers

Speaking Out: What impact will the EU whistleblowing law have on business transparency? In the past few years, demands have been growing around the world for more accountability by businesses and governments – particularly since the start of the Covid-19 crisis. Indeed, the global pandemic has heightened issues around whistleblowing like never before.

Nevertheless, whistleblowers often still face dire consequences – often fatal – if they report on problems their superiors would rather the world didn’t know about.

Dr Li Wenliang, in Wuhan China, was a case in point. Officially reprimanded for warning the world about Covid-19, he was then later ruthlessly silenced by the Wuhan public security bureau. In Poland, meanwhile, Renata Pizanowska, a nurse and midwife, was sacked for posting pictures on social media of her totally inadequate homemade surgical mask used by hospital staff for protection against the deadly virus.

Elsewhere, in the UK at the start of the pandemic, Linda Fairhall, an NHS nurse since 1979, was sacked after warning that the crippling workload NHS staff were under had led to a patient’s death. After she raised the alarm she was summarily dismissed for concerns about her leadership capabilities.

Theoretically, this was all set to change on December 17, with the implementation of the EU’s new whistleblowing directive that was due to be adopted into national laws by different EU states. The aim is a laudable one – to fight for more transparency from governments and organisations not just in the EU but beyond its borders. As with GDPR compliance, the hope is that there will be a positive knock-on effect with all businesses and public sector organisations that are located or have an office in an EU state.

The idea of the directive is to set up uniform minimum protection for people who want to report breaches of EU law – giving them legal security against any retaliation by companies or colleagues. Along with this minimum level of protection, each EU state is obliged to introduce a national legislation to give an added layer of security for whistleblowers. However, almost all professional services advisers agree that this added protection in the form of national laws will take time to enact given the patchwork of legislation that exists across the diverse EU member states.

What is the status of legal whistleblower protection within your jurisdiction and – if outside the EU – will there be an alignment with EU legislation because of the new law?

The UK already has a strong whistleblower regime in place and there are signs that this will be further improved in the future. This contrasts with the EU, where only about 10 or so countries previously had comprehensive laws in place to protect those who expose illegal acts. So the EU Whistleblowing Directive, which was passed in 2019, is a gamechanger because it required all Member States to transpose the core protections into their laws by December 2021.

It is still early in the post-Brexit era and it remains to be seen how far the UK will align itself legally with the Directive. We have decided not to adopt the Directive so far, but it is still directly relevant to UK-based organisations that have EU operations.

There is also the fact that the UK-EU Trade and Co-operation Agreement commits us to keep up with EU levels of employment protection. This makes it likely that the government will eventually decide to amend UK law to keep pace with EU worker rights and best practice.

If there is a push for alignment then the changes to UK whistleblowing law could include widening the scope of individuals who are afforded protection, such as to include self-employed contractors, volunteers and non-executive directors; requiring larger employers to set up internal channels and feedback procedures; introducing standards for how regulators maintain confidentiality and respond to disclosures; extending protection to whistleblowers from exposure to potential liability, such as defamation and data protection; and providing support for whistleblowers seeking to bring employment-related claims.

International organisations active in the EU and involved in the industry sectors covered by the Directive – which include public procurement, financial services, protection of privacy and data – must be especially alert to their obligations.

Will anonymous reporting be permitted? Will this help develop a culture of transparency?

One of the main aims of whistleblowing law is to protect the person reporting wrongdoing from retaliation, and anonymous reporting is an essential part of this. The goal is to remove the fear of losing your job and reputation if you are brave enough to come forward and make a report.

Under the Directive, affected organisations are required to establish internal reporting channels. There is no equivalent requirement in the UK (and no legal requirement for a whistleblowing policy), except for specific requirements applying to regulated firms in the financial sector. There is a similarity with the UK in that reporting through internal channels is encouraged in the first instance, followed by escalation to external channels if needed.

The Directive also states that the identity of the whistleblower must not be disclosed without consent to anyone beyond those dealing with the report, unless this is necessary and proportionate in the context of the investigation.

This is comparable to the position in UK law, which has emerged through case law, although it is not specifically set out in legislation yet.

The uniform standards set by the Directive are a very good thing and should bring much more transparency and encourage workers to bring illegal acts – or suspected illegal acts – into the light. Here in the UK any employer who tries to dismiss or punish a legitimate whistleblower is likely to face a claim in the Employment Tribunal, where the resulting award is potentially unlimited in value.The aid packages offered by the government represent a relief and rescue measure, but not for all companies. They offer some help for very specific situations.

Under the Directive, criminal law will remain a prerogative of each member state. How will the new legislation impact criminal law in different jurisdictions?

In the UK whistleblowing protection in the workplace is covered under the Public Interest Disclosure Act 1998 as incorporated into the Employment Rights Act 1996. This provides statutory protection to workers, who can bring a claim in the Employment Tribunal if they are subjected to any detriment by their employer on the ground that they have made a protected disclosure.

The Directive does not seem to have any direct implications for criminal law in the UK. However, there are various initiatives aimed at changing the existing regime and one worth mentioning is the Public Interest Disclosure (Protection) Bill, which was presented to Parliament in 2020 and seeks to create a new independent Whistleblowing Commission to set, monitor and enforce standards. This also advocates the creation of two new criminal offences, namely the offences of subjecting a whistleblower to detriment and failing to handle a protected disclosure adequately. Another Private Members Bill, the Office of the Whistleblower Bill 20192021, was presented to Parliament in 2020 and it wants to establish an independent Office of the Whistleblower, which would deal with the administration of arrangements to facilitate whistleblowing. This would act as a point of contact for whistleblowers, but also maintain a fund to support whistleblowers and a panel of legal firms.

These draft laws could one day lead to the formation of an independent regulatory body in the UK in line with the Directive. It will be very interesting to see if any of these good ideas eventually take seed and become law. If this happens, it will surely bring the UK’s whistleblower laws closer to the new EU regime.

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Contributing Advisors