The challenges of transposing the European directive on whistleblowers

Article published in RSE Magazine on September 23, 2020.

In a context of good governance and more ethics and transparency in business life, the European Union has adopted measures to meet these ambitions. At the end of 2019, it issued a new European Directive on whistleblowers and the use of an ethics whistleblower.

The challenges of transposing the European directive on whistleblowers to a more mature whistleblower system for the Sapin 2 Law:

An ethics whistleblower is the organization of resources and measures to be deployed within companies, allowing all company employees to report to its management all dysfunctions and reprehensible facts that they have witnessed. The reports issued through the alert line can relate to subjects such as crime (corruption, fraud, abuse of corporate assets, etc.); harassment, discrimination, violation of privacy, public health or even environmental aspects: These will therefore be dealt with diligently in order to correct these dysfunctions through remedial actions.

The European Directive on the protection of whistleblowers will enter into force from 2021 for all companies in the 28 member countries. As a first step, companies with more than 250 employees, municipalities with more than 10,000 inhabitants or public law entities will have to comply; while companies with a minimum workforce of 50 employees will benefit from an additional two-year period for implementation.

For most member countries, the deployment of an ethics whistleblower with mechanisms guaranteeing the protection of whistleblowers is a novelty; and the new directive provides all the provisions and guidance on how to implement an effective ethics hotline; whether it is the scope, the procedures for handling reports, the gradual levels of escalation of the alert or the penalties.
For countries which already have regulations in this area, it is now necessary to take into account the characteristics of the directive, during transposition, to ensure that national regulations are in line with the guidelines published by the European Union.

Comparison with the SAPIN 2 law:

This is the case in France, which has regulations and precise conditions for the application and implementation of an ethics whistleblower since the adoption of the SAPIN 2 law of December 2016; whether for the general alert line resulting from articles 6 and 8 of the law, or the alert line as a mandatory measure in the anti-corruption prevention program of Article 17. The reporting system is now well integrated into the compliance landscape in France; with a high application rate for large groups and public organizations, while medium-sized companies comply more slowly but with constant progress.

In essence, the new European directive and the SAPIN 2 law are quite similar, aiming overall to detect and report dysfunctions and reprehensible facts, while protecting the whistleblower at the initiative of raising the whistle. However, certain structuring and non-negligible aspects of the new directive diverge from French regulations; and can be summarized as follows:

Graduated reporting procedure in 2 stages versus 3 stages
French regulations currently provide for a stricter framework, with 3 escalation levels for reports issued by whistleblowers: 1) to the internal organization, 2) to the regulator and competent authorities, 3) to public disclosure. A report cannot be "escalated" to the next level by the whistleblower; only if it has not been properly processed within a reasonable time. In the event of failure to comply with this graduation, the issuer could not then claim the status of whistleblower and the associated legal protection.
The European Directive makes the graduation process more flexible with only 2 stages: 1) internal and external processing (competent authorities), then 2) public disclosure; which is likely to comfort and reassure the whistleblowers under pressure from the hierarchy internally.

Persons eligible for the status and legal protection of the whistleblower
SAPIN 2 provisions grant protection status only to employees (and to a certain extent to external temporary staff); while the new European directive considerably widens the eligible population, including people who assist whistleblowers, i.e. natural and legal persons linked to whistleblowers (facilitators, colleagues, family).

Knowledge of the facts
Currently, protection is granted to whistleblowers in the SAPIN 2 law for reports of facts / malfunctions, of which the whistleblower is personally aware; while the new European directive also relaxes this measure; by extending the status to the whistleblower issuing a report of malfunctions that have been observed by third parties.

The challenges of transposition: encourage whistleblowers to contribute more and promote transparency and ethics in business. From the beginnings of the Sapin 2 law until today, there have been diametrically opposed positions on the characteristics of an alert system, with on the one hand NGOs such as Transparency International or Anticor, wanting less opacity and more social and societal commitment and responsibility; and on the other hand, companies advocating more regulated, more “controlled” transparency.
A 3-step graduation tends to favor this second position; it thus allows organizations to channel and filter fanciful reports and to better control the outcome of an alert. It is an additional leverage granted to companies to deal effectively with reports, while managing the legal and reputational risks that could result from them.

There appears to be a current consensus on a necessary regulatory change, aimed at encouraging the use of the ethics whistleblower and whistleblowers to contribute more to reporting wrongdoing. Numerous initiatives for reflection, conferences and discussions have resulted in the Defender of Rights, an independent administrative authority, formulating a report encouraging the French State to live up to the ambition of the European directive, in particular on the following aspects :
. an extension of the status of whistleblower and associated legal protection, to unions, NGOs, people assisting whistleblowers,
. break the loneliness for the whistleblower, encouraging and supporting him in his process of reflection and issuing a report,
. identify and equip independent and competent organizations to support whistleblowers and create favorable conditions to encourage the process.

The forthcoming transposition of the new directive will undoubtedly be fiercely debated, with the forces involved, when it comes to developing the Sapin 2 law.
But at the same time, it offers a providential opportunity to improve a device, the usefulness of which is now recognized in the French landscape. Changing the principle of the hotline towards a more mature phase means going in the direction of history, towards more transparency and social and societal responsibility.

An article co-authored by:
- Jean-Jacques QUANG, Associate Director - Ethicaline
- Jan Tadeusz STAPPERS, Senior Manager for WhistleB - NAVEX Global


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