M.O.O.C. Unito

The Commission’s proposal for a Directive (23 April 2018) set out minimum standards for whistleblower protection in areas with a clear EU dimension and where the impact on enforcement is the strongest. 

The proposal introduced solid protection for whistleblowers who report violations in sectors where:

•  violations of EU law may cause serious harm to the public interest, 
• a need to strengthen enforcement has been identified,
• whistleblowers are in a privileged position to disclose infraction.
  

The proposal focused on the areas of public procurement; financial services; prevention of money laundering and terrorist financing; product safety; transport safety; environmental protection; nuclear safety; food and feed safety, animal health and welfare; public health; consumer protection; protection of privacy and personal data, and security of network and information systems. 

In several of them (such as financial services, aviation safety and maritime transport safety) the EU legislator had already set up specific channels for reporting a violation and protecting those who make such a report.

Where already offered, the proposed Directive supplemented this protection with additional provisions and safeguards.

The Proposal strove to ensure that: 

• potential whistleblowers have clear reporting channels available to report both internally (within an organisation) and externally (to an outside authority); 

• when such channels are not available or cannot reasonably be expected to work correctly, potential whistleblowers can resort to public disclosure; 

• the competent authorities are obliged to follow up diligently on reports received and to give feedback to whistleblowers; 

• retaliation in its various forms is prohibited and punished;

• if whistleblowers do suffer retaliation, they have easily accessible advice free of charge; 

• they have adequate remedies at their disposal (e.g. interim remedies to halt ongoing retaliation such as workplace harassment or to prevent dismissal pending the resolution of potentially protracted legal proceedings);  

• reversal of the burden of proof, so that the person taking action against a whistleblower must prove that it is not retaliating against the whistleblowing act.

Aspects to be improved according to Transparency International to ensure comprehensive and effective protection to whistleblowers in line with international standards and best practices: 

• The motives of a whistleblower in reporting information that they believe to be true should be unequivocally irrelevant to the granting of protection [articles 13 and 17 of the proposed Directive];

• employees should be able to report breaches of law directly to the competent authorities;

• the whistleblower's identity should be more effectively protected [articles 5, 6, 7, 9, 10 and 17];

• the Directive should address anonymous reporting;

• whistleblowers should be entitled to full reparation through financial and non-financial remedies;

• the reversal of the burden of proof should be strengthened;

• national whistleblowing authorities should be responsible for the supervision and enforcement of whistleblowing legislation;

• penalties should be extended to all situations where obligations under the Directive are not fulfilled [article 17];

• the material scope should be extended as much as possible;

• the personal scope should be extended to include former employees, EU staff and persons associated with a whistleblower or believed to be a whistleblower [article 2].;

• all public-sector entities should be obliged to establish internal reporting mechanisms [article 4];

• internal reporting mechanisms should provide for transparent, enforceable and timely procedures to follow up on whistleblowers’ complaints of unfair treatment [chapter II of the proposed Directive];

• internal reporting procedures should include an obligation to acknowledge receipt of the report [articles 5 and 11];

• the collection and publication of comprehensive data on the functioning of reporting mechanisms should be mandatory for both internal and external reporting (at least in the public sector) [article 21]; 

Impact assessment accompanying the Proposal for a Directive

Four policy options had been assessed and two options had been discarded. The preferred one was a Directive with a broad scope, particularly apt for addressing the current fragmentation and for enhancing legal certainty so as to address effectively underreporting and to enhance the enforcement of Union law in all the identified areas, where breaches could cause serious harm to the public interest. The legislative initiative was complemented by a Communication setting out a policy framework at EU level, including measures to support national authorities. 

Benefits of the Directive: 

• It supports national authorities in their efforts to detect and deter fraud and corruption in detriment to the EU budget (the current risk of loss revenue is estimated to be between EUR 179 billion and EUR 256 billion per annum).  

• In other areas of the single market, such as in public procurement, the benefits are estimated to be in the range of EUR 5.8 to EUR 9.6 billion each year for the EU as a whole. 

• It effectively supports the fight against tax avoidance resulting in loss of tax revenues from profit-shifting for the Member States and the EU, estimated to be about EUR 50-70 billion per annum. 

• The introduction of robust whistleblower protection improves working conditions for 40% of the EU workforce who are currently unprotected from retaliation measures and will increase the level of protection for nearly 20% of the EU workforce.

•  It enhances the integrity and transparency of the private and public sector, contributing to fair competition and creating a level playing field in the single market. 

Implementation costs: 

• for the public sector they are expected to amount to €204.9 million as one-off costs and €319.9 million as annual operational costs; 

• for the private sector (medium-sized and large companies) the projected total costs are expected to amount to €542.9 million as one-off costs and €1016.6 million as annual operational costs. The total costs for both the public and private sector are €747.8 million as one-off costs and €1336.6 million as annual operational costs;

• costs for companies: micro and small companies are not obliged to put in place internal reporting channels. The general exemption of small and micro-companies does not apply to companies active in the area of financial services or vulnerable to money laundering or terrorist financing. Small and micro companies operating in the area of financial services are not exempted from the obligation; the cost for those companies is minimal (sunk costs) since they are already obliged to establish internal reporting channels under existing Union rules.