Why the Whistleblower Protection Act means greater transparency

In Germany, the Whistleblower Protection Act has been in force since mid-June—a significant step towards improving transparency in companies and protecting whistleblowers. But what challenges and opportunities does the legislation bring for businesses, and what needs to be considered?

What the legislation is about

Whistleblowers who expose misconduct and legal violations in companies often face significant risks. The Whistleblower Protection Act aims to better protect these individuals, enabling them to report breaches of laws and ethical standards without fear of repercussions. The EU Whistleblower Directive was adopted by the European Union in October 2019. In Germany, the legislation was passed in May 2023.

Implementation and deadlines

The Whistleblower Protection Act prohibits employers from dismissing, demoting, or otherwise punishing employees for exposing illegal activities. Companies with more than 250 employees had until mid-June 2023 to establish an appropriate workflow for protecting whistleblowers. Smaller businesses with 50–250 employees have until December 2023 to comply. In any case, it is essential for companies to implement reporting channels carefully, ensuring they are accessible around the clock and maintain whistleblowers’ anonymity.

The benefits of IT-based whistleblowing systems

When it comes to establishing a transparent and fair reporting system, IT-based whistleblowing systems are highly recommended. Such systems offer clear advantages as they are accessible 24/7, ensure secure handling of submitted reports, and reliably protect whistleblowers’ anonymity. Unlike traditional channels such as physical mailboxes or hotlines, IT-based systems are asynchronous, allowing whistleblowers to submit their reports without direct interaction with a recipient. The system then sends a notification to alert relevant parties of the new report. This saves time and facilitates the processing of cases.

Additionally, data transmission can be encrypted end-to-end, protecting whistleblowers' submissions from hacking attempts. IT-based systems also enable secure archiving of reports and reduce liability risks in cases of legal violations.

Conclusion

The Whistleblower Protection Act represents a significant step towards transparency and compliance. Companies should consider implementing IT-based whistleblowing systems to foster a trustworthy error-reporting culture and ensure the protection of whistleblowers. Timely preparation and adherence to the legal requirements are crucial to avoid potential disadvantages and penalties.