{"id":2438,"date":"2023-01-15T11:55:00","date_gmt":"2023-01-15T10:55:00","guid":{"rendered":"https:\/\/legaltegrity.com\/?p=2438"},"modified":"2026-05-13T17:54:48","modified_gmt":"2026-05-13T15:54:48","slug":"whistleblower-system-shield","status":"publish","type":"post","link":"https:\/\/legaltegrity.com\/en\/blog\/hinweisgebersystem-schutzschild\/","title":{"rendered":"Whistleblower system as a shield"},"content":{"rendered":"
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Modern Whistleblowing System: Early Warning System and Shield for Your Business<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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A whistleblower system acts as a protective shield! As an entrepreneur, managing director, or executive, you will have followed the scandals of recent years at T\u00f6nnies, Wirecard, or also at Wilke, VW, and Facebook. You therefore know that such incidents can bring about significant reputational damage. However, it is often only large corporations that have the financial reserves to escape with a slap on the wrist.<\/p>\n

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So, for every upright, medium-sized business owner, the question arises: how can the risk be reduced that an employee, through conscious or unconscious breaches of the law, puts the company's fate at risk or jeopardises its future?<\/p>\n

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For known, quantifiable risks, there are often very complex risk management systems depending on the size and business model of the company. At least, however, there is a \u201ePlan B\u201c in the drawer, which one hopes not to need. But what about the broad spectrum of unknown risks due to misconduct, which are rather unlikely but, if they occur, can have the consequences of a tsunami for the company?\u00a0<\/p>\n

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In the following post, you will learn how a compliant whistleblowing system can serve as an early warning system and a shield against scandals and legal violations within your company.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What risks can be avoided by companies through a whistleblowing system?<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Potential environmental or health hazards, product liability cases due to quality defects, corruption, bribery, fraud, accounting and balance sheet irregularities or even serious economic crime: they all fall under the risks for which there is usually no plan B in your company. They come as a surprise and no one would have thought it possible beforehand. Small and medium-sized enterprises or family businesses with proven cooperation based on trust and short decision-making processes are often particularly at risk here. The line between great trust and blind trust is narrow. If appropriate control mechanisms are missing, the gateway for abuse is wide open.<\/p>\n

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The sooner risks can be identified, the more efficient and cheaper the measures will be to counteract them and prevent a scandal from defining your company's future. Severe reputational damage from negative press or massive financial losses not only leads to significant revenue shortfalls for small and medium-sized enterprises but often also to insolvency and personal liability for you, the management.<\/p>\n

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An example of Financial losses<\/strong>:<\/h4>\n

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The unlimited trust of the owner family of the world-renowned security firm ABUS in their former authorised signatory enabled him to embezzle over 16 million euros into his private accounts. After spending the defrauded money, he turned himself in. However, the company suffered massive financial damage, which could only be rectified with the private assets of the entrepreneurial family.<\/p>\n

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An example of\u00a0Damage to reputation<\/strong>:<\/h4>\n

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In the T\u00f6nnies case<\/strong><\/a>\u00a0a whistleblower, an employee of the canteen operator, was concerned that the violation of the minimum distance of 1.5 m in the canteen would lead to the spread of\u00a0<\/strong>was promoted by COVID-19. Her video went viral and she was sacked. She sued, but there was no final judicial resolution. The spread of the virus in the region and the devastating press coverage regarding working conditions at T\u00f6nnies contributed to lasting reputational damage and significant financial losses.<\/p>\n

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An example of\u00a0Trade secrets<\/strong>:<\/h4>\n

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The case of Brigitte Heinisch, who pointed out inhumane conditions in care to her employer Vivantes \u2013 Netzwerk f\u00fcr Gesundheit GmbH, went through all legal instances. Due to staff shortages, residents were left lying in their own faeces and urine until the afternoon. Services were billed that were never provided in that form. After Vivantes did not respond, Brigitte Heinisch could not reconcile this fraud with her conscience and involved the public prosecutor's office.<\/p>\n

