The planned date for the implementation of the EU whistleblowers’ protection directive is 15 May 2021. Polish companies are now searching for compliance solutions, but many remain uncertain about which whistleblowing system to choose, legal specifics, and best practices for effective implementation.
Benefits and legal obligations
The EU whistleblowers’ protection directive is aimed at benefiting companies, whistleblowers themselves, as well as the EU itself.
According to the EU directive, the protection of whistleblowers who report a violation of EU laws must be guaranteed. Violations listed in the directive that whistleblowers may report include tax fraud, money laundering, and data protection violations, among others. Thus, the implementation of whistleblower protection increases the chances that corporate wrongdoing will be disclosed to the EU.
At the company level, an effective internal whistleblowing system not only enhances the ethical image of a company, but also helps in the prevention of financial losses, to uncover corruption, or violations of employee rights. The costs of implementing whistleblowing systems is low, considering the potential benefits. The European Comission calculated the approximate cost of introducing a system at EUR 1,374, and the cost of its maintenance at EUR 1,054.60 per annum. As for legal obligations, companies that provide financial services, employ more than 50 people, or have revenue of more than EUR 10 million, must have a whistleblowing system in place by the date that the directive comes into force.
According to the EU directive, a whistleblower is a person who reports wrongdoing in the private or public sector and has become aware of the misconduct as a result of direct cooperation with a company. Potential whistleblowers therefore include: employees / sole proprietors / shareholders / members of the managing board / interns and volunteers / subcontractors / candidates who received information during negotiations and recruitment (before signing a contract).
Whistleblowers may be reluctant to reveal misconduct for various reasons, including a fear of harrassment, job loss, or reputation damage. Thus, the directive facilitates their anonymity and safety.
To be eligible for protection, however, whistleblowers should report wrongdoing either through their company’s internal whistleblowing system, an appropriate national and/or EU reporting body, or, if the latter two approaches do not result in action being taken, they may report violations directly to the public through media.
Effectiveness of whistleblowing systems
The debate revealed that both companies and whistleblowers face barriers. Companies need to measure the effectiveness of whistleblowing system implementation. Additionally, companies must address the hurdles that prevent stakeholders from reporting misconduct.
According to E-nform, elements that decide the effectiveness of the whistleblowing system include:
- Engagement and conscious management (tone from the top)
- Engaged and conscious employees (ensuring awareness through workshops and communication)
- Internalising the whistleblowing system as an integral element of the corporate culture
- Providing a safe channel for reporting (anonymous and confidential)
- Clear and effective procedures for the handling of reports
- Careful and effective management of reports
- Consequent actions (problem solving, system improvement)
- Guarunteeing whistleblower protection
As the topic is still ongoing, Bearstone Global expects to host more events with industry professionals to support deeper knowledge and clearer implementation steps for decision-makers.
Feedback on the conference:
‘Very well organized event, excellently chosen speakers and participants’ – Iwona Onisk, Compliance Officer, Vienna Insurance Group
‘Very interesting event, every presentation was attention-worthy. It is great, that there was a chance for a debate’ – Monika Duszyńska, Stowarzyszenie Certyfikowanych Audytorów i Specjalistów ds. Kontroli Wewnętrznej
‘Well organized event, interesting experience, good networking’ – Leszek Adamski, Partner, Law for Lifesciences