Whistleblower protection in the EU and other countries
The topic of whistleblowing has gained a lot of traction in Europe in recent years, especially in the context of the EU Whistleblower Directive. The official name of the EU Whistleblower Directive, which came into force on December 16, 2019, is a bit unwieldy: “Directive of the European Parliament and of the Council on the protection of persons who report infringements of Union law.” However, the message behind it is clear: companies are obliged to take steps to offer employees (but also external stakeholders such as suppliers or customers) the opportunity to point out unethical or illegal behavior – without having to fear sanctions such as dismissal or other reprisals.
The central element of the Directive is a confidential reporting channel that companies with more than 50 employees in the EU must set up. EU member states were given until December 17 2021 to transpose the Directive into national law. Only four EU member states (Denmark, Sweden, Portugal and Malta) complied within the specified deadline. Some other states (Cyprus, Latvia, France and Lithuania) followed suit at the beginning of the year, and draft laws are still being discussed in the other EU states. The EU Commission has initiated infringement proceedings against countries that missed the deadline in order to generate additional pressure for prompt implementation.
In the United States (Guidance of the Department of Justice / Sarbanes-Oxley Act) or in the United Kingdom (Bribery Act), whistleblower systems – also known as whistleblowing systems – were already enshrined in national laws. You can also read about the protection whistleblowers enjoy in different European countries in our expert guide “Whistleblowing Laws in the European Union”.
Still no national law in sight for Switzerland
The fact that these regulations will not exist in Switzerland for the foreseeable future, leaving a twelve-year debate in 2020 on stronger whistleblower protection without a happy ending for whistleblowers, continues to be sharply criticized by Transparency International Switzerland. “An indictment of Switzerland,” proclaimed one media release by the organization, which is committed to fighting corruption, on the failure of the law in the National Council. It is a period of darkness for whistleblowers in Switzerland who continue to be completely inadequately protected by law against the disadvantages of speaking out.
However, companies also run a risk if they fail to protect whistleblowers by establishing a whistleblowing system that allows anonymous reports. This is because reports of legal violations or violations of internal rules and values in the company then do not reach those responsible, or only in significantly smaller numbers – or they reach them in a roundabout way and with a significant time delay.
In other words, there is still no legally required and efficient early warning system to identify risks in time and avert sanctions, penalties and reputational damage. According to a statement by Federal Councillor Karin Keller-Sutter, head of the FDJP, the Federal Council will not take action on its own initiative until further notice. After the last rejection of the law, it is now the turn of the parliament. However, all parties involved agree that the pressure on Switzerland to catch up with the international requirements for whistleblower protection will increase.
Movement at cantonal level in the public sector: Geneva whistleblowing law
Even though the last attempt to pass legislation on whistleblower protection in 2020 failed at the federal level, there is movement at the cantonal level. The governments of many cantons have put the protection of whistleblowers on the agenda and want to regulate this at least for the public sector.
For example, the Canton of Geneva has adopted the law “Loi sur la protection des lanceurs d’alerte au sein de l’Etat (LPLA) (12261)” (Law on the Protection of Whistleblowers in the State of Geneva), which entered into force on March 26, 2022. The law concerns all employees of all cantonal administrations and departments, the State Chancellery, the Grand Council, all municipal authorities, the University of Geneva, the University of Applied Sciences of Western Switzerland and other autonomous public institutions of the canton. The whistleblower may submit a tip anonymously if he/she wishes. In addition, the whistleblower receives special protection against professional disadvantages and other reprisals. The protective measures also prevent the whistleblower from being accused of a breach of official secrecy, the duty of loyalty, due diligence, or confidentiality.
The public institutions concerned are assisted by the Confidential Group of the Canton of Geneva, which was set up specifically for this law. This group provides an anonymous reporting channel, ensures the protection of the whistleblower, answers all questions relating to the law and ensures that the whistleblower does not suffer any professional disadvantages. Alternatively, the institutions affected by the law can also set up their own reporting channel that complies with it.
The cantonal authorities and institutions concerned have six months from the entry into force of the law to make use of the trust group or implement another reporting channel for whistleblowers. The corresponding ordinance also entered into force on March 26, 2022. Further information as well as answers to the most important questions for affected employees can be found on the website of the Canton of Geneva.
In the canton of Ticino, a similar law for the public sector is also about to be passed in the cantonal parliament.
Proactively preventing harm thanks to whistleblower systems
A look at the Whistleblowing Report 2021* shows how effective and urgently needed a properly designed and communicated whistleblowing system is: According to this report, almost one in three of the companies surveyed in Switzerland had been affected by whistleblowing in 2020. The damage was considerable in some cases: One third of Swiss companies put the total financial damage caused by whistleblowing at more than 100,000 euros. This is a significant increase compared to the Whistleblowing Report 2020. In 2019, the total financial damage was still over 100,000 euros for 21 percent of Swiss companies. However, it was pleasing to note that over 27.6 percent of the Swiss companies surveyed were able to uncover 80 percent of the total financial damage.
So, it pays to be proactive – even if the law does not require it. Swiss companies have already set an example here in the past: According to the Whistleblowing Report 2021, almost 65 percent of Swiss companies have already set up an internal reporting office for whistleblowers, and among large companies the figure was as high as 73.1 percent. This puts Switzerland well behind the UK (73.0%), roughly on a par with Germany (63.2%) and well ahead of France (54.1%).
* The Whistleblowing Report 2021 was prepared by the University of Applied Sciences Graubünden in cooperation with EQS Group. Representatives of 296 British, 291 German, 338 French and 314 Swiss companies were surveyed as part of this report.
Significance of the EU Directive for Switzerland - Need for action by affected companies
However, the fact that national legislation does not require whistleblower protection and that the EU Whistleblower Directive has no impact on the activities of Swiss companies within their own national borders does not mean that they can ignore EU regulations.
In fact, the opposite is true: There is an urgent need for action, especially for internationally active groups in Switzerland that maintain branches or subsidiaries with more than 50 employees in other EU countries. This is because they are subject to EU law with their foreign subsidiaries and must therefore set up an internal channel through which compliance violations can be reported anonymously.
Philipp Luettmann, partner and consultant for forensic investigations, corporate compliance management and crisis management at Deloitte Switzerland, also advises Swiss companies to urgently review an implementation of the requirements of the EU Directive. In order to ensure a uniform standard within the company, this should not only be done in the foreign subsidiaries, but throughout the entire group. This means that employees in Switzerland should also have the opportunity to report grievances without incurring an incalculable risk. At present, they still have to fear that they will be held responsible for breaches of the duty of loyalty under labour law, data protection or confidentiality obligations.
Whistleblower platforms for good corporate governance
By introducing an internal reporting option, a company also demonstrates its good corporate governance, comprehensive risk minimization and the creation of a corporate culture that promotes a high level of ethics and trust in its established corporate values, Luettmann further explains. What’s more, it enables Swiss companies to meet the expectations and demands of European Union corporations regarding the compliance of their suppliers and business partners.
Guide to the Introduction of Whistleblowing Systems
How to successfully implement a whistleblowing system in your organisation.