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New Act will introduce requirements on whistleblower schemes

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Legal news
calendar 14 March 2021
globus Denmark

The Danish government has just submitted a draft bill for the new Whistleblower Act for consultation. The draft bill will implement the EU whistleblower directive and, among other things, introduce requirements upon companies with 50 employees or more to establish a whistleblower scheme. For larger companies, the requirement will already apply from 17 December 2021. In this newsletter, we take a closer look at the draft bill and what it will mean for companies.

The new draft bill implements and expands the EU whistleblower directive, which states that all companies with 50 employees or more must establish a whistleblower scheme. The new rules will therefore have significant importance for most companies.

What can be reported?

With the new draft bill, companies with more than 249 employees must establish a whistleblower scheme before the new Act becomes effective, on 17 December 2021. Companies with 50 to 249 employees will have an extended deadline and must establish a whistleblower scheme by 17 December 2023.

It’s not possible to report on all types of matters to the whistleblower scheme. Reports can only relate to breaches of specific EU law, as well as serious breaches of EU law or Danish law or other serious matters in general.

For a breach of law or a matter to be considered serious enough to be covered by the rules of the Act, it, as a starting point, requires that uncovering the information is a matter of "public interest". In other words, a case-by-case assessment must be made to determine if reporting is in the public interest. It could be a case concerning fraud, embezzlement, or bribery, but could also be serious or repeated breaches of law concerning the public health, transport safety or protection of nature and or the environment.

At the same time, this means that reports concerning the whistleblower's own employment relationship as a main rule not would be possible, unless it’s a case of severe harassment or sexual harassment. We have previously described the Danish government's proposal to include sexual harassment in the new rules, here.

Better protection for whistleblowers

Companies' future internal whistleblower scheme can be established either internally or alternatively, in whole or in part externally, with a business partner. In all cases, however, the whistleblower scheme must satisfy the new requirements to ensure better protection for whistleblowers. The new requirements entail, among other things, that:

  • Companies must appoint an impartial person or department to receive and follow up on reports and maintain contact with the whistleblower

  • Companies must establish and ensure the function of the scheme in a way that ensures the confidentiality of the whistleblower's identity and anyone mentioned in the report

  • Companies must have appropriate procedures to ensure, among other things, that the whistleblower receives confirmation of receipt of the report within 7 days and feedback within 3 months of the report, or 6 months if special circumstances warrant it

  • Companies with 50 to 249 employees can establish a joint whistleblower scheme, but it remains the responsibility of each company to provide feedback and ensure the whistleblower's identity

  • Companies must ensure that whistleblowers who satisfy the conditions to be covered by the protection of the Act are not punished for having reported a matter, such as suspension, termination, pay deduction etc.

  • Companies must help ensure that whistleblowers are not prevented or attempted to be prevented from reporting
  • Companies must ensure that reporting can be done orally or in writing

If the scheme is operated completely externally via a business partner, most of the obligations will be transferred from the company to the business partner.

The draft bill also proposes for the establishment of an external and independent whistleblower scheme via the Danish Data Protection Agency, as a supplement to the internal whistleblower schemes established by companies. Consequently, this in principle means that all companies are actually covered by the Act, since employees in companies with less than 50 employees also can report and be covered by the protection under the Act.

The Act is expected to enter into force on 17 December 2021.

IUNO’s opinion

The new Whistleblower Act means that many companies must establish whistleblower schemes and simultaneously, that all companies in principle will be more or less covered by the new rules. Particularly, larger companies should already commence preparations now to ensure that the new schemes meet the new requirements and are established within the deadline.

Therefore, IUNO recommends that companies pay special attention to the fact that there are requirements on independence as part of the scheme, and that companies must ensure that a conflict of interest does not arise when reports are handled. This means that companies should consider whether the whistleblower scheme should be established via a business partner that the company normally uses, or whether it should be managed by another business partner.

We usually recommend that companies establish an internal whistleblower program through an external partner. The reason is that if employees only can report matters internally, they may refrain from reporting to the scheme because the company is the direct recipient of the report.

