World Whistleblowers Day: experts urge review of ‘speak-up’ and reporting mechanisms

Neil McInnes, Sarah Munro and Eike Grunert of Pinsent Masons were commenting as incidence of whistleblowing complaints grow globally.

McInnes, a global investigations expert, said: “The effectiveness of a business’ speak-up mechanism is a lightning rod to assess the maturity of a compliance programme. Lack of employee engagement with ‘speak up’ or, worse, a culture where people fear they will suffer a detriment if they do flag a concern, will have disastrous knock-on effects for how other corporate compliance measures are assessed. Similarly, failure to respond effectively – by harnessing a multi-disciplinary approach to investigating whistleblowing reports – can mean necessary remedial actions or lessons learned are missed.”

Many jurisdictions now have, or are planning, legislation guaranteeing whistleblower protection, encouraging more to come forward. Coupled with some high-profile accounts of enforcement action following whistleblowing, this means that employees and others may also now be more likely to come forward and speak up about concerns – with legitimate expectations that organisations are equipped to respond to their concerns, keep them informed as appropriate, and protect them from any risks because they have spoken up. 

McInnes said that if an organisation does not have a speak up policy which provides a mechanism to make such reports, or where it does but that mechanism does not inspire confidence, whistleblowers may decide to make their concerns more public. This, he said, can prompt external investigation or supervision and, at the very least, have an adverse impact on an organisation’s reputation, even before any investigation is conducted to see if the concerns are partly or wholly substantiated.

As a result, McInnes said organisations are increasingly advised to put in place a mechanism to deal with – and, crucially, which is seen to deal with – whistleblowing complaints in a timely, efficient and effective manner, even where it is not a legal or regulatory requirement to do so. He said having such a mechanism in place can help to demonstrate a culture and commitment to compliance generally – particularly in relation to the detection and prevention of financial crime, as these activities and their perpetrators can often only be exposed by insiders.

McInnes said: “In order for companies to demonstrate they have effective compliance programmes to detect and prevent such risks, the existence of secure speak-up channels is critical, along with demonstrable actions to ensure these channels are well-known and that employees and others feel comfortable accessing them. But a holistic approach is required. Lessons from recent high-profile organisational failures to tackle other workplace conduct and behaviour, as well as the increasing ESG expectations on businesses, underline the importance of strong speak-up systems and the need to triage reports to the right functions to investigate.”

Munro, an employment law expert, said: “Our clients are facing increasing numbers of whistleblowing complaints ranging from relatively straightforward HR concerns to more serious sexual harassment complaints. It is really important that companies ensure that any complaint is dealt with by the most appropriate team within an organisation and not to lose sight of the potential employment law risks of dismissal and detriment claims.”

Grunert, a compliance expert added that the legal framework around whistleblowing has become a critical area of legal compliance for organisations and employers.

In the EU, the 2019 Whistleblower Protection Directive aims to improve the protection of whistleblowers in all member states. Setting out minimum requirements and protections, it details various obligations on employers to establish whistleblowing reporting channels, practices and procedures, as well as granting protections to whistleblowers. Whilst some member states did not meet this target, implementation is progressing in most, with relevant draft laws proceeding through the parliamentary process. 

However, other laws and regulations also have a bearing on the matter. 

In Germany, for example, there are two recent pieces of legislation that impact on whistleblowing.

First, the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG), which has been in force since 1 January 2023, requires large companies with at least 3,000 employees in Germany to take measures to ensure that they and their suppliers from Germany and abroad comply with environmental and social standards. This also includes the mandatory requirements to set-up a complaint procedure – including reporting systems – which is open to all relevant stakeholders within a company’s supply chain.

Since the beginning of 2023, the Federal Office of Economics and Export Control (BAFA), which is responsible for the implementation and monitoring of the new law, has made a complaint form available on its website, which can be used to report violations of the LkSG by businesses. The form is available in English, French, Spanish and German.

Grunert said that while not a legislative requirement, the existence of the BAFA reporting channel poses an increased risk of multiple complaints being made to that channel, possibly anonymously, triggering supervisory measures. He said companies should be encouraged to develop and implement their own complaint management system in order to be able to receive and deal with complaints internally as a matter of priority.

Secondly, as of 2 June 2023, Germany implemented the EU 2019 Whistleblower Protection Directive, making it mandatory for legal entities with generally 50 or more employees to establish internal reporting mechanisms enabling employees to raise concerns on violations of a wide range of EU laws, criminal laws, and certain administrative laws. Businesses with generally more than 249 employees already had until 2 July 2023 to do so.

Grunert said: “Businesses with operations in Germany are currently under high regulatory pressure to brush-up their whistleblowing systems in line with new requirements. This will either mean setting-up new systems, or checking whether existing systems are in line with the new laws. For effectiveness, businesses should take this opportunity to take a best practice approach and embed whatever is needed into their central systems, rather than pursuing isolated solutions.”

In the UK, Munro noted there is no general positive obligation on employers to encourage whistleblowing or to implement a whistleblowing policy – notwithstanding specific rules applicable in financial services. Nor do the terms of the EU Whistleblower Protection Directive apply to UK operations, though its terms remain relevant, particularly for UK-headquartered multinational firms which will either have to reflect the changes in their global whistleblowing policy or choose to adopt a jurisdiction-by-jurisdiction approach.

Whistleblower protections are contained in provisions inserted into the Employment Rights Act 1996 (ERA 1996) by the Public Interest Disclosure Act 1998. In March 2023, the UK government announced a review of the whistleblowing framework, designed to examine its effectiveness and inform policy decisions on improvements. UK employers can expect to be increasingly required to have in place appropriate channels for whistleblower reporting, which are properly resourced, accountable and protect confidentiality, as the government is considering ways to improve the whistleblowing laws applicable in England, Wales and Scotland.

McInnes said: “With legal requirements developing across different markets, organisations should have in place whistleblowing policies covering all significant compliance risks, with reporting channels easily accessible, properly resourced, independent and confidential. Protections against retaliation should also be provided.”

McInnes said World Whistleblowers Day continues to raise public awareness of the importance of whistleblowing to any compliance programme and should serve as a catalyst for organisations to review the offering they provide.

“World Whistleblowing Day offers an opportunity to reflect on what is working and what may need a refresh for an organisation’s speak up mechanism,” McInnes said.

He said practical issues organisations might explore include whether the last employment engagement survey addressed their speak up mechanism and how people felt about it; whether different types of whistleblower report are being routed to the most appropriate personnel to investigate; whether compliance personnel have access to key metrics – including how long it is taking for whistleblowing reports to be investigated and for any remediation action to be taken – and what the trends are in reports received by an organisation and how those benchmark against their industry and peers.