Integration of the European directive on the protection of whistleblowers into national legislation | Barnea Jaffa Lande & Co.
By October, European Union companies employing at least 50 employees will need to have an internal reporting system in place to report misconduct that may indicate compliance violations. In addition, all EU businesses, regardless of size, will be required to protect whistleblowers against all types of retaliation.
The EU directive on the protection of whistleblowers entered into force in October 2019. It has given EU member states two years to prepare to incorporate the directive into their national law. Before the enactment of the Directive, no uniform binding legislation applied to all EU Member States and only 10 Member States had adopted national legislation in this regard. The impending introduction of national whistleblower protection laws across the EU will naturally have a ripple effect.
Although the situation in Israel is different and the EU directive will not apply to Israeli companies operating in Israel that are not subject to the directive in one way or another, past experience has showed that the ripple effect of such legislation will also reach Israeli shores. The repercussions may come in the form of fast-track whistleblower protection legislation in Israel, or large European companies pressuring their Israeli partners to ensure that the latter comply with European standards as a precondition for prosecution. common business activities. Either way, it would be wise for Israeli companies to give this question some thought.
The obvious starting point is to define the term “whistleblower”. Whistleblowers are employees or third parties who discover during their work a fault that could be prejudicial to the public interest and who report this fault to an authority (usually within the company). Examples of misconduct include actions that cause damage to the environment, harm public health, or negatively impact investors in the capital market.
It is important to note in this context that while Israel has not enacted legislation similar to the EU directive about to enter into force, there is certainly a growing awareness of the issue. in Israel. First, the Employee Protection Act (Exposure to Breaches, Unethical Behavior and Maladministration) already protects whistleblowers in the public sector. In addition, the private sector is also increasingly aware that internal reporting of misconduct and breaches within organizations must be encouraged and that whistleblowers need to be protected.
So what does the European whistleblower protection directive include?
- The directive obliges the creation of secure communication channels for reporting within the organizations themselves.
- It extends the protection to also include instances of reporting via external channels. Essentially, the directive encourages whistleblowers to use internal channels for initial reporting, before referring to authorities outside their organizations. Nevertheless, the directive stipulates that whistleblowers should not be denied protection even if they decide to report to external authorities from the outset.
- The directive extends the protection of whistleblowers to include not only employees, but also volunteers, interns, shareholders, etc.
- It defines the means of protection to be provided to whistleblowers against acts of intimidation or reprisals, such as work suspensions, demotions, threats or other means of intimidation.
- The directive extends the scope of protection to also cover people who assist whistleblowers, whether they are colleagues or family members.
- It adds a list of support measures that must be provided to help whistleblowers.
- Directive obliges businesses and authorities to take action after receiving a report from a whistleblower within three months. (This period may be extended to six months in justified cases.)
Businesses that fail to comply with these requirements put themselves at risk, as whistleblowers can use external reporting channels and report businesses to EU authorities. This will generate bad press and etiquette that these companies allow unethical offenses and misconduct and have a poor culture of compliance.
Therefore, Israeli companies with subsidiaries or related companies in EU member states should speed up their preparations to strengthen their culture of compliance and implement internal mechanisms in line with the provisions of the Directive.
In addition, as mentioned, it would also be wise for Israeli companies, even those unrelated to the EU, to spend time building custom internal mechanisms to encourage and protect whistleblowers.