The European Parliament and the Council of the European Union have approved a new Directive [1] regarding the protection of persons who report breaches of Union law [2].

 

The Directive came into force on 16 December 2019. Member States have 24 months to implement its transposition [3].

 

It should be noted that this Directive does not intend for Member States to establish (i) a legal framework for the protection of ‘snitches’ nor (ii) a regime of ‘witness immunity’ as found in some foreign legal systems.

Rather, it aims to protect ordinary citizens who do not wish to be co-authors or colluders in the practice of illegal activities, allowing them to report them safely.

 

 

I. LEGAL FRAMEWORK

 

The purpose of this Directive is to strengthen the application of the Union’s laws and policies [4] in specific sectors – in particular, the fight against illegal activities (fraud, corruption, tax evasion, money laundering, etc.) and consumer protection – by establishing common minimum standards for a high level of protection for persons who report [5] breaches [6] of Union law.

 

The most notable aspects of the Directive's legal framework are highlighted below.

 

1. Material scope

 

The material scope [7] of this Directive is based on the identification of areas where the protection of whistleblowers [8] is both justified and necessary, and a list detailing them has been set out in the Annex of the Directive.

 

Within this framework, the Directive establishes common minimum standards for the protection, against possible retaliation [9], of persons (whistleblowers) who report the following breaches of Union law:

 

a) Breaches that concern the following areas:

i. Public procurement;

ii. Services, products and markets, and prevention of money laundering and terrorist financing;

iii. Product safety and compliance;

iv. Transport safety;

v. Protection of the environment;

vi. Radiation protection and nuclear safety;

vii. Food and feed safety, animal health and welfare;

viii. Public health;

ix. Consumer protection;

x. Protection of privacy and personal data, and security of network and information systems;

 

b) Breaches affecting the financial interests of the Union[10];

c) Breaches relating to the internal market[11].

 

This Directive is without prejudice to the power of Member States to extend protection under national law as regards areas or acts not covered by it.

 

 

2. Relationship with other Union acts and national provisions

 

This Directive and its transposition shall not affect the application of Union or national law relating to any of the following:

a) The protection of classified information;

b) The protection of legal and medical professional privilege;

c) The secrecy of judicial deliberations;

d) Rules on criminal procedure;

 

 

3. Personal scope

 

This Directive shall apply to reporting persons working in the private or public sector who acquired information [12] on breaches in a work-related context including, at least, the following:

a) Persons having the status of worker [13];

b) Persons having self-employed status [14];

c) Shareholders and persons belonging to the administrative, management or supervisory body of an undertaking, including non-executive members, as well as volunteers and paid or unpaid trainees;

d) Any persons working under the supervision and direction of contractors, subcontractors and suppliers.

 

This Directive shall also apply to reporting persons where they report or publicly disclose information on breaches acquired in a work-based relationship which has since ended.

 

This Directive shall also apply to reporting persons whose work-based relationship is yet to begin in cases where information on breaches has been acquired during the recruitment process or other pre-contractual negotiations.

 

 

4. Conditions for the protection of reporting persons

 

Reporting persons shall qualify for protection under this Directive provided that:

a) They had reasonable grounds to believe that the information on breaches reported was true at the time of reporting and that such information fell within the scope of this Directive; and

b) They reported either internally, or externally, or made a public disclosure, in accordance with the terms of this Directive.

 

 

5. Prohibition of retaliation

 

Member States shall take the necessary measures to prohibit any form of retaliation against persons protected by this Directive, including threats of retaliation and attempts of retaliation such as:

a) Suspension, dismissal or equivalent measures;

b) Demotion or withholding of promotion;

c) Transfer of duties, change of location of place of work, reduction in wages or change in working hours;

d) Withholding of training;

e) A negative performance assessment or employment reference;

f) Imposition or administering of any disciplinary measure, reprimand or other penalty, including a financial penalty;

g) Coercion, intimidation, harassment or ostracism;

h) Discrimination, disadvantageous or unfair treatment;

i) Failure to convert a temporary employment contract into a permanent one, where the worker had legitimate expectations that he or she would be offered permanent employment;

j) Failure to renew, or early termination of, a temporary employment contract;

k) Harm, including to the person's reputation, particularly in social media, or financial loss, including loss of business and loss of income;

l) Blacklisting on the basis of a sector or industry-wide informal or formal agreement, which may entail that the person will not, in the future, find employment in the sector or industry;

m) Early termination or cancellation of a contract for goods or services;

n) Cancellation of a licence or permit;

o) Psychiatric or medical referrals.

 

 

II. OTHER PROVISIONS

 

Moreover, the Directive under consideration provides for and regulates other matters, in particular the following:

a) Obligation to establish internal reporting channels;

b) Obligation to establish channels for external reporting and to follow up on complaints;

c) Information regarding the receipt of reports and their follow-up;

d) Public disclosure;

e) Duty of confidentiality;

f) Processing of personal data;

g) Record keeping of the reports;

h) Various support measures;

i) Measures to protect the persons concerned;

j) Penalties.

