THE PROCESS OF IMPLEMENTING THE WHISTLEBLOWER DIRECTIVE INTO THE POLISH LEGAL SYSTEM AND THE COURT RULING CONFIRMING ITS DIRECT EFFECTIVENESS
Publication date: January 11, 2024
The article prepared by Przemysław Głowacz, KIELTYKA GLADKOWSKI KG LEGAL
Introduction
The concept of whistleblowing has been known for many years. It is the term that refers to the act of calling for help and literally means “blowing the whistle”. It is defined as critical statements, complaints or tips provided by employees – whistleblowers about shortcomings and erroneous behavior in the company towards state institutions or other third parties.
It is worth emphasizing that not every disclosure of abuses committed in a company can be defined as whistleblowing, so it is worth describing in more detail the conditions that characterize this activity. First of all, it is important that the person disclosing the information is an employee or former employee and cannot be an outsider. This phenomenon does not concern stakeholders other than employees, so it does not include, among others, customer complaints or protests from local communities. Moreover, disclosures that are required by law under pain of sanctions are not considered whistleblowing. This is related to the fact that the motivation of the discloser must be solely to care for the public interest or the interest of third parties, and therefore it is only altruistic and ethical, not legal.
In Poland, the phenomenon of whistleblowing is received much less favorably by public opinion than in Western European countries or the USA. The reasons for this are believed to be related to events that took place during World War II and in the post-war period. Informants were perceived by society in a negative light and described as “sellouts” and “traitors of the nation”. For this reason, in our country there is greater acceptance of “covering up” negative phenomena in the workplace than revealing them. Disclosing irregularities in the workplace may be treated as contrary to ethics due to lack of loyalty to the employer. Currently, in practice, there are situations where whistleblowers who reveal the employer’s secrets are exposed to legal liability. Employees who report irregularities occurring at the employer often have to take into account disciplinary punishment and even termination of the employment contract without notice due to the employee’s fault based on Art. 52 section 1 point 1 of the Labor Code – i.e. due to the violation of basic employee duties, such as taking care of the good of the workplace, protecting its property and keeping secret information that may expose the employer to damage. Unfortunately, even if the employee appeals to the labor court, the courts often rule in favor of the employer because in these proceedings they do not examine the social, public purpose of the employee’s action, but only the violation of the employer’s interest. This should be assessed negatively because whistleblowing is an ethical and desirable phenomenon. In order to effectively use whistleblowers to eliminate pathological phenomena in employers’ activities, it may be necessary to change the law and give whistleblowers the same status as crown witnesses and incognito witnesses in criminal law.
Whistleblower protection directive and Polish act
The expectations related to the protection of whistleblowers are met by Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons reporting breaches of Union law. So far, in Poland, regulations regarding this area have existed under various legislative acts, including: in the Labor Code or the Act on counteracting money laundering and terrorism financing. The whistleblower protection directive applies to companies employing between 50 and 249 employees. The threshold of 50 people does not only apply to employees employed under the Labor Code, but also includes people working on a basis other than an employment relationship, in particular under civil law contracts. However, if a legal entity carries out activities in the field of financial services, products and markets, counteracting money laundering and terrorist financing, transport security and environmental protection, falling within the scope of application of European Union legal acts listed in Part IB and II of the Annex to the Whistleblower Protection Directive, it has obligation to implement an internal procedure for reporting violations of the law, regardless of the number of people performing or providing work. The directive regulates the requirements related to internal channels for reporting irregularities. It was to be implemented by December 17, 2021. The Polish legislator is in the process of preparing the final version of the draft law on the protection of persons reporting violations of the law. Currently, as indicated by the Government Legislation Center, the process of implementing the above Directive is at the stage of work of the Legal Committee. Due to the fact that Poland, along with Estonia, remains the only country in which the implementation process stopped at the draft act, there is a real possibility of imposing multi-million financial penalties in connection with a complaint filed against Poland to the European Court of Justice for not adopting the provisions on time. The fact that Poland must adopt a law on whistleblowers is certain. However, it is not known what shape the act will take and when it will come into force. However, according to the assurance of the new head of the Ministry of Family, Labor and Social Policy, one of the priorities of the Ministry will be the implementation of outstanding directives, the directive on whistleblowers being among them.
Turning to the analysis of the Directive, it should be noted that infringements falling within the scope of application of EU acts concern areas such as:
– public procurement,
– financial services, products and markets and the prevention of money laundering and terrorist financing,
– product safety and compliance with requirements,
– transport safety,
– environmental protection,
– radiological protection and nuclear safety,
– food safety, animal health and welfare,
– public health,
– consumer protection,
– protection of privacy and personal data and security of networks and information systems.
Furthermore, the material scope of the Directive relates to an infringement affecting the financial interests of the Union as referred to in Article 325 TFEU and detailed in the relevant Union measures and infringements relating to the internal market referred to in Art. 26 section 2 TFEU, including infringements of EU competition and State aid rules, as well as infringements relating to the internal market in relation to activities which constitute an infringement of corporate tax rules or to practices intended to obtain a tax advantage contrary to the object or purpose of the applicable rules on corporate tax.
