On 15 May 2024, the Act on the Protection of Whistleblowers of Work-Related Violations of European Union Law was passed. Also known as the Whistleblower Protection Act, it imposes the obligation on many companies to create an internal whistleblowing channel for reporting violations.
The law enters into force on 1 September 2024 and from that point on companies with at least 50 employees must think about how to set up that channel. They are required to have the channel in place by 1 January 2025.
The main goal of the channel is to give employees a possibility of confidentially reporting violations. Employees must have a way of doing so orally, in writing or both. It is considered important to consider the nature of the company and its workforce.
The act provides for the option of companies sharing or jointly managing whistleblower channels. Sharing and joint management is allowed for the following companies and institutions:
Law-makers aimed to create as favourable a system as possible for companies to develop and subsequently manage the whistleblower channels.
Companies can opt to have their channel in the form of confidential telephone line, email address, or use a software solution. Grant Thornton Baltic’s services also include setup and management of whistleblower channels for its clients. No matter which solution companies opt for, remember that the channel should be a secure channel for reporting violations.
Besides setting up the channel, companies have to give thought to who will process any reports that come in. Processing the reports includes initial analysis of the reports, provision of feedback to the whistleblower, and follow-up measures. This can mean considerable additional administrative burden for companies but fortunately legislation in force allows the management of the whistleblower channel to be outsourced to an outside service provider.
The choice of the reporting channel(s) and processing of reports must be documented by the company by developing and approving a corresponding policy. The aim of drafting the internal procedure at the company is to define precisely in what situations and which individuals can report violations and how the matter will be addressed internally. It’s important to bear in mind that the aim of the procedure is transparency and clarity in regard to all of the company’s employees and partners.
At first, setting up a whistleblower system may seem like a big obligation, but the ultimate goal is to nip any internal violations in the bud, and that minimizes a wide range of potential losses (including damage to reputation, pecuniary damage, etc.).
At Grant Thornton Baltic, we assist companies in setting up whistleblower systems every day, and as a separate service, we also offer management of reports and all aftercare.
If you have any questions about the new law or would like information on the services we provide, contact us today!
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