Whistleblowing in a nutshell

27. 7. 2021

Authors: Robert Nešpůrek, Petr Bratský

Source: FairWhistle Blog

Directive (EU) 2019/1937 of 23 October 2019, on the protection of persons who report breaches of Union law, requires Member States to implement the relevant legislation by 17 December 2021 at the latest. The Czech Republic’s Whistleblower Protection Bill has not yet been approved by the legislature and is expected to be passed into law around the beginning of 2022. Below is an overview of the fundamental rights and obligations arising from the Whistleblower Protection Bill, which, as currently proposed, the obliged persons should comply with by 31 March 2022.

Who must introduce an internal whistleblowing system?

• employers with at least 25 employees (1)
• public contracting authorities
• municipalities with more than 5,000 inhabitants (2)
• operators of selected business activities (such as banks, investment funds, insurers, and consumer loan providers)

What is the deadline?

The deadline for introducing the whistleblowing system is 31 March 2022 (3)

What must be arranged by the obligated?

• Introduce an internal whistleblowing system, i.e. allow whistleblowers to report potentially unlawful conduct
  • verbally
  • in writing
  • in person (at the whistleblower’s request)
• Appoint a “responsible person”, i.e. a person responsible for receiving and handling reports in accordance with the law (such as communication with the whistleblower, investigation of reports, keeping statutory records)
• Ensure whistleblower protection:
  • protecting the identity of whistleblowers
  • protection of whistleblowers against retaliatory measures by the employer (such as termination or non-renewal of employment, transfer to another job, reduction in wages, termination of a contractor agreement)

Risks arising from a non-functioning internal whistleblowing system

• Financial losses – a fine of up to CZK 1 million or 5% of the net turnover for the last closed accounting period
• Reputational risk:
  • The whistleblower may report to the Ministry of Justice or another public authority
  • If the report is not addressed within the statutory time limits, the whistleblower may disclose the matter (including the company’s trade secret!) to public authorities or even publicly
• Disclosure of trade secrets
• Compensation for non-pecuniary loss
• Reverse burden of proof

Who can be a whistleblower?

An employee, a member of an executive body or another corporate body, an intern, a volunteer, a trainee, a service provider, a job applicant, etc.

What is reported?

Potentially unlawful conduct that has the characteristics of an administrative infringement or a criminal offence or violates a legal regulation or violates a legal regulation of the European Union in selected areas, i.e.:

• finance
• the protection of EU financial interests
• public contracts and public auctions
• competition (including State aid) and internal market
• corporate income tax
• AML
• consumer protection and compliance with product requirements
• safety in transportation
• environmental protection
• nuclear safety and radiation protection
• protection of internal security and order, protection of life and health
• privacy and personal data protection
• protection of the security of electronic communications networks and information systems

What reports do not enjoy protection?

Reports knowingly false

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(1) The number of employees may be subject to change depending on the outcome of the legislative process in the Parliament of the Czech Republic

(2) The population limit may be subject to change depending on the outcome of the legislative process in the Parliament of the Czech Republic

(3) The deadline may be subject to change depending on the legislative process in the Parliament of the Czech Republic