 

Lisbon, April 2020.

 

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[1] Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019.

[2] This Directive is addressed to the Member States.

[3] Until 17 december 2021.

[4] The Directive is based on a vast and diverse set of Fundamentals and we offer a brief summary, from among the 110 Recitals of the Directive, of those standing out for their particular relevance:

1. Protection and confidentiality of the identity of the reporting persons – e. those working in public or private organizations - without fearing any form of retaliation, by establishing effective, confidential and secure reporting channels, as well as by protecting them, e.g. from retaliation under labour law, provided that their reports contain reasonable grounds for considering that, given the circumstances and the information available to such workers at the time of the report, the facts reported by them are true and relevant;

2. The standardisation of the reporting mechanisms by the Member States, establishing common minimum protection standards, since the cases frequently have a cross-border dimension;

3. Increase the fight against fraud, corruption and other illegal activities, preventing and detecting fraud and corruption in public procurement, in order to avoid distortions of competition, tax evasion (breaches of tax law and evasion of tax liabilities);

4. The importance of whistleblower protection in terms of preventing and deterring breaches of Union rules on transport safety (aviation, maritime, road and railway transport);

5. Ensuring and increasing the safety of products placed on the internal market, as businesses involved in the manufacturing and distribution chain are the primary source of evidence, with the result that reporting by whistleblowers in such businesses has a high added value, since they are much closer to information about possible unfair and illicit manufacturing, import or distribution practices regarding unsafe products.

6. Ensuring and increasing environmental protection, evidence-gathering, preventing, detecting and addressing environmental crimes and unlawful conduct remain a challenge and actions in that regard need to be reinforced;

7. Ensuring and increasing the protection of the European Atomic Energy Community on nuclear safety, radiation protection and responsible and safe management of spent fuel and radioactive waste;

8. Detecting and preventing, reducing or eliminating risks to public health and to consumer protection resulting from breaches of Union rules, and therefore enhancing consumer protection;

9. All while respecting: (i) privacy and protection of personal data; (ii) the enforcement of Union competition law and safeguarding the efficient functioning of markets in the Union; (iii) the national security needs of each Member State; (iv) the confidentiality of communications subject to professional secrecy (e.g. between lawyers and their clients or between health professionals - doctors, psychiatrists, psychologists, etc. - and their patients, etc.); (v) the legislation on criminal procedure, particularly those aiming at safeguarding the integrity of the investigations and proceedings or the rights of defence of persons concerned; (vi) the rights to freedom of expressions and their limits; and (vii) the public interest of the Member States and of the Union;

10. Effective enforcement of the scope of this Directive to the broadest possible range of categories of persons, whether or not they are Union citizens or third-country nationals;

11. Ensuring that complaints are effective and that they swiftly reach the authorities closest to the source of the problem, most able to investigate it and with powers to remedy it.

[5] ‘Report’ or ‘to report’, for the purposes of this Directive, means the oral or written communication of information on breaches (see footnote 6).

[6] For the purposes of this Directive, ‘breaches’ means acts or omissions that: (i) are unlawful and relate to the Union acts and areas falling within the material scope of the Directive; or (ii) defeat the object or the purpose of the rules in the Union acts and areas falling within the material scope of this Directive.

[7] Point (a) of Article 2(1) defines the material scope of this Directive by means of a reference to a list of Union acts set out in the Annex.

[8] ‘Whistleblower’ or ‘reporting person’ means a natural person who reports or publicly discloses information on breaches acquired in the context of his or her work-related activities.

[9] ‘Retaliation’, for the purposes of this Directive, means any direct or indirect act or omission which occurs in a work-related context, is prompted by internal or external reporting or by public disclosure, and which causes or may cause unjustified detriment to the reporting person.

[10] These are the financial breaches referred to in Article 325 TFEU and as further specified in relevant Union measures.

[11] These tax breaches are those referred to in Article 26(2) TFEU, including breaches of Union competition and State aid rules, as well as breaches relating to the internal market in relation to acts which breach the rules of corporate tax or to arrangements the purpose of which is to obtain a tax advantage that defeats the object or purpose of the applicable corporate tax law.

[12] For the purposes of this Directive, ‘information’ or ‘information on breaches’ means information, including reasonable suspicions, about actual or potential breaches, which occurred or are very likely to occur in the organisation in which the reporting person works or has worked or in another organisation with which the reporting person is or was in contact through his or her work, and about attempts to conceal such breaches.

[13] ‘Worker’, within the meaning of Article 45(1) TFEU, including civil servants.

[14] ‘Self-employed status’, within the meaning of Article 49 TFEU.

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