Whistleblower Protection - New Attempt to Implement the Directive

After the draft bill on the Whistleblower Protection Act failed on 10 February 2023 due to the approval of the Bundesrat, an alternative solution was urgently needed (see also our website article).

Instead of appealing to the mediation committee, as many observers had expected, the government parties chose a different path. In view of the ongoing infringement proceedings before the European Court of Justice, it is not surprising that the government prefers a quick solution.

In order to ensure a timely implementation of the Directive, the existing draft law was split into two drafts - a draft law for better protection of whistleblowers and for the implementation of the Directive on the protection of persons who report infringements of Union law and a draft law supplementing the regulations on whistleblower protection. The main provisions of the original draft are now separated from the aspects requiring consent.

Overview of the most important provisions
In order to avoid the Bundesrat's approval requirement for the new draft, civil servants and judges of the Länder, municipalities, Land corporations and public institutions of the Länder have been excluded from the personal scope of application of the Act. As a result, the bill no longer affects the interests of the Länder and the consent of the Bundesrat pursuant to Article 74 section 2 of the Basic Law is no longer required. Whether the consent requirement could nevertheless arise from e.g. Article 84 section 1 is currently open.

In terms of content, there are no significant changes compared to last year's draft bill. In particular, the regulations that failed to gain the approval of the Bundesrat are still contained in the draft bill, which is now probably not subject to approval:

Companies with more than 249 employees must immediately set up internal reporting channels that allow oral or textual reporting. For companies with 50 or more employees, this obligation will apply from 17 December 2023. From 1 January 2025, it must also be possible to submit anonymous reports and subsequently process them while preserving the anonymity of the whistleblower. Furthermore, the draft law contains the presumption that subsequent reprisals are related to the report. If a company does not set up internal reporting channels, not only the use of external reporting channels is threatened, but also the imposition of a fine. However, the obligation to pay a fine only comes into force 6 months after the promulgation of the law. Finally, violations of national criminal law and certain administrative offences are still covered by the law. However, the German legislator continues to allow the use of a reporting channel within the group and thus ignores the opinions of the EU Commission (we reported).

Thus, criticisms of the Bundesrat have not been taken up. In particular, the presumed involvement in reprisals after a report and the rules on fines are not provided for in the EU directive and thus burden German companies more than other European companies. With regard to enabling anonymous reporting, companies have to resort to IT-based systems, which incur costs.

What happens next?
The current plan is for the Whistleblower Protection Act to be passed in the Bundestag as early as 30 March 2023. This should be possible with the votes of the governing parties. If one calculates one week for the publication of the law in the Federal Law Gazette and one month for the date of entry into force, it is very likely that the Whistleblower Protection Act will already enter into force in May 2023.

Conclusion
Companies that do not yet have a whistleblower system should urgently deal with the new draft of the Whistleblower Protection Act. The fact that the law will most likely come into force as early as May 2023 makes it necessary to act quickly. Companies with 50 or more employees will also have to maintain corresponding reporting channels as of 17 December 2023. In this context, companies should also consider in particular that the implementation of the whistleblower system may be associated with numerous legal as well as technical and organisational issues.

If you need assistance in implementing the Whistleblower Protection Act, please do not hesitate to contact us. We will assist you with all legal questions and ensure that you comply with your legal obligations. We will also soon be offering another webinar with regard to the latest developments in this area. We will inform you about this in good time.