At IUNO, we can help your company with all aspects of the whistleblower scheme. Read more about it here.

[Draft bill on the protection of whistleblowers of 24 February 2021]

The new draft bill implements and expands the EU whistleblower directive, which states that all companies with 50 employees or more must establish a whistleblower scheme. The new rules will therefore have significant importance for most companies.

What can be reported?

With the new draft bill, companies with more than 249 employees must establish a whistleblower scheme before the new Act becomes effective, on 17 December 2021. Companies with 50 to 249 employees will have an extended deadline and must establish a whistleblower scheme by 17 December 2023.

It’s not possible to report on all types of matters to the whistleblower scheme. Reports can only relate to breaches of specific EU law, as well as serious breaches of EU law or Danish law or other serious matters in general.

For a breach of law or a matter to be considered serious enough to be covered by the rules of the Act, it, as a starting point, requires that uncovering the information is a matter of "public interest". In other words, a case-by-case assessment must be made to determine if reporting is in the public interest. It could be a case concerning fraud, embezzlement, or bribery, but could also be serious or repeated breaches of law concerning the public health, transport safety or protection of nature and or the environment.

At the same time, this means that reports concerning the whistleblower's own employment relationship as a main rule not would be possible, unless it’s a case of severe harassment or sexual harassment. We have previously described the Danish government's proposal to include sexual harassment in the new rules, here.

Better protection for whistleblowers

Companies' future internal whistleblower scheme can be established either internally or alternatively, in whole or in part externally, with a business partner. In all cases, however, the whistleblower scheme must satisfy the new requirements to ensure better protection for whistleblowers. The new requirements entail, among other things, that:

  • Companies must appoint an impartial person or department to receive and follow up on reports and maintain contact with the whistleblower

  • Companies must establish and ensure the function of the scheme in a way that ensures the confidentiality of the whistleblower's identity and anyone mentioned in the report

  • Companies must have appropriate procedures to ensure, among other things, that the whistleblower receives confirmation of receipt of the report within 7 days and feedback within 3 months of the report, or 6 months if special circumstances warrant it

  • Companies with 50 to 249 employees can establish a joint whistleblower scheme, but it remains the responsibility of each company to provide feedback and ensure the whistleblower's identity

  • Companies must ensure that whistleblowers who satisfy the conditions to be covered by the protection of the Act are not punished for having reported a matter, such as suspension, termination, pay deduction etc.

  • Companies must help ensure that whistleblowers are not prevented or attempted to be prevented from reporting
  • Companies must ensure that reporting can be done orally or in writing

If the scheme is operated completely externally via a business partner, most of the obligations will be transferred from the company to the business partner.

The draft bill also proposes for the establishment of an external and independent whistleblower scheme via the Danish Data Protection Agency, as a supplement to the internal whistleblower schemes established by companies. Consequently, this in principle means that all companies are actually covered by the Act, since employees in companies with less than 50 employees also can report and be covered by the protection under the Act.

The Act is expected to enter into force on 17 December 2021.

IUNO’s opinion

The new Whistleblower Act means that many companies must establish whistleblower schemes and simultaneously, that all companies in principle will be more or less covered by the new rules. Particularly, larger companies should already commence preparations now to ensure that the new schemes meet the new requirements and are established within the deadline.

Therefore, IUNO recommends that companies pay special attention to the fact that there are requirements on independence as part of the scheme, and that companies must ensure that a conflict of interest does not arise when reports are handled. This means that companies should consider whether the whistleblower scheme should be established via a business partner that the company normally uses, or whether it should be managed by another business partner.

We usually recommend that companies establish an internal whistleblower program through an external partner. The reason is that if employees only can report matters internally, they may refrain from reporting to the scheme because the company is the direct recipient of the report.

At IUNO, we can help your company with all aspects of the whistleblower scheme. Read more about it here.

[Draft bill on the protection of whistleblowers of 24 February 2021]

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Anders

Etgen Reitz

Partner

Søren

Hessellund Klausen

Partner

Kirsten

Astrup

Associate

Cecillie

Groth Henriksen

Associate

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