On the morning of May 12, 2023, the Bundesrat (upper house of the German parliament) approved the updated draft of a law for better protection of whistleblowers and for the implementation of the directive on the protection of persons who report infringements of Union law (Whistleblower Protection Act). Just the day before, the German Bundestag approved the law, a compromise worked out in the Mediation Committee. This means that both chambers of parliament have approved the compromise.
The Whistleblower Protection Act is intended to strengthen the hitherto inadequate protection of whistleblowers and finally transpose the European Whistleblower Directive into German national law. We expect this to resolve the conflict that currently exists between maintaining confidentiality with regard to whistleblowers and the information and disclosure obligations under the GDPR. For many employers, however, extensive obligations to act will arise after the law comes into force.
Before the law can enter into force one month after its expected promulgation, the legislative process must first be completed. The law still has to be executed by the Federal President, which will then be followed by publication in the German Federal Law Gazette. We therefore expect the law to enter into force most likely sometime in June 2023.
Content of the Law
The Whistleblower Protection Act protects from reprisals and retaliation natural persons who have obtained information about violations in connection with their professional activities or in the run-up to such activities and report them to the designated reporting offices. The protection further extends to natural persons who are otherwise affected by a report or disclosure.
The Whistleblower Protection Act contains an extensive catalog of violations that fall within the scope of the Act. These include, in particular, violations of life and limb, health or the protection of employee rights or the rights of representative bodies in connection with an employer, or another body with which the person providing the information was in professional contact.
The Whistleblower Protection Act prohibits any reprisals or retaliation against whistleblowers and thus acts or omissions in connection with professional activities that constitute a reaction to a report or disclosure that causes or may cause the whistleblower to suffer an unjustified disadvantage. The most common instances of reprisal or retaliation are likely to be termination, demotion, or withholding a promotion. It is not only reprisal per se that is prohibited, but also the threat of such reprisal. If the whistleblower claims to have suffered a disadvantage as a result of a report or disclosure, the burden of proof is shifted to the employer. It is presumed that the measure in dispute is a reprisal or retaliatory measure until proven otherwise.
Internal and External Reporting Offices – Whistleblower’s Right of Choice
Even after the compromise reached in the Mediation Committee, the Whistleblower Protection Act provides for the establishment of external and internal reporting offices. The Federal Government will establish a central external reporting office at the Federal Office of Justice. Other special reporting offices will be set up at the Federal Financial Supervisory Authority and the Federal Cartel Office. The federal states may also set up their own external reporting offices for reports concerning the respective state and local government.
Companies and organizations with 50 or more employees must also set up internal reporting offices. In doing so, the company or organization can decide whether to use their own employees for this purpose or to commission third parties with the tasks of the internal reporting office (lawyers, auditing firms or specialized providers of reporting channels). For companies or organizations with no more than 249 employees, the law provides for an implementation deadline no later than December 17, 2023 for the establishment of internal reporting offices.
In principle, whistleblowers have the right to choose which reporting office (internal or external) they contact. However, it is the intention of the legislator that internal reporting channels should be given preference if it is foreseeable that such a report will lead to effective action being taken against the violation and the whistleblower does not have to fear reprisals or retaliatory measures as a result.
No More Obligation to Process Anonymous Tips
In the compromise that has now been adopted, the obligation to allow anonymous reports to be submitted has been removed. This applies to both internal and external hotlines. Nevertheless, according to the will of the legislator, anonymous reports will still need to be processed. However, with the compromise that has been reached, companies and organizations can now forego the establishment of completely anonymous reporting channels, for example by using appropriate third-party providers.
What This Means for Companies
Companies and organizations may want to act now and, if they haven’t already done so, set up internal reporting channels. Smaller companies with fewer than 250 employees should also start planning promptly, if they have not already done so. Setting up appropriate channels takes time. If a works council exist, it generally has co-determination rights when it comes to designing the whistleblower system.
Photo: Shutterstock / Victor Moussa