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A whistleblowing system - easily explained
The adoption of the EU Whistleblower Protection Directive poses new challenges for SMEs in the future: The deadline for implementing a whistleblower system for companies with 250 or more employees expired at the beginning of July 2023. Since 17 December 2023, small companies (< 250 employees) must also become active under the new German Whistleblower Protection Act. But what is a whistleblower system anyway?
In very general words, a whistleblower system is a system used by companies and administrations to open up a confidential communication channel for their employees and third parties in the environment. The channel can be used by them to report possible criminal offences and ethical violations.
(Cf. Schemmel/Ruhmanseder/Witzigmann: Hinweisgebersysteme, C.F. Müller, Heidelberg 2012).
A whistleblowing system as the heart of your compliance
The topic of whistleblowing and compliance is still handled carelessly in many companies. However, compliance with legal regulations is not only an option or even a “free exercise” for companies today, at least since the new EU Whistleblower Directive, it’s a duty.
Find out in 90 seconds how you can protect your company with a whistleblower system:
These well-known scandals have stimulated discussions about whistleblower protection:
As well-known cases from the past show, whistleblowing can pose a danger to companies. The creation of a regulated infrastructure with a whistleblower system forms a sound basis for identifying violations at an early stage.
Protecting so-called whistleblowers from retaliation is a central part of the discourse. What is a whistleblower? Whistleblowers are employees who report internal and external legal violations. A whistleblower system protects the identity of whistleblowers and creates a structured way of dealing with violations.
The so-called EU Whistleblower Directive is an important impulse here, with which the EU has taken an important step towards whistleblower protection. The German government only transposed the directive into German law in May 2023, i.e. 1.5 years late. In addition to whistleblower protection, the law also repeatedly mentions whistleblowing systems.
Which whistleblowing systems are available on the market?
There is a variety of whistleblowing systems. The EU Whistleblower Directive does not give specific instructions on how to implement the Directive, i.e. what kind of system companies should use.
Various systems are on offer on the market:
- Mailbox - communication mostly in one direction only
- Call centre - communication from person to person
- Ombudsperson - the mediating body in between the parties
- Digital whistleblowing systems - real-time chat and the ability to submit reports at any time and from any location using any internet-enabled device
All types of systems have different advantages and disadvantages, all of which a company must consider when making a choice, taking into account its processes and priorities.
How do companies benefit from whistleblowing systems?
The European Parliament’s Whistleblower Directive 2019/1937 has now been implemented in Germany. By the deadline of 17 December 2023, all companies with more than 50 employees must offer their employees and business partners a whistleblowing system. Companies with more than 250 employees had to take action by 2 July 2023. Authorities, offices and public institutions, such as cities and municipalities with more than 10,000 inhabitants, are also obliged to introduce a whistleblowing system.
Regardless of the specific number of employees, however, it is advisable for all affected companies to consider the introduction of a whistleblower system at an early stage.
Whistleblowing system as a protective shield – An internal reporting system pays off for every organisation in many ways:
- With a EU-Directive-compliant system, you fulfil the legal requirements.
- You protect your employees and your company from penalties, sanctions and damage of image.
- Your company automatically receives an early warning system.
- You promote the values of integrity and transparency internally and thus strengthen your image towards business customers, partners, banks, investors and employees.
- Your company acts proactively to live an open corporate culture.
How does a digital whistleblowing system work?
Digital whistleblowing systems are convincing due to their standardised procedure with a high level of protection of the whistleblower’s identity. The usual process of an incident can be divided into five steps.
1. Whistleblowers observe legal breach
A staff member observes an incident that violates legal requirements. Even if the person is unsure whether the incident needs to be reported, they should not hesitate to do so. A review from legal experts protects against mistakes.
2. Reporting via the digital whistleblowing system
Via a whistleblower system, a whistleblower can submit reports anonymously and confidentially from any internet-enabled device. A simple phone call is also possible. It is up to the whistleblower whether he or she wants to leave personal data or not. Additional information relevant to the report – such as pictures, documents, drawings, etc. – can be uploaded directly. It is important that the meta data is deleted.
3. Verification of the report & communication
Upon receipt of the report, the system automatically arranges for the responsible employee or the ombudsperson to be informed. As a rule, digital whistleblowing systems can be used for both oral and written reports. It is important that the system converts voice messages or verbal answers to the questionnaire into text. If the whistleblower and the responsible officer are in the system at the same time, modern systems allow real-time communication with the whistleblower. This gives the person responsible on the company side the opportunity to enter into an anonymous dialogue with the whistleblower and ask important questions about the report.
4. Consequence of the report
After processing the report and communicating with the legal expert, a decision is made on possible consequences. The incident can be clarified either internally or through legal measures.
5. Follow Up
A follow up is also part of the whistleblower system. After a certain time, it is checked whether the matter could be clarified or whether disagreements have been resolved.
Why should you rely on a digital whistleblowing system?
There are a number of whistleblowing systems (analogue and digital) with different advantages and disadvantages available for you on the market. However, in our view, a digital whistleblowing system currently offers the safest and most efficient option as it:
- allows anonymous reporting
- enables confidential case handling
- securely encrypts data
- in our case, stores the data securely in the cloud of Deutsche Telekom
- is available at any time, in real time and from anywhere, as long as internet access is available
- allows examination by independent experts
A whistleblowing system is only successful in a company if it is actually used. A digital system lowers the hurdles for the whistleblower in reporting an incident.
Whistleblower Systems FAQ: Frequently asked questions
“The EU Whistleblower Directive is not yet a legal requirement for all companies. Why should our company implement a whistleblower system?”
Take the opportunity to be a role model. Proactively introducing a digital, anonymous whistleblowing system will have a positive impact on your corporate culture. By saying “yes” to a whistleblowing system, you as a company management are setting an example of transparency and openness. This promotes corporate responsibility among your employees. You promote trust and loyalty in your company. At the same time, you create an internal early warning system that protects your company from scandals.
“Which capacities are to be planned for implementation?”
With LegalTegrity, we have developed a whistleblowing system that is precisely geared to the needs of small and medium-sized businesses. This also includes the fact that our digital whistleblowing system can be used immediately after booking without any complex IT implementation. You receive a link from us that you can integrate into your intranet or website. Without any effort. The whistleblower system can be used without training because it is self-explanatory. All you need is an internet connection – the system can be accessed from any device. The data is securely hosted in the cloud of Deutsche Telekom. If you have any questions, our advisors are available to help you at any time.
“Doesn’t an anonymous system encourage abuse or complaining?”
There is no scientific or statistical evidence that the anonymity of the system is falsely used to malign colleagues. With a whistleblowing system in your company, you can take action against destructive critics through proactive and verifiable communication. These requirements can be communicated in the employment contract.
“Doesn’t a whistleblowing system promote a monitoring culture in the company?”
With a whistleblower system, you proactively promote values such as education, trust and transparency in your company. These are the values that protect your employees – ethically and economically. The days when whistleblowing only had a negative connotation are over, as the bottom line is that it protects your long-term business success.
You want to know more? Then download our guide “How to comply with the whistleblowing directive in your company”. Of course, you are also welcome to contact one of our experts for a personal discussion.
