This post was written by Séverine Martel, Marie Brunot, Claudia Röthlingshöfer, Jan Weißgerber, Desmond Liaw, Anita Wan, Michael Smith, Amy Ferrington, and Joel Barras.
Welcome to Reed Smith’s monthly global employment law blog post. This month’s post covers the protection afforded to whistleblowers around the world.
Under French law, employees cannot be sanctioned, dismissed or be subject to direct or indirect discriminatory measures (especially concerning salary, training, reclassification or appointment) for reporting in good faith suspected wrongdoing by their employer.
French companies are not obliged to adopt a written whistleblowing policy. However, whistleblowing procedures in France must comply with the principles set out by the CNIL (i.e., the French Data Protection Authority). These rules are primarily designed to protect employees from invasion of privacy, potential breaches of individual liberties, false denunciation and wrongful data management.
Any form of retaliation taken against an employee who has used a whistleblowing mechanism in good faith is deemed to be null and void. By way of exception to this legal principle, an employee may face a disciplinary sanction and even incur criminal liability should he or she report a violation in bad faith or with malicious intent.
There is no legislation relating specifically to whistleblower protection in Germany. The rights and duties of employees in this respect are determined by the general rules and obligations applicable to the employer-employee relationship. In short, employees must be loyal to their employer and protect its business.
German labour courts have considered the validity of sanctions that employers have applied to employees who have raised concerns with third parties outside of the company (such as police and public authorities), after escalating – or without trying to escalate – an issue with the employer first.
German courts have deemed terminations or sanctions based on whistleblowing actions as invalid, where employees have tried to address illegal behaviour of a colleague/superior internally without success before informing third parties outside the company. The courts have stated that any sanction violates the principle of protection against victimisation and retaliation, provided that the whistleblowing was justified. In such cases, dismissed employees must be reemployed.
The entire whistleblowing topic is still under development in Germany, and several Acts covering these issues have been discussed recently. As there is no clear legal regulation in place, there is still a lot of uncertainty as to which disclosures are protected.
In Hong Kong, no legislation specifically offers whistleblower protection. To gain protection from having “blown the whistle”, an employee has to rely on other rights found in employment and anti-corruption legislation.
For instance, under the Employment Ordinance (Cap. 57), an employee who gives evidence in any proceedings regarding the enforcement of labour legislation, industrial accidents, or breach of work safety regulations, is protected from dismissal and discrimination. An employer who dismisses or discriminates against such a whistleblowing employee commits a criminal offence and is liable to pay a fine of HK$100,000 and/or compensation to the employee.
Further, a whistleblowing employee is protected from allegations of breaches of confidentiality in the following circumstances:
- Where it is in the public interest to make the disclosure under common law
- Where the disclosure is made under a Court Order or under the directive of a statutory inspector
- Where the disclosure relates to suspected money laundering or other serious crimes, and is made under certain pieces of legislation to an “authorised officer” (e.g., a police officer, a member of the Customs and Excise Service, the Joint Financial Intelligence Unit)
- Where the disclosure relates to corruption and bribery and is made under the Prevention of Bribery Ordinance (Cap. 201)
The Stock Exchange of Hong Kong Limited has amended its Corporate Governance Code to state that it is recommended best practice for all Hong Kong-listed companies to establish a whistleblowing policy, under which employees may raise concerns about possible improprieties in confidence. This is not compulsory, but listed companies that fail to comply must explain non-compliance in their annual report.
In the UK, the Public Interest Disclosure Act 1998 (“PIDA”) protects whistleblowers in two respects:
- Dismissal of employees will be automatically unfair if the reason, or principal reason, for their dismissal is that they have made a “protected disclosure”
- Workers (a wider category of individuals than employees) are protected against being subjected to any detriment on the grounds that they have made a protected disclosure. “Detriment” is defined very widely and can include any circumstances in which a worker might reasonably take the view that they have been disadvantaged.
A whistleblower will only qualify for the protection described above where they have made a qualifying disclosure which is also a protected disclosure.
A qualifying disclosure for these purposes is a disclosure of information which, in the reasonable belief of the worker making it, tends to show that malpractice (e.g., a breach of a legal obligation regarding health and safety) has taken place, is taking place, or is likely to take place. Following reform in this area, a disclosure made on or after 25 June 2013 will only be a qualifying disclosure if the worker has a reasonable belief that the disclosure is in the public interest.
Whether or not a qualifying disclosure will amount to a protected disclosure depends upon the identity of the person to whom the disclosure is made. PIDA generally encourages disclosures to be made internally, to the employer, and further conditions apply to disclosures to third parties.
U.S. law prohibits employers from taking adverse action against employees who engage in whistleblowing activities. Federal law specifically protects those employees who blow the whistle on environmental, workplace safety, and securities laws violations. Federal whistleblower laws also prohibit retaliation against employees who participate in governmental or administrative investigations into potential workplace law violations – even if that employee did not initiate the complaint.
The Occupational Health and Safety Act of 1970, for instance, protects workers from retaliation as a result of reporting/investigating health or safety violations in the workplace. Similar laws address specific industries or niche categories, such as commercial motor vehicle safety and environmental hazards.
The Sarbanes-Oxley Act of 2002 (“SOX”) and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 work in tandem to protect whistleblowers at all publicly traded companies. Employers at publicly traded companies are prohibited from taking adverse action against any employee in retaliation for that employee “initiating, testifying in, or assisting in any investigation or judicial or administrative action” related to the employer’s violation of the federal securities law. The SOX and Dodd-Frank whistleblower protections are particularly broad, encompassing adverse action taken even in minor part as a result of protected activity. Thus, even if an employee has committed an otherwise terminable offense, if that employee has also engaged in whistleblowing activity, he or she may be protected from adverse employment action.
In addition, many individual states have independent whistleblower statutes protecting employees of private companies. In New York, for example, both public and private employers are prohibited under state law from disciplining or taking retaliatory action against any employee who has disclosed or threatened to disclose policies or practices that violate the law or that otherwise threaten public health or safety.