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Joint whistleblower schemes for multinationals

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Legal news
calendar 2 November 2021
globus Denmark, Sweden, Norway

The new rules on the protection of whistleblowers enter into force around Europe, including Denmark and Sweden. But how do the new rules affect multinationals? Some companies may already have a group-wide centralized whistleblower scheme in place, while other companies are looking to limit the number of schemes across the group to preferably one group-wide scheme. We take a closer look at the different options.

Companies with more than 249 employees must establish a whistleblower scheme, in Denmark by 17 December 2021, and in Sweden by 17 July 2022. Companies with 50 to 249 employees have an extended deadline and must establish a whistleblower scheme before 17 December 2023.

Many multinationals with companies in two or more EU countries either already have a group-wide centralized whistleblower scheme or prefer to limit the number of schemes across the group, to one centralized scheme. The question is whether it is possible under the new rules? While the answer for Denmark is yes, due to a special exemption in the Danish implementation act, this special rule only applies for Denmark.

One or more whistleblower schemes?

Under the EU rules, companies with activities in one or more member states, with 50 to 249 employees, can establish one joint whistleblower scheme within the group. One joint whistleblower scheme means that the companies within the group can share resources and split the expenses associated with the whistleblower scheme. It also means that these companies can process reports under one shared whistleblower scheme, and thereby ensure a more specialized and effective processing.

When establishing a joint whistleblower scheme, the participating companies remain responsible for ensuring compliance with the new rules, including the obligation to ensure confidentiality, to give feedback and to prevent the matter that is being reported. It also means that it is not possible to allocate the entire responsibility to the parent company in the group.

For larger, international companies with more than 249 employees in one or more companies outside Denmark, there is currently no access to establishing a joint whistleblower scheme. Instead, these companies must establish individual schemes within each legal entity abroad. As a practical solution, companies could establish an additional group-wide whistleblower scheme. In practice, the company could encourage the use of the group-wide scheme, and in connection with reports, transfer reports to the group-wide scheme – subject to the prior and explicit consent of the whistleblower. However, this solution still means that each individual company within the group remains responsible for ensuring compliance with the rules as well as towards the whistleblower.

IUNO’s opinion

Multinationals with activities outside Denmark do not have access to apply the special rule introduced under Danish law for joint whistleblower schemes within the group. Consequently, multinationals wanting to limit the number of whistleblower schemes that have to be established, can consider the option to establish either a joint whistleblower scheme or an additional group scheme, in addition to the separate schemes within each company. For a group consisting of larger companies established partly or fully outside Denmark, the only option is to establish an additional group scheme.

IUNO recommends that companies closely consider how to ensure that whistleblower schemes are established in a lawful, but at the same time effective and flexible manner. In this connection, it is important to remember that the special rule available under Danish law is conditioned upon approval at EU-level and that it cannot be applied by multinationals with activities outside Denmark.

Norway and Finland have yet to propose any national rules on implementation. Norway has current rules on whistleblower protection, which do not require a whistleblower scheme as such. We are following the development in the Nordics.

Read more about how IUNO can help establish and administrate your whistleblower scheme, here.

[Act on Protection of Whistleblowers of 29 June 2021]

Companies with more than 249 employees must establish a whistleblower scheme, in Denmark by 17 December 2021, and in Sweden by 17 July 2022. Companies with 50 to 249 employees have an extended deadline and must establish a whistleblower scheme before 17 December 2023.

Many multinationals with companies in two or more EU countries either already have a group-wide centralized whistleblower scheme or prefer to limit the number of schemes across the group, to one centralized scheme. The question is whether it is possible under the new rules? While the answer for Denmark is yes, due to a special exemption in the Danish implementation act, this special rule only applies for Denmark.

One or more whistleblower schemes?

Under the EU rules, companies with activities in one or more member states, with 50 to 249 employees, can establish one joint whistleblower scheme within the group. One joint whistleblower scheme means that the companies within the group can share resources and split the expenses associated with the whistleblower scheme. It also means that these companies can process reports under one shared whistleblower scheme, and thereby ensure a more specialized and effective processing.

When establishing a joint whistleblower scheme, the participating companies remain responsible for ensuring compliance with the new rules, including the obligation to ensure confidentiality, to give feedback and to prevent the matter that is being reported. It also means that it is not possible to allocate the entire responsibility to the parent company in the group.

For larger, international companies with more than 249 employees in one or more companies outside Denmark, there is currently no access to establishing a joint whistleblower scheme. Instead, these companies must establish individual schemes within each legal entity abroad. As a practical solution, companies could establish an additional group-wide whistleblower scheme. In practice, the company could encourage the use of the group-wide scheme, and in connection with reports, transfer reports to the group-wide scheme – subject to the prior and explicit consent of the whistleblower. However, this solution still means that each individual company within the group remains responsible for ensuring compliance with the rules as well as towards the whistleblower.

IUNO’s opinion

Multinationals with activities outside Denmark do not have access to apply the special rule introduced under Danish law for joint whistleblower schemes within the group. Consequently, multinationals wanting to limit the number of whistleblower schemes that have to be established, can consider the option to establish either a joint whistleblower scheme or an additional group scheme, in addition to the separate schemes within each company. For a group consisting of larger companies established partly or fully outside Denmark, the only option is to establish an additional group scheme.

IUNO recommends that companies closely consider how to ensure that whistleblower schemes are established in a lawful, but at the same time effective and flexible manner. In this connection, it is important to remember that the special rule available under Danish law is conditioned upon approval at EU-level and that it cannot be applied by multinationals with activities outside Denmark.

Norway and Finland have yet to propose any national rules on implementation. Norway has current rules on whistleblower protection, which do not require a whistleblower scheme as such. We are following the development in the Nordics.

Read more about how IUNO can help establish and administrate your whistleblower scheme, here.

[Act on Protection of Whistleblowers of 29 June 2021]

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Anders

Etgen Reitz

Partner

Kirsten

Astrup

Senior associate

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Etgen Reitz

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