EU Whistleblowing Directive

Whistleblowers have an important role in uncovering misconduct, and they contribute to an open and transparent society. This makes it crucial to protect them from the negative consequences of whistleblowing. A major contribution to this is made by the EU Directive. In the EU, whistleblowers are entitled to special protection when reporting irregularities. According to the EU Directive, EU member states must ensure whistleblower protection for internal and external reports as well as for reports to the public. In addition, certain companies are required to establish internal reporting channels.

In Switzerland, the legal situation in the private sector with regard to the disclosure of wrongdoing by whistleblowers is inadequate. The last proposal to improve the protection of whistleblowers by law failed in the Councils of 2020. Thus, it is clear that there will be no regulations in Switzerland in the near future that provide greater protection for the reporting of irregularities in the workplace, and existing legal bases such as labor law, data protection law, and criminal law are used to weigh up the interests.

Relevance of the EU Whistleblowing Directive for Swiss groups

The fact that the EU Directive does not affect the activities of Swiss companies within their own national borders does not mean that they can turn a blind eye to it. The EU Directive becomes of relevance to Swiss groups whenever they have subsidiaries in the EU area that reach the respective threshold.

EU subsidiaries of Swiss companies with 50 or more employees must implement internal reporting channels (in special cases, depending on the country, even less may be sufficient). This threshold does not apply to EU subsidiaries of Swiss companies operating in the financial industry, as they need to implement reporting channels regardless of the number of employees. When designing these channels, the minimum content requirements of the EU Directive must be met. However, the provisions of the EU Directive apply only indirectly, as each EU member state regulates the specific requirements in a separate transposition law. By the end of March 2023, 20 out of 27 EU member states have adopted the EU Directive into their national law.

EU subsidiaries of Swiss companies with at least 250 employees, already had to comply with this obligation by 17 December 2021. EU subsidiaries with 50 to 249 employees are now required to set up an internal reporting channel by 17 December 2023.

International Swiss groups are thus requested to examine which subsidiaries in the EU are subject to the EU Directive and to consult local law as well as to take appropriate measures. Where the national legislation is still in progress, companies should nevertheless start implementing the minimum standards of the EU Directive.

Call for action

Although not all Swiss companies are affected equally by the legal requirements outlined in the EU Directive, they are well advised to start developing and implementing an appropriate and trustworthy whistleblowing management system. An adequate whistleblowing management system not only reduces the risk of non-compliance and legal breaches that may lead to heavy fines and loss of reputation, but it also promotes an ethical culture, demonstrates good corporate governance, and strengthens the trust of key stakeholders. Furthermore, it prevents whistleblowers from seeking recourse to the authorities or the public and thus externalise internal grievances.

In general, a whistleblowing management system is becoming more and more relevant, which is why also other newer legislation is promoting whistleblowing channels (e.g., the German Supply Chain Due Diligence Act).

What can you do to make it happen?

• Set up an appropriate infrastructure tailored to the needs of your company, including different reporting channels, such as an online platform, email, phone, and the possibility to report in person;
• Implement and promote a clear and comprehensive whistleblowing policy, which sets forth the reporting as well as investigation process and explains how reporters are protected against retaliation;
• Conduct adequate training tailored to the different levels in your organisation and a supportive tone from the top to enable a speak-up culture;
• Introduce a designated reporting office that handles reports independently and confidentially;
• Appoint an independent investigative function to verify and investigate reports; and
• Maintain a regular reporting cycle.

How can we support you?

Would you like to better understand the impact of the EU Whistleblowing Directive on your business, or do you need support in developing and implementing, or enhancing an appropriate and trustworthy whistleblowing management system? Please do not hesitate to contact us. We are happy to answer your questions and support you in your next steps!

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