Bundestag and Bundesrat pass whistleblower protection law

The Whistleblower Protection Act has been passed. On May 9, 2023, the Mediation Committee of the Bundestag and Bundesrat reached an agreement and submitted a recommended resolution on the draft bill. The Bundestag approved this on May 11, 2023, the Federal Council then immediately on May 12, 2023 approved. The law will thus enter into force one month after promulgation, i.e. probably in mid-June 2023.

The Whistleblower Protection Act is intended to implement the so-called Whistleblower Directive of the EU (2019/1937). The deadline for this had already expired on December 17, 2021. Although the Bundestag had already passed the law on February 10, 2023, the Bundesrat (upper house of the German parliament) refused to give its approval at the time, which is why a mediation committee was set up.

The purpose of the regulation is to improve the enforcement of European and German law by strengthening the protection of employees who draw attention to wrongdoing in their organization or in their authority.

Here are the key points of the new law:

Scope of application of the Whistleblower Protection Act

The new whistleblower protection rules apply to private and public employment employers with 50 or more employees. Private employment employers with typically 50 to 249 employees will still be given a grace period for implementation and will not be required to have their internal reporting offices in place as early as mid-June 2023, but rather as late as December 17, 2023. Employees, civil servants, self-employed persons, partners, interns, volunteers, employees of suppliers and persons whose employment relationship has already ended or has not yet begun or is in a pre-contractual stage fall under the legal protection as whistleblowers.

The Act does not apply to the reporting of all wrongdoing, but only to criminal offenses and certain misdemeanors as well as other violations of law that are listed in the catalog of Section 1 of the Whistleblower Protection Act. A further prerequisite is that these legal provisions are violated in the course of a professional, business or official activity.

Obligation to establish a reporting office

Employers with at least 50 employees each, as a rule, are required to set up an internal reporting office for tips. Internal reporting channels must allow reports in verbal or text form. Personal meetings with a person from the internal reporting office must also be made possible.

Hotlines are not required to accept anonymous reports. This was originally provided for in the legislation; however, this passage was deleted in the Mediation Committee.

The reporting offices check the validity of the indications and initiate appropriate follow-up measures. These are usually internal investigations, either by the employment provider itself or by another competent body.

Whistleblowers are not bound to the internal reporting office; they can also contact an external reporting office directly in accordance with the Whistleblower Protection Act.

Whistleblowers must not be disadvantaged

If someone has made a tip and is discriminated against in connection with his or her professional activities, the law presumes that this is a reprisal because of the tip. The employer bears the burden of proving that the adverse action is justified for other reasons. However, the person giving notice must make a substantiated claim that the adverse action is a reprisal. If reprisals actually occur, the whistleblower can claim damages, for example.

Fines for whistleblowers and for employment employers

Both the whistleblower and the company may be subject to fines. A person who knowingly spreads false facts is as much in violation of the law as a person who obstructs communication. Fines may also be imposed if the hotline is not established, reprisals are taken against whistleblowers, or confidentiality is not maintained. The amount of the fine can be up to 50,000 euros and, if necessary, can be increased up to ten times this amount with respect to companies.

Conclusion

Germany is one of the last EU countries to finally have a whistleblower protection law – the KPMG Law Whitepaper provides a general overview. That it was coming has long been known, and many employers have already voluntarily set up a whistleblower hotline. As an employer, you should be informed about legal violations in the company as early as possible. It is to be welcomed that there is now clarity and that the procedures can be designed. Of course, employment providers are free to create additional options for reporting beyond the minimum legal requirements. For example, the relationship to the “complaints mechanism” under the Supply Chain Act, which is to be designed in a very similar way in parts, needs to be clarified.

All private and public employment providers should establish and publicize an internal reporting office and appropriate reporting channels as soon as possible.