On 16 April 2019 the European Parliament approved new rules to protect whistleblowers who reveal breaches of EU law such as data misuse, tax evasion, money laundering, fraud or corruption in areas including public procurement, financial services, product and transport safety, public health, consumer and data protection. Those who qualify as whistleblowers include any person in the public or private sector who acquires information in a work-related context. It will include a much larger pool of people than just employees and workers, extending to shareholders and suppliers.
The new rules provide protection to whistleblowers across the EU. Only 10 EU member states currently have comprehensive legal protection for whistleblowers, resulting in differing approaches to those who make disclosures. The EU considers that this has led to potential whistleblowers failing to come forward due to fears of retaliation. This new level of protection is accordingly designed to encourage more reports of wrongdoing within "safe channels".
Whistleblowers will be protected where they disclose information either internally to the entity concerned or directly to competent national authorities, as well as to relevant EU institutions, bodies, offices and agencies. However, if no "appropriate" action is taken following the initial report, or they believe there is an imminent danger to the public interest (for example from spoiled food or defective software) or risk of retaliation, the whistleblower can disclose information publically and still be protected from retaliation. Businesses will therefore need to make sure that they have in place procedures to ensure that they deal with whistleblowing reports appropriately in order to avoid a public disclosure and the reputational damage that could cause.
The increased protection for whistleblowers is likely to lead to increased disclosures, and potentially public disclosures, particularly from persons in countries where there was not previously much or any protection for whistleblowers. UK companies may accordingly find themselves the subject of reports of wrongdoing in foreign jurisdictions, which could lead to reputational damage and prosecution. Given the extra-territorial effect of legislation such as the Bribery Act 2010 and Criminal Finances Act 2017, these disclosures of foreign wrongdoing could also result in prosecution at home. Although member states will have two years to implement the new rules, now is the time to ensure that whistleblowing, as well as anti-corruption and anti-tax evasion, procedures are in place and fit for purpose.