The Directive covers reporting persons working in the private or public sector who obtain information about breaches in a work-related context, including at least:
– persons having the status of an employee within the meaning of Art. 45 section 1 TFEU, including civil servants,
– persons with the status of self-employed persons within the meaning of Art. 49 TFEU,
– shareholders or partners and persons who are members of the administrative, management or supervisory body of the enterprise, including non-executive members, as well as volunteers and trainees, regardless of whether they receive remuneration,
– people working under the supervision and direction of contractors, subcontractors and suppliers.
The Directive also applies to reporting persons where they report or publicly disclose information about breaches which they have obtained in the context of an employment relationship that has already ended, and to reporting persons whose employment relationship is yet to be established, where information about violations was obtained during the recruitment process or other negotiations preceding the conclusion of the contract.
In addition, where appropriate, protection measures for reporting persons also apply to:
– people helping to submit the report,
– third parties associated with reporting persons who may experience retaliation in a work-related context, such as co-workers or relatives of reporting persons,
– legal entities that are owned by, work for or are otherwise associated with the reporting person in a work-related context.
Both the draft act and the whistleblower protection directive provide for three channels for reporting irregularities:
– internal reports,
– external reports,
– public disclosure.
The internal reporting channel is a channel that private entities are obliged to implement. It is a reporting channel within a given organization and is intended to be the first choice channel for whistleblowers reporting irregularities. Employers will be obliged not only to develop and implement an internal procedure for reporting violations of the law, but also to take a number of follow-up actions, including: carrying out appropriate proceedings regarding the received reports. Such a channel can be fully electronic, but it can also be in the form of a traditional mailbox or telephone line. A private entity may appoint a department or person from outside the company to carry out the channel’s tasks, or pay for an appropriate IT system prepared by an external company. Regardless of the choices made, such a channel is intended to ensure the safety and anonymity of each whistleblower. The Whistleblowers Directive also imposes obligations to monitor the effectiveness of internal channels. For this purpose, records should be kept of each report received through the internal reporting channel.
The external reporting channel is a channel through which a whistleblower will be able to report irregularities to the appropriate public authority. The Whistleblower Protection Directive provides for the obligation to establish appropriate authorities in Member States that will be responsible for receiving and processing reports of irregularities made by whistleblowers. The draft law specifies that in Poland, external reporting of a crime will, in principle, have to be made to the Police and, in some cases, also to the prosecutor. In certain cases, external reports may also be submitted to the National Labor Inspectorate.
The last channel for reporting irregularities is the so-called public disclosure. It involves the whistleblower disclosing information about irregularities to the public. This may be done via mass media, e.g. television, the Internet or the press. This form of reporting irregularities is to be a last resort and, according to the draft act, a person reporting irregularities in this way is protected in the following cases:
– when the reporting person submits an internal report and then an external report, and neither the entity to which the internal report was submitted nor the public authority takes any appropriate follow-up actions or provides the reporting person with feedback within the deadlines for providing feedback established in the relevant procedures in force in these entities, or
– when the notifier immediately submits an external report and within the deadline for providing feedback set in the public authority’s external procedure, the authority fails to take any appropriate follow-up action or fails to provide feedback to the notifier.
Therefore, using the last channel to report irregularities cannot be treated as an independent basis for such action, and can only take place if the whistleblower does not receive feedback on the earlier report or the authorities responsible for the internal or external report do not take any action.
In relation to internal and external reports, Art. 16 introduces an obligation to maintain the confidentiality of the identity of the person making the report. It can be turned off at the request of the reporting person. Confidentiality must be maintained for all persons, including staff members responsible for receiving and following up on reports. This also applies to any other information from which the identity of the reporting person can be identified, directly or indirectly. By way of derogation, the identity of the reporting person and any other information may only be disclosed where such disclosure is a necessary and proportionate obligation under Union or national law in the context of investigations or judicial proceedings conducted by national authorities, including for the purpose of guaranteeing the right to defense of the person concerned. Before the identity of reporting persons is disclosed, they must be notified, unless such notification would jeopardize related investigations or legal proceedings. When notifying reporting persons, the competent authority shall provide them with a written explanation of the reasons for disclosing the relevant confidential data. Reporting persons must be notified before their identities are disclosed, unless such notification would jeopardize a related investigation or legal proceeding. When notifying reporting persons, the competent authority shall provide them with a written explanation of the reasons for disclosing the relevant confidential data.
The directive defines the issue related to the processing of personal data, stating that the exchange or transfer of personal data by competent authorities is carried out in accordance with Regulation (EU) 2016/679 and Directive (EU) 2016/680. However, the exchange and transmission of information by the institutions, bodies, offices or agencies of the Union shall be carried out in accordance with Regulation (EU) 2018/1725. In addition, personal data that is clearly irrelevant to the consideration of a specific report is not collected and, if collected accidentally, is deleted without undue delay.
