Protection of whistleblowers: A few words about penalties

In the last post, we introduced the purpose and major assumptions of the Directive of the European Parliament and of the Council (EU) No. 2019/1937 on the protection of persons who report breaches of Union law (i.e. the so called Whistleblowers Protection Directive) [here]. It imposes a number of obligations connected with the service and protection of such entities on the defined group of employers. To continue this train, it is worth responding to the following question: what penalties do employers that, despite of the implementation of relevant regulations, fail to fulfil such obligations face?

The Directive does not respond to such a question directly. In Article 23 it only stipulates that while implementing the above regulations, Member States shall provide for penalties applicable to persons that, among others, hinder or attempt to hinder reporting. This seems to also apply to entities that will not establish relevant reporting procedures in accordance with legal requirements. By use of general clauses, it is also pointed out that the penalties should be effective, proportionate and dissuasive and that criminal, civil or administrative penalties are necessary to ensure the effectiveness of the rules on whistleblowers protection and such penalties should be dissuasive to persons who take retaliatory or other adverse actions. Thanks to such clauses, Member States have a great freedom in developing their legal system, depending on their economic and legal situation, as well as their applicable rules of conduct.

Until the draft law is prepared, we can only speculate about the severity of possible penalties. However, given our experience to date, it is highly likely that consequences to unreliable entrepreneurs will be very severe. This is visible, for example, in the draft law on the liability of collective entities for forbidden acts subject to penalties, where it is stipulated that any entrepreneur that fails to fulfil its obligations concerning the protection of whistleblowers can be charged for a financial penalty of up to PLN 60 million! In addition, the entrepreneur will also have to take into account its liability for damages, lost benefits, lost reputation or limitations to the development of an employee’s professional career.

One is certain: the Directive introduces a certain novum for employers, employees and the legislator. Instead of allowing for the gradual implementation of changes, the postponed deadline for the implementation of relevant changes in the operation of an enterprise is, unfortunately, likely to result in delaying the complexity of the process, which will be implemented at the last possible moment. However, it is not worth waiting and, for sure, entrepreneurs should already start taking relevant steps aimed at adjusting their internal procedures, systems or employee awareness to new operating rules in order to enforce approaching changes with due diligence and protect themselves against potential penalties.

Aleksandra Bętkowska, Attorney

Michał Korszla, Attorney at law