In today’s dynamic work environment, whistleblowers play a vital role in uncovering workplace misconduct and potential company threats or risks. This is acknowledged during World Whistleblowers Day on 23 June.
Examples of whistleblowing include criminal activity, such as theft, or unethical or unjust behaviour in the workplace, such as discrimination against a protected class. However, personal grievances (including bullying, harassment and discrimination) are not usually covered by whistleblowing law unless the case is in the public interest.
Whistleblowers’ role in uncovering misconduct, all of which work towards improving culture, must be upheld and regarded as crucial as ever. To achieve this, companies must ensure their reporting procedures and policies are robust, effective and efficiently communicated to employees.
The state of regulations in the EU countries
Internal procedures for handling whistleblowing in the workplace can vary from company to company. However, in recent years, policies and legal regulations surrounding, and case handling have tightened and increased worldwide.
Particularly noteworthy is entry into force of the EU Whistleblowing Protection Directive on December 16th 2019, which has been transposed into national law by almost all EU Member States. The Directive’s purpose is to provide a higher minimum level of protection across EU countries for those wanting to expose breaches of EU law or workplace misconduct.
Employees who ‘blow the whistle’ must now have clear reporting channel options and be protected from negative retaliation. EU companies with 250 or more employees and public bodies have been within scope since December 17, 2021. As of this year, this has extended to companies with 50 or more employees.
Additionally, with recent laws enacted globally, whistleblowing regulatory enforcement is beyond the EU. Following the EU’s decision to tighten its whistleblowing laws, on June 1, 2022, Japan updated its own rules to include smaller companies and increase the protection for potential whistleblowers. However, for organisations with 300 or fewer employees, the requirement for an internal system is reduced to “make efforts.”
What’s the current situation in the UK?
The UK is also set to implement a UK Whistleblowing Bill, which will enable, communicate and enhance the current protection in place for whistleblowers. In the USA, 2022 received the highest number of whistleblowing reports. Furthermore, the U.S. Securities and Exchange Commission recently gave a whistleblower award totalling $279 million. This is easily the largest award in SEC history and a sign that the SEC now fully embraces whistleblower tips to investigate misconduct.
To remain compliant, companies must ensure their policies stick to the minimum whistleblowing requirements of each country’s national laws. Further, companies must appoint a dedicated whistleblowing, legal or compliance officer to regularly ensure the organisation, especially those operating globally, keeps up to date with the continuously changing landscape of whistleblowing compliance and structures the reporting system by the law. Not following laws can result in hefty fines, criminal penalties and reputational damage.
Building a culture of trust
The Financial Conduct Authority (FCA) recently highlighted a lack of protection for whistleblowers, and its survey revealed widespread dissatisfaction among those alerting the regulator to wrongdoing.
Furthermore, some people understandably fear potential backlash from their colleagues or the business when speaking up. These concerns can often lead an employee to report to an external authority or media source, risking the company’s financial and social reputation.
Efficient procedures and policies must be implemented to ensure reports are raised internally and employees feel protected from retaliation. Reporters should know their claims will be handled effectively, impartially and under data policy guidelines, like the GDPR. Providing anonymity is also core to encouraging a speak-up culture and keeping matters internal. It is vital for companies to communicate the various whistleblowing hotline options to employees, keep whistleblowers updated on the case information, and provide feedback on the outcome of an investigation.
In addition, companies should analyse the whistleblowing data, trends and metrics they receive to identify potential areas of cultural and behavioural improvement. The board of directors should also provide the data to enhance transparency and influence decision-making around cultural enhancements.
However, in the rare circumstance that a company feels an employee would be exposed, perhaps due to the company size or the case relating to the person handling reports, external authorities may be the best option. An employer should provide appropriate communication or guidance to external agencies if needed.
Investment and social reputation
Reputation is the stakeholders’ perception of your company’s values, actions and achievements. It can influence customer loyalty, employee engagement, investor confidence, media coverage, and social responsibility. An upstanding and positive reputation gives a company a competitive edge, while a negative one can damage its financial and reputational risks.
As mentioned earlier, external reporting is on the rise in whistleblowing reports. A company’s financial and social reputation could be damaged if a whistleblowing case is made to an external authority or hits media headlines. Companies with negative reputations may find hiring new employees or gaining new stakeholders and investors difficult and experience a high employee turnover.
Showing stakeholders that a robust policy is in place is essential to proving that misconduct matters are effectively and internally dealt with. This builds an ethical corporate culture that grows public reputation and delivers strategic business outcomes.