The EU Whistleblowing Directive: Q&A Germany
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Dr Marcus Iske is a Partner and Anne Bremer is an Associate in our Dusseldorf office, both of whom advise on all aspects of employment law.
In our latest insight on whistleblowing, Marcus and Anne answer questions on the HinSchG and its implications for German employers.
What impact will the updated whistleblowing legislation have in Germany?
The HinSchG introduces protection for people who have obtained information about violations in connection with their professional activities (or prior to professional activities) and who report or disclose such information to the relevant reporting channels. It ensures protection for anyone who is the subject of (or affected by) a report or disclosure.
This applies in particular to violations of criminal law, federal and state legislation and directly applicable EU law. Further, the HinSchG obliges certain companies to establish internal reporting channels for whistleblowers.
Which companies does the HinSchG apply to in Germany?
The HinSchG requires employers in the private sector with 250 employees or more, and employers in the public sector, to implement internal whistleblowing reporting channels now. Private sector companies with between 50 and 249 employees have until 17 December 2023 to fulfil this obligation.
Regardless of the number of employees, the obligation to establish reporting channels applies to various companies in the financial sector as of the date the HinSchG came into force (2 July 2023).
What are employers' obligations in relation to dealing with disclosures?
Companies must establish and run internal reporting channels. They must also provide information about the reporting channel as well as alternative external reporting channels (for example, directly within the reporting channel or on the intranet, by email or notice board).
After reporting a violation, a whistleblower must receive an acknowledgement of receipt within seven days. In addition, the employer must ensure that it takes all necessary follow-up measures, such as investigating the disclosure and implementing any measures to remedy the violation.
The internal reporting channel should feed back to the whistleblower within three months of acknowledging receipt of the report or, if receipt has not been acknowledged, no later than three months and seven days after receipt of the report. The feedback must include notification of any follow-up action planned as well as any follow-up action already taken and the reasons for such action.
How are the reporting channels organised?
Companies can establish the internal reporting channel by themselves or use external service providers. Many companies choose external service providers in order to save resources and ensure a higher level of trust among whistleblowers.
All internal reporting channels must be secure and reliable, and allow for reports to be made verbally, in text form and (if desired) in person. The individuals responsible for overseeing an internal reporting channel should therefore be trained in advance to ensure they have the necessary expertise. The selected employees may perform other tasks and duties within the company in addition to their work for the internal reporting channel. However, any other tasks and duties must not lead to any potential conflict of interest.
In addition to internal reporting channels in companies, there are external reporting channels at public authorities and at the federal level, for example, the German Federal Office of Justice.
Will individual companies within a larger group structure be required to implement separate whistleblowing systems?
Currently, many international companies in Germany use joint whistleblowing schemes. The HinSchG offers the possibility for this practice to continue, provided that each individual entity with 50 employees or more also implements its own whistleblowing system for internal reports. The obligations to take measures to stop violations and report to the whistleblowers remain with the individual companies.
These internal systems can be shared with other group entities with less than 250 employees. Group entities with 250 or more employees must not share their internal whistleblowing systems with other entities, if an employee elects to report their concern through the local internal whistleblowing system.
Can whistleblowers make a report both internally and externally?
Generally, whistleblowers have the right to choose whether they report to an internal reporting channel within the company or to an external channel. The HinSchG provides that internal reporting channels should be given preference. Companies should therefore make internal reporting channels as trustworthy as possible and thus create incentives for whistleblowers to prefer to report to internal reporting channels.
Will employers be required to process anonymous disclosures?
Employers will not be obliged to accept or follow-up on anonymous reports. However, an anonymous whistleblower will still be entitled to protections if their identity subsequently emerges. As such, internal reporting channels should ideally also respond to anonymous reports.
What are the potential sanctions if an employer fails to comply with the HinSchG?
If a company fails to comply with the obligation to establish an internal reporting channel by 1 December 2023, it will face fines of up to EUR 20,000.
Fines of up to EUR 50,000 are possible for impinging upon a report or any subsequent communications (or attempting to do so), taking any retaliatory action (or attempting to do so) and breaching confidentiality. In exceptional cases, the fine can be increased up to EUR 500,000.
What other things should employers in Germany be thinking about?
Employers should quickly assess whether the HinSchG applies to them and take the appropriate measures to establish a reporting channel. In particular, responsibilities and procedures should be regulated at an early stage and the confidentiality of reports should be ensured. If a works council exists, its participation rights must be observed.
Whistleblowers are comprehensively protected from reprisals under the HinSchG, and stricter rules of evidence apply in their favour. Employers should therefore carefully document any personnel measures in order to be able to evidence that any disciplinary action taken is not related to a previous disclosure being raised by a whistleblower.