The issue of keeping notification registers has also been regulated. Member States shall ensure that legal entities in the private and public sectors and competent authorities keep records of all notifications received, in accordance with the confidentiality requirements provided for in Article 16. Reports shall be kept no longer than necessary and proportionate to ensure compliance with the requirements laid down in the Directive or with other requirements laid down in Union or national law. Where a report is made via a recorded telephone line or other recorded voice communication system, legal entities in the private and public sectors and competent authorities have the right, with the consent of the person making the report, to document the oral report in one of the following ways:
– by recording the conversation in a permanent and searchable form; or
– by means of a complete and accurate transcript of the interview prepared by the staff members responsible for processing the report.
Where a report is made via an unrecorded telephone line or other unrecorded voice communication system, legal entities in the private and public sectors and competent authorities have the right to document the oral report in the form of an accurate record of the conversation prepared by the member of staff responsible for processing the report. Legal entities in the private and public sectors and competent authorities shall provide the reporting person with the opportunity to check, correct and approve the interview report by signing it.
Where a person requests a meeting with staff members of legal entities in the private and public sectors and competent authorities for the purpose of making a report, legal entities in the private and public sectors and competent authorities shall ensure, with the consent of the reporting person, that complete and accurate records of the meeting are kept in in a durable and searchable form.
Legal entities in the private and public sectors and competent authorities have the right to document the meeting in one of the following ways:
– by recording the conversation in a permanent and searchable form; or
– by means of detailed minutes of the meeting prepared by the staff members of the competent authority responsible for dealing with the reports.
The directive introduces an obligation for Member States to provide the necessary measures to prevent retaliatory actions and to provide access to support measures in the event of retaliatory actions. First of all, people employed by the employer concerned by the report will be protected against dismissal. Such an employer will also not be able to terminate other contracts: with suppliers, collaborators, contractors and other entities reporting irregularities, before the deadline for terminating cooperation provided for in the contract. However, dismissal or termination of cooperation before the deadline is not the only form of retaliation that the directive is intended to counteract. These also include threats of any retaliatory actions and repression, such as: demotion from the position, forced unpaid leave, reduction of remuneration, suspension of training and other benefits for the whistleblower, imposition of penalties, reprimands, exclusion, discrimination and others.
In addition, the directive establishes the obligation for Member States to introduce effective, proportionate and dissuasive penalties applicable to natural or legal persons who:
– hinder or attempt to hinder reporting,
– take retaliatory actions against reporting persons,
– initiate burdensome proceedings against reporting persons,
– breach the obligation to maintain the confidentiality of the identity of the reporting persons.
In the case of an internal channel, the responsibility for imposing sanctions will rest with managers.
Member States shall also introduce provisions providing, in accordance with national law, for remedies for damage resulting from such reporting or public disclosure.
Obligations imposed on employers
A legal entity covered by the Act will be obliged to:
– implement a procedure for reporting violations of the law and taking follow-up actions, such as the obligation to consult trade unions or representatives of persons performing work for the entity,
– provide information about the internal reporting procedure to a person applying for work under an employment relationship at the beginning of recruitment or negotiations preceding the conclusion of a contract,
– conduct explanatory proceedings regarding submitted reports,
– ensure that the internal reporting procedure and the related processing of personal data prevent unauthorized persons from gaining access to the information covered by the report,
– maintain a register of internal notifications.
In addition, legal entities will have to appoint a team that will be responsible for conducting explanatory proceedings. However, the draft act provides for the possibility of authorizing an external entity to handle notifications in a given organization on the basis of a contract.
The current draft of the Whistleblower Protection Act provides that the new regulations are to enter into force within 2 months from the date of their announcement, with the exception of the provisions on establishing the procedure for internal and external reporting, which are to enter into force 14 days from the date of announcement. Failure to adopt internal procedures at all will result in the imposition of a fine, and disclosure of the whistleblower’s data will result in imprisonment of up to one year.
Application of the Directive
As a result of the slow procedure of introducing the Directive into the Polish legal system, whistleblowers were not sufficiently protected in Poland. It seems that this situation is improving. Based on the judgment of the Polish District Court in Toruń of July 12, 2023, case ref. no. IV P 171/22, it can be concluded that the Directive was directly applied by the court. This is good news for whistleblowers whose rights are violated and who are subjected to unjustified harm. The comments on the judgment emphasize that this is the first time we are dealing with a direct effect of the Directive, applied in the absence of implementing provisions. It should be noted that the court could rule on such an effect only in a case concerning the relationship between a public entity and an individual – an employee. In case law, this is referred to as a vertical arrangement, where on one side there is an individual and on the other an entity constituting an emanation of the state.
The court in Toruń found retaliation in connection with the disclosure of irregularities in the conduct of one of the university’s employees unacceptable. In this situation, Article 21 of the directive in question applied. The court awarded the dismissed employee compensation. The judgment is not final and does not translate into horizontal relations between private entities, however, it is a good starting point for the formation of a new line of jurisprudence in the Polish judiciary in matters of labor law.
Sources:
- Act of June 26, 1974, Labor Code, Journal of Laws 2023.1465, i.e. of July 31, 2023.
- Project (rcl.gov.pl)
- Directive 2019/1937 on the protection of persons reporting breaches of Union law – OpenLEX
- Content of the judgment IV P 171/22 – Portal of Judgments of the District Court in Toruń
