May 28

Obligation for Employers to Introduce a Whistleblowing System

Tags:

The Czech Republic has an obligation to transpose Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (the “Directive”) into the Czech legal system.
The transposition period expired on 17 December 2021 but the governmental bill on the protection of whistleblowers has as yet only passed the first reading in the Chamber of Deputies.
The Directive introduces an obligation for public institutions and private entities (employers) to prepare an internal whistleblowing system which will introduce protection of whistleblowers, i.e. employees or collaborators who report unlawful activities or other breaches of regulations in the company.
In the internal whistleblowing system, anonymity of the whistleblower must be safeguarded and a so-called competent person must be appointed to address the report and to devise a solution.
What does it mean that the Directive has not been transposed into the Czech legal system yet, i.e. that the bill on the protection of whistleblowers has not been passed within the transposition period?
It means that the obligations determined by the Directive are as yet only applicable to the government and other government-established or government-controlled entities performing public interest services.
Public entities, regions and municipalities are therefore obliged to comply with the Directive already, i.e. they are obliged to introduce an internal whistleblowing system.
It might be expected that the bill will be passed by the Czech Parliament shortly, thereby transposing the Directive which will then apply to private entities as well. So far, the bill is about to apply also to employers with more than 25 employees.
People working for or being in touch with a company are often the first to learn about such cases. It is thus best if they are the ones to use their position and inform about a case a competent person appointed by the employer who they trust and who will be addressing the report of breach. These persons also have the right to report breaches directly to the Ministry of Justice within a so-called external whistleblowing system, or directly to investigative, prosecuting and adjudicating bodies. In such case, the employer himself may lose control over the initial solution of a breach discovered in his company.
In regard to the fact that the obligations determined by the Directive will apply also to private entities in the future, we recommend that companies do not delay in introducing measures required to comply with the determined obligations to avoid unnecessary complications caused by insufficient preparations. We highly recommend to private companies that they prepare their internal whistleblowing system under the Directive now, although they are not obliged by law to do so yet.

According to the bill on the protection of whistleblowers, a breach of obligation may be subject to a fine up to CZK 1 million or 5% of net turnover achieved by the company for the last complete financial year.

We will be happy to prepare an internal whistleblowing system for your company and help you with the related practical issues. Should you be interested, please do not hesitate to contact us via email info@advokatky.cz.

Mgr. Alexandra Kábrtová, Junior Attorney

JUDr. Vladimíra Pajerová, Attorney at Law
Pajerová Sedláčková ADVOKÁTKY s.r.o.
Prague, 26 May 2022