Author: Lívia Djukić
Co-author: Kateřina Nešpůrková
AFTER ALMOST 5 MONTHS OF DELIBERATIONS, THE CHAMBER OF DEPUTIES PASSED THE WHISTLEBLOWER PROTECTION BILL. IN WHAT VERSION WILL THE SENATE DEAL WITH IT NOW, AND WHEN CAN WE EXPECT THE ACT TO TAKE EFFECT?
If the obliged entities (all employers with more than 50 employees, public institutions, and other selected entities) have not yet done so, they will soon have to implement an internal reporting system that will allow employees, business partners and other entities to report unlawful conduct within the organisation or harm to public interests. Even organisations that have reporting systems in place, e.g. under the existing AML regulations, will need to adapt them to the newly adopted legal requirements.
The obliged entities will need to consistently protect whistleblowers from retaliation and disclosure of their identity. They will also be obliged to designate a whistleblowing officer who will be responsible for receiving and addressing reports, to comply with the legal deadlines for verifying reports and communicating with the whistleblower, to protect the whistleblower’s identity, and to keep records of reports received.
The obliged entities will be exposed to fines up to CZK 1 million for violation of their obligations. Whistleblowing officers may be fined up to CZK 100,000. In addition, the whistleblower may claim compensation for non-pecuniary damage from the wrongdoing organisation, with the burden of proof being on the obliged entity in the potentially ensuing dispute.
Only employers with up to 249 employees will be allowed to share their internal reporting system with another company. All other employers will need to introduce their own internal reporting system, regardless of whether they are part of a group or not – the use of a group-wide reporting system is not justified under Czech law.
We have summarised the details of the forthcoming legislation for you in our previous article.
From the beginning, the legislative process in the Chamber of Deputies was accompanied by two main topics: the obligation to accept anonymous reports, and the protection of whistleblowers who report suspected offences.
On Friday, 21 April 2023, an amendment was approved in the third reading, according to which protection will be provided not only to a whistleblower who reports a suspected crime or violation of another regulation in areas defined by law, but also to a whistleblower who reports a suspected misdemeanour for which the perpetrator faces a fine of at least CZK 100,000. Misdemeanours are regulated in the Czech Republic by numerous regulations governing the various segments of public administration (about 250 legal regulations), so it will be interesting to see how whistleblowers will be able to deal with the legal qualification of the reported facts in order to find out whether or not it is a report that will trigger their protection.
Conversely, an amendment under which public entities and employers would be required to accept and investigate anonymous reports was rejected. On the other hand, receiving anonymous reports is not prohibited and, therefore, every obliged entity will be free to decide whether or not to address anonymous reports.
In mid-March, the European Commission announced that it would take legal action against the Czech Republic and other Member States that have not yet implemented the Whistleblower Protection Directive into their legal systems. At the same time, it has asked for a fine to be levied which would accrue until the European regulation is transposed - the amount of the fine is EUR 4,900 per day, calculated from the first day of delay, i.e. from 18 December 2021. Therefore, it can be expected that the legislative process in the Senate will be carried out quickly and efficiently so that the law enters into effect as soon as possible.
Under the current bill, obliged entities would have approximately one month after the adoption of the law to implement an internal notification system, designate a qualified whistleblowing officer, publish all mandatory information, and ensure compliance with their other legal obligations.
Based on our experience, the implementation of an internal whistleblowing system takes several weeks – it is indeed necessary to set up technologies and processes for a safe reporting, prepare and approve related internal documentation, make additions to the website and, last but not least, train the whistleblowing officers as well as potential whistleblowers. Therefore, we recommend that you do not leave the implementation for the last moment.
The law allows outsourcing the implementation and management of the internal reporting system, as well as the performance of the role of the whistleblowing officer, to a third party. In cooperation with our affiliated company, FairData Professionals a.s., we help our clients implement a comprehensive whistleblowing solution FairWhistle, and we also manage ethics hotlines for a number of clients and perform the role of whistleblowing officer. If we can help you too, we would be happy to hear from you.
We will also share with you our experience and practical tips on how to set up a working internal reporting system, or how to address reports, in our WHISTLEBLOWING AND INTERNAL INVESTIGATION – PRACTICALLY AND EFFICIENTLY (ONLINE) seminar, where we will explain, among other things, the basics of internal investigation.
To sign up, click HERE.
