Whistleblowing in the Czech Republic – the state and state-owned companies will have to comply with the rules of the Directive irrespective of the absent Czech law

6. 10. 2021

Authors: Robert Nešpůrek, Vojtěch Bartoš, Jaroslav Šuchman

The deadline for the adoption of a Czech whistleblowing act will expire before the year-end – and most likely due to neglect. Nevertheless, the state, regions, municipalities and their subordinate organisations and companies should prepare for the application of the rules of the European Whistleblowing Directive immediately after 17 December 2021.

The EU Whistleblower Protection Directive, commonly known as the Whistleblowing Directive, came into force in autumn 2019. Like any directive, it obliges EU Member States to take such steps at the national level to ensure that the relevant rules jointly agreed by Member States are put into practice.

The Member States are always obliged to fulfil this obligation by a certain date. In the case of the Whistleblowing Directive, that date is 17 December 2021. It is already clear that the Czech Republic will not meet its obligation in time and a Czech law will not be adopted by that date. Breach of this obligation will have one very concrete consequence for public entities in the Czech Republic, which should already be taken into account today, particularly by senior employees of state, regional and municipal organisations, as well as managers of companies backed by the state, regions or municipalities.

Direct effects

After the expiry of the deadline for the adoption of national legislation due to neglect, an individual may directly invoke the application of specific rules contained in the Directive against the State, as if it were a standard Czech law.

Thus, in the case of the Whistleblowing Directive, whistleblowers (employees, workers, contractors and others) will be able to seek some of their rights set out directly in the Directive.

Employers will be obliged to comply with the corresponding obligations under the Directive. These obligations may include, in particular, the obligation to protect the whistleblower, the prohibition of retaliation, the establishment of internal whistleblowing channels or, for example, the obligation to provide information on reports received. These are key rights and obligations arising from the Directive, which are the backbone of the entire whistleblower protection mechanism and the core of the relevant legislation.

Who will be affected

It is crucial for everyday practice that the term “state”, i.e. the one against whom the Directive may be directly invoked, should be understood in a broad sense. This is not a new or ad hoc artificial stretching of the concept, but a long, well-established and generally accepted decision-making practice of the Court of Justice of the European Union, which offers little room for doubt.

The Court of Justice understands the term “state” to mean any organisation or body which is subject to the jurisdiction or control of the state or which has special powers beyond the scope of standard rules of private law.

The definition thus includes not only state institutions, such as ministries, independent authorities, state funds and other organisations typically established under or by the operation of law, but also local authorities and organisations established by them. In addition, state-owned or public enterprises and companies owned by the state or local authorities are also subject to state control, and thus undoubtedly fall under the term “state”, as is clear from the CJEU’s decision.

Those responsible for the operation of these bodies, institutions and companies should therefore be aware that whistleblowers will be able to invoke the protection arising directly from the Whistleblowing Directive after 17 December 2021, irrespective of whether or not the implementing Czech act will have been adopted by then. However, whistleblowers will only be able to invoke the provisions of the Directive itself and not the broader concept of protection going beyond the Directive as contained in the current Czech bill.

What the whistleblower may invoke

The immediate consequence of this failure of the Czech legislature will be that whistleblowers will be able to claim in particular internal mechanisms for reporting, will have to be provided with protection if a report is made, and in the event of retaliation against the whistleblower, for example, the whistleblower will be able to claim damages. All this without the Czech legal order laying down more precise rules as to how state institutions are to ensure the above. The provisions of the Directive appear to be quite clear and detailed in these respects.

If you need advice on defining an internal reporting mechanism, please do not hesitate to contact our experts. We know how to deliver a comprehensive solution ranging from a simple, largely standardised solution for a small company, to a tailor-made solution for a group of companies or a public body.