A topic wildly discussed in society is the protection of whistleblowers, also known as whistleblowing (excluding the pandemic situation and related issue of vaccination, addressed in previous articles)
Since this topic is very extensive and spans several areas, we have decided to prepare a series of articles following this topic, that will focus on the practical impacts on both employers and employees and open a discussion on the consequences that might not be immediately apparent.
However, this series of articles will not involve general description of the implemented system of the European Parliament and Council Directive (EU) 2019/1937 of October 23, 2019, on the protection of persons who report breaches of Union law (hereinafter referred to as “Directive“) or the proposed draft of national legal act of the Czech Republic. In this series, the topic will be pointed out in practical perspective of our everyday practice, particularly in the area of labour law.
Initially it is important to state that, regardless the of the assessment of the quality of the Directive and the forthcoming implementing regulation at national level, one fact cannot be denied – they both have opened up a very important topic of the responsibility of legal entities and the related personal responsibility of representing individuals, which, in our opinion, is the greatest benefit.
We also consider it positive that, if the whistleblower protection regulation is properly conceived, it can have a positive impact on employment law or civil service relationships, as well as promote a focus on fairness and trust in society. Although the Directive has not currently been implemented by a national implementing regulation, targeted protection and compensation for damages due to inadequate (in this situation entirely absent) implementation of the Directive can be sought from the competent court. The possibility to seek compensation for damages from the State for failing to implement the Directive within the transposition period was granted to individuals by the Court of Justice of the European Union, inter alia, in the case of Francovich v. Italy (C-6/90).
A condition for asserting this claim is both a causal link between the improper implementation of the Directive and the rights established to be protected by the Directive. In the case of the Directive, this concerns the right to protect whistleblowers from negative consequences resulting from reporting unlawful conduct.
For the purposes of today’s article, we will set aside the specific defence measures currently provided by the legal system outside the scope of the Directive, as these will be covered in its subsequent parts of this series. However, we can mention some institutions settles by the Labor Code, the Civil Code, the Civil Procedure Code, as well as, for instance, the Law on the Service of Officers of the Security Forces and the Professional Soldiers Act. In practice, it is very common for some employees or members of the civil service to hesitate in reporting improper conduct against them, as asserting their rights, unfortunately, often means ‘putting a target on their own back’.
This approach by employers naturally discourages other individuals from taking similar actions.
However, the Directive allows to report unlawful conduct even in cases when the individual enforcing law is not directly affected by such a misconduct, which is significant support fot those who, for any reasons, have difficulty setting and maintaining their own boundaries and, in connection with that, have difficulties in taking charge of their own happiness (in the sense of the fundamental principles of private law, explicitly expressed in article 3 of the Civil Code).
In the context of the Directive, the reporting itself can take place either within the organization (internally) or through a notification to other entities, intended for this purpose.
There cannot be forgotten a benefit of internal reporting in situations where the unlawful conduct is already being addressed through state mechanisms (in proceeding such as administrative, tax, criminal, or other proceedings) and the whistleblower demonstrates that they reported the negative conduct (or omission) through a standard process.
In case that the whistleblower’s notification was also adequately responded to by taking necessary and reasonably expected measures, then it is also appropriate to consider liberation causes to release the liability, both for the employer and the whistleblower.
In the opposite case, the proceedings also assess whether the person under investigation (natural or legal person) knew or at least should have known and could have known about the unlawful conduct.
However, this considers not only stricto sensu illegal acts, but all acts in fraudem legis.
We fully understand the concerns of all whistleblowers about the negative consequences that may arise from their reports, not only for those listed in the Directive but especially the consequences that the whistleblower may personally experience, which cannot be mitigated by legal mechanisms. Typically, this will involve a loss of trust from colleagues or the employer, associated with negative work atmosphere, or the negative impact on friendly relationships between employees. Naturally, this raises the issue of the boundaries between the general prevention duty under Section 2900 of the Civil Code, the reporting obligation under Section 368 of the Criminal Code on one hand and the loyalty expected from employees or members of the civil service under the Labor Code on the other hand.
Considering the corresponding fundamental rights, the right to freedom of expression and the right to preserve one’s reputation, we believe that this limit cannot be defined in general and will be considered by the competent court in specific cases individually.
Reflecting the established case law of the Constitutional Court and the Supreme Court on the issue of whistleblowing, we again strongly recommend that employers focus on a precisely drafted internal regulation and require full compliance with it. If the internal regulation clearly establishes the obligation to report any unlawful conduct primarily in an internal way, the employer can maintain control over its reputation.
In addition, this way saves financial, and time costs often spent on extensive court proceedings when claiming damages for injury to reputation or spent on a lawsuit challenging, for example, the validity of immediate termination of employment relationship or notice of termination.
The above case of protection of the employer’s legitimate interests and the consequences associated with a breach of this duty, or failure to be loyal to the employer, is also covered by the Supreme Court’s judgment. In the light of its decision, it is easy to imagine a situation in which if an employee prefers to report a violation to the media instead of reporting it internally and thus causes damage to the employer (whether to property or reputation), the protection of the employee within the meaning of the Directive will not be justified.
And for this reason, we believe that the Directive should serve a priori as a prevention to maintain the necessary trust and fairness between the contracting parties.
The European legislator himself, in creating the Directive, took into account that the effectiveness of reporting systems often lacks trust (see paragraph 63 of the Directive’s preamble). Therefore, we recommend that all employers establish internal regulations with reporting mechanisms, ensure open and strong communication with their employees in this area, and incorporate these procedures into their daily practices. This is more likely to positively impact the creation and maintenance of trust and to help prevent damages to the employer’s reputation.
We believe that a well-designed reporting mechanism can positively support the motivation of individual employees or members of the civil service, and in this context, it will clarify their duty to protect the interests of the employer. This duty arises particularly from Section 301, subsection 1 of the Labor Code, Section 45 subsection 1, paragraph b), h) and i) of the Law on the Service of Officers of the Security Forces and Section 48, subsection 1, paragraph c), d) or f) of the Professional Soldiers Act.
We also perceive a high benefit in implementing internal reporting mechanisms for unlawful conduct (in addition to the widely used anti-corruption and ethical guidelines) in relation to corporate social responsibility (CSR). Companies with a responsible and ethical corporate culture attract interest from not only potential employees but from investors as well.
Ultimately, the inclusion of these systems can not only enhance market value but also increase employee loyalty and their work efficiency.
In conclusion, the Directive formalises the essential need of every employer, who should be aware that this is primarily a measure to protect their own reputation and avoid any possible criminal consequences.
Practical benefits can be seen also in strengthening position in the area of customer-supplier relations, but this is an area that would go beyond the scope of our article.
Full reading here.