Whistleblower directive Germany: understanding the new whistleblowing protection act

In July 2022, the Whistleblower Protection Act, a draft law transposing the EU Whistleblower Directive in Germany, was adopted by the nation’s Federal Cabinet. The law, which was recently passed in the German Parliament, gives whistleblowing protection to employees who disclose wrongdoing in the private and public sectors. The proposed rules include 42 provisions that would ensure employees who disclose misconduct are protected. One of the most important is the reversal of the burden of proof, which means that when whistleblowers suffer retaliation such as loss of employment or workplace harassment after they disclose information, the company or organization is presumed to be retaliating and must prove otherwise.

Whistleblowing in Germany: The New Whistleblower Protection Act

On September 29th, 2022, the German Parliament (Bundestag) passed its first reading of the Whistleblower Protect Act draft law. In its final session, on December 14th, it voted to pass the new Whistleblowing law and effectively transpose the EU Whistleblowing Directive (EU Directive). Nearly one year after the deadline had passed, the new rules have been approved and will include measures such as:

  • An internal reporting system must be provided, or a third-party company must be hired to assist to business in doing so.
  • The national government will provide an external reporting body through additional public offices that will act as authorities on whistleblowing.
  • Anonymous reporting will be made available to employees who disclose misconduct to help prevent retaliation.
  • Information disclosed about anti-constitutional statements by civil servants will be included in the scope of the new Whistleblower Protection Act.
  • Offences against animal protection will be covered by the Digital Markets Act of the European Union.
  • Whistleblowers in Germany who experience retaliation or reputational damage can claim compensation if they qualify for protection under the new rules.
  • Police officers will be protected under the new whistleblowing law.
  • Whistleblowers may now report wrongdoings internally or externally, but public disclosures will only be allowed in exceptional cases.

Germany joins the latest Member States to transpose the EU Whistleblowing Directive into national law after Italy and Belgium also took similar steps in December 2022.

Improvements in Whistleblower Protection in Germany

The new Whistleblower Protection Act will improve existing whistleblower protection in Germany and make it mandatory for companies with 250 employees (and as of December 2023 for companies with 50 or more employees) to implement the new rules. The changes are welcome by many companies doing business in Germany. Chief Executive Officer at EQS Group, Achim Weick, said of the changes, “We have been preparing intensively for the introduction of a whistleblower protection law for three years. We are very pleased that anonymous reports must now also be made possible. Although this also increases the requirements for companies, these can be fulfilled legally and reliably with our market-leading software”.

According to the EU Whistleblowing Monitor, several amendments to the draft law were made after experts called for improvements early in the process. NGOs, academics, businesses, and trade unions were consulted by law makers and provided feedback on the HunSchG (Whistleblower Protection Act). Most agreed that the law didn’t go far enough. One of the biggest criticisms of the draft Act was that it didn’t cover classified government information. Under the approved Whistleblower Protection Act, section 5 still excludes the reporting of misconduct when documents are protected under national security and classified as secret.

Remaining Gaps in New Whistleblowing Rules in Germany

Despite having been successfully adopted, the new Whistleblower Protection Act in Germany still falls short of the EU Directive and has a few gaps. Whistleblower reports related to the General Equal Treatment Act will not be covered by the new rules. The provisions would have helped prevent discrimination based on race, sex, religion, disability, age, and sexual identity. As well, corporate groups can still share one reporting channel with their subsidiaries, which weakens the effectiveness of internal whistleblowing systems by risking breaches in confidentiality. Employees may be less likely to use internal reporting channels when the disclosure is related to another subsidiary. Digital whistleblowing tools that ensure confidentiality to employees who disclose wrongdoings will be crucial for establishing anonymous internal reporting channels people trust.

In Germany, the approval process for new laws is notoriously long, which is likely why the Member State has continued to have delays in the implementation of the EU Directive. When a bill is proposed in Germany, it is sent to the Bundesrat, a council of 16 representatives of state governments, and the draft is debated. It is then sent to the Bundestag, the federal Parliament, where it is reviewed and amended during three readings before a vote is made. According to the corruption perceptions index, Germany is generally able to prevent corruption in government organizations, but businesses already view its tax regulations and strict labour laws as a hurdle to doing business. In 2020, Germany ranked 10th out of 180 countries when it came to public perception of levels of corruption, but the COVID-19 pandemic threatened transparency and accountability.  

Some businesses have criticized the new law for placing too much burden on companies to manage whistleblowing cases. Many companies have called for the law not to go beyond the EU Directive requirements. However, the European Commission had previously initiated infringement proceedings against the Member State in February of 2022, after it failed to meet the deadline of December 17th, 2021. The formal notice it sent to 24 nations advising them of their failure to comply with the EU Whistleblower Directive likely placed pressure on law makers to move the new Whistleblower Protection Act bill through Parliament more quickly.