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The Federal Constitutional Court had already ruled in 2001 that employees may also report their employer if there are criminal concerns (Ref: 1 BvR 2049\/00). Ms. Heinisch was dismissed. Her persistent struggle through the courts ended six years later before the European Court of Human Rights in Strasbourg. It delivered a judgment on 21 July 2011 (Az: 28274\/08<\/a>which restricts the protection of trade secrets:\u00a0<\/p>\n

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  1. The \u201eDisclosure of wrongdoing<\/em>\u201cis covered by freedom of speech.\u00a0<\/li>\n
  2. The \u201epublic interest in information about shortcomings\u201c<\/em>\u00a0a company's interest in protecting its reputation and business interests prevails.<\/li>\n<\/ol>\n

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    Since 2019, the legal situation in Germany has been extended by the Trade Secrets Act to the effect that unethical behaviour by a company or its management is sufficient for an employee to disclose trade or business secrets. The prerequisite for this is that the disclosure is suitable for protecting the general public interest. For example, the Higher Regional Court of Oldenburg acquitted a whistleblower who leaked trade secrets of a company to the media. The company lawfully exported a chemical for lethal injection to the USA for the execution of the death penalty, with the approval of the authorities.<\/p>\n

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    Legal requirements for early warning systems<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    Early warning systems come in varying levels of complexity. From the minimum compliance with legal requirements to comprehensive risk management systems and extensive compliance programmes. The aim of all systems is to prevent breaches, thereby preventing damage to reputation and reducing liability risks. Furthermore, they serve to detect any misconduct as quickly as possible, in order to be able to react efficiently and consistently.<\/p>\n

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    With small and medium-sized enterprises, there is often an approach of simply meeting the minimum requirements, which avoids criminal proceedings or claims for damages, and which, for example, allows them to participate in public procurement tenders.<\/p>\n

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    But what is the minimum? In Germany alone, there are around 2,000 laws and around 3,500 regulations with over 75,000 legal norms. Added to this are EU directives and further legal requirements as soon as the company operates outside of Germany.<\/p>\n

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    However, to this day, there are only recommendations and no explicit \u201ecompliance\u201c law that regulates which measures you must implement as a business owner. With the\u00a0EU Whistleblower Directive<\/a>\u00a0<\/strong>From 16\/12\/2019, a mandatory, cross-industry core element of compliance programmes was established for the first time.<\/p>\n<\/div>\n<\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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    The whistleblower system according to the new EU directive<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    The EU Whistleblower Directive (now translated into the German Whistleblower Protection Act) states that all companies with 50 or more employees must establish secure channels for reporting infringements by the end of 2023. The reports must then be handled professionally and confidentially.<\/p>\n

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    Until now, in Germany, as in most EU countries, whistleblowers were not protected. Reporting an incident entailed a high personal risk. The directive therefore requires that someone who notices potential compliance violations in the course of their professional activities should be able to report them without having to fear civil and labour law consequences. Specifically, these include, for example, suspension or dismissal, relocation or transfer of duties, salary reduction or issuance of a poor employment reference, bullying or discrimination, disadvantage or unequal treatment.<\/p>\n

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    This also includes applicants, interns, and former employees. The policy goes further: if the whistleblower suffers retaliation, they are additionally entitled to compensation.<\/p>\n

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    What's the situation like in practice today?<\/h3>\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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    The variety of reporting channels and systems used in practice to date is large, as there are currently no legal requirements for the design of such whistleblower solutions. Today, whistleblowing systems are primarily found in internationally operating companies with comprehensive compliance programmes. In these, whistleblowing is considered an important contribution to effective compliance.<\/p>\n

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    Some companies consciously reject whistleblower systems. They are convinced that their open communication culture does not require special reporting channels, or they fear that doing so will create a culture of mistrust.<\/p>\n

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    \u201eIs the catfight now continuing anonymously and digitally?\u201d<\/h4>\n

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    The fact is that, in the future, as a business owner, you will be obliged to respond to notifications within one week and to follow up on them accordingly.\u00a0\u00a0<\/p>\n

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    What is to be reported according to the EU Directive? The scope appears manageable at first glance, but can become complex and challenging in the detailed areas:\u00a0<\/p>\n

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