The New Draft Bill on the Implementation of the EU-Whistleblower-Directive in Germany Or: You always meet twice!

• Germany

• ESG
• Financial services disputes and investigations

10-06-2022

After the former draft bill of the “Whistleblower Protection Act”, which was supposed to transpose the EU-Whistleblower-Directive (Directive (EU) 2019/1937) into national law, was rejected due to massive disagreements on certain aspects of the draft bill among the (then) government parties in 2021, it had been rather quiet regarding a German concept of a “Whistleblowing Law” for some time. Almost unnoticed the EU Commission has initiated infringement proceedings against Germany given the fact that Germany failed to meet the transposition deadline that had expired on 17 December 2021.

Germany’s Federal Minister of Justice has recently circulated a new draft bill. Although this draft bill is based on the previous draft bill to a significant amount, it also contains some new aspects which were not anticipated in their particular shape and form and which give rise to a brief consideration.

Extended Scope of Application

Similar to the previous draft bill, the present paper also provides for an extended scope of application compared to the EU-Whistleblower-Directive.

While according to the EU-Whistleblower-Directive (due to the limited legislative competence of the EU legislator) only the reporting of certain violations of EU law triggers a protection mechanism for whistleblowers, the present draft bill provides protection for whistleblowers with regard to reporting which concerns

• violations punishable by criminal law,
• violations which constitute administrative offences (insofar as the violated provision serves to protect life, limb or health or the rights of employees or their representative bodies, or
• violations supposed to protect certain enumeratively listed areas of law (including money laundering, data protection, environmental protection).

Contrary to the present draft bill, the previous draft bill dated 2021 did not provide for any restriction of administrative offences to certain objects of legal protection. The fact of limiting the protection mechanism only to certain administrative offences, is likely to be due to the idea of not unduly extending the objective scope of application since it is to be noted that the German legislator already has a much broader scope of application than the concept provided for by the to the EU-Whistleblower-Directive. Therefore it seems appropriate to limit the protection mechanism for whistleblowers to reports of significant violations of local law (i.e. criminal offences and administrative offences that affect essential objects of legal protection).

Group-Wide Whistleblowing Systems

It is essential to note that the present draft bill allows for the implementation and maintenance of a reporting system through “third parties”. According to this concept, it is permissible to outsource the implementation and the maintenance of reporting system to law firms or auditing firms, for example.

In addition, according to the draft bill, this leads to the fact that – contrary to certain opinions rendered by the EU Commission in 2021 – obligated companies that are part of an affiliated group may rely on the group-wide reporting system. Last year, the EU Commission caused discussion when it had declared that group companies with more than 250 employees would always have to maintain their own reporting system; according to the opinions of the EU Commission, the group-wide reporting channel could only be operated as an additional reporting channel to the reporting channel of the single group company.

It remains to be seen to what extent the possibility of one single group-wide reporting system will be reflected in the national law and whether this concept will be hold valid under a review by European law.

No Mandatory Obligation to Accept and Process Anonymous Reports

The current draft bill – like the previous paper – does not provide for a mandatory obligation to design company internal whistleblower structures in a way that anonymous reports shall be submitted and processed. However, a company is free to set up such a reporting structure. Implementing a whistleblowing system which allows for anonymous reports could be of high relevance for obligated companies given the fact that this may reduce consequential costs in order to ensure the confidentiality of the whistleblowers.

Outlook

It is expected that the German law transposing the EU-Whistleblower-Directive into national law will pass parliamentary vote this summer and subsequently enter into force. Since Germany is already facing infringement proceedings initiated by the EU Commission due to failure of timely implementation of the EU-Whistleblower-Directive, a generous implementation period should not be expected.

Companies should familiarize with the new draft bill and – if necessary – initiate appropriate adjustments to their internal reporting system. In this respect it should be noted that the violation of the obligation to set up and operate an internal reporting system is punishable with a fine of up to EUR 20,000 according to the present draft bill.

Our partner Dr. David Rieks (Germany Head of Corporate Crime and Investigations) and his team are here for your support to:

• discuss with you whether and to which extent your whistleblowing systems might be adjusted;  
• assist you with regard to setting up new whistleblowing structures in order to fulfil the prerequisites set out by the Directive;
• actively support you with regard to handling reports of whistleblowers and to draw appropriate consequences from such reports received;
• help you maintain a compliant whistle-blowing system in your everyday business.