On 16 December 2022, the Whistleblower Protection Act (HinSchG) was passed in the Federal Parliament. Based on the Whistleblower Directive, it guarantees whistleblowers better protection in their professional environment against reprisals such as dismissal or defamation. The next plenary session of the Bundesrat is on 10 February 2023. If it approves the HinSchG, the law can be promulgated in February. Since a law comes into force three months after promulgation, in this case it would probably be the end of May. In the first stage, the law will apply to all companies with 250 or more employees and, from 17 December 2023 to all companies with at least 50 employees.
The Whistleblower Protection Act in practice
The Whistleblower Protection Act obliges employers to set up an internal reporting office through which whistleblowers can submit a report of wrongdoing, criminal offences, or administrative offences in the company. Here is a brief summary of what the internal whistleblower system must fulfil:
- Whistleblowing must be able to be submitted in writing, orally or in person – “in person” in the new law includes not only a face-to-face meeting, but also a visual or audio transmission.
- Confirmation of a received tip must be given within seven days and after three months at the latest, the reporting office must inform the whistleblower what follow-up measures have been taken or are planned to effectively clarify the tip.
- All whistleblowing must be documented and organised in accordance with the law.
- All tips must be followed up – also anonymous ones.
- Whistleblowers can turn to an internal or external reporting office – companies benefit from whistleblowers submitting reports internally and should therefore make the reporting office attractive and communicate transparently how it works.
One of the latest changes in the adopted law concerns the handling of anonymous reports: The internal reporting channel must be designed in such a way that anonymous contact on the part of the whistleblower is possible and that communication between the whistleblower and the internal reporting office can also be completely anonymous. In the draft, this was still considered an option. Although this obligation will not come into force until 1 January 2025, it is of course sensible to design the reporting system in such a way that it fulfils all requirements.
Another change concerns compensation claims: Whistleblowers are not only entitled to compensation if reprisals by employer’s result in pecuniary damage, but also if the reprisals result in non-pecuniary damage. Such non-material damages can be, for example, psychological stress due to mobbing or damage to reputation.
In principle, whistleblowers can choose whether to use external or internal reporting channels. Whistleblowers who decide to use an external reporting office can in future contact the Federal Office of Justice. Information can also be submitted via the existing reporting systems of BaFin or the Federal Cartel Office.
Anonymity, multilingualism, personnel issues, time limits: there are a lot of things to consider when implementing a whistleblower system in compliance with the law, and the implementation in the company is anything but trivial in practice. Non-compliance with the obligations or faulty processes can result in severe fines.
In order for a company to meet the legal requirements with as little effort as possible, it is advisable to choose a digital platform for the internal reporting system. In contrast to an ombudsperson, a digital platform enables 24/7 accessibility, regardless of location and time, simply and efficiently. Multilingualism can also be easily implemented here.
To ensure that the HinSchG is implemented in compliance with the rules, companies can outsource the reporting office – which is easy to implement with a digital solution. In this way, companies save their own resources and do not need to train the team and, if necessary, train the person responsible for the reporting office. This is because this person must not only perform his or her task independently, i.e. without instructions, but must also have the necessary expertise to assess how a report should be classified and to which person it should be forwarded.
THE MAK`ED TEAM supports companies with a high level of expertise in all challenges that arise in the development and establishment of an internal whistleblower system. We recommend digital systems and advise companies in the individual decision-making process so that all requirements for transparency, accessibility, anonymity, compliance with deadlines and data protection can be met reliably and without problems. THE MAK’ED TEAM advises medium-sized companies in the field of compliance management and thus also in the implementation of the new regulations.