The new Danish whistleblowing act will enter into force on Friday 17 December 2021. This means that as of today companies with 250 or more employees must have an internal whistleblowing reporting channel in place. For companies with 50-249 employee, this requirement applies from 17 December 2023. The interpretation of the Danish whistleblowing act and the underlying EU whistleblowing directive has raised uncertainty as to whether companies with 250 or more employees, that are part of a group, are able to share the same whistleblowing channel, or whether each group company must establish their own reporting channel to comply with the obligation to establish an internal whistleblowing channel. This newsletter provides an update on the issue.
The Danish whistleblowing act is based on EU legislation, namely the EU whistleblowing directive.
The directive lays down an obligation for companies with 50 or more employees to establish an internal whistleblowing reporting channel.
The directive leaves opportunity for companies with 50-249 employees to share resources as regards the receipt of reports and any investigation to be carried out in relation to the whistleblowing reporting. This provision has been interpreted by the European Commission and the Danish Ministry of Justice. Both concluding that, a contrario, companies with 250 or more employees are precluded from fulfilling the requirement of an internal whistleblowing channel, if this channel is shared with other group companies. This interpretation entails that each group company must set up and operate its own internal channels.
The Danish whistleblowing act includes a provision that allows for companies with 250 or more employees, which are part of a group, to share the same whistleblowing channel. This differs from the original draft bill which did not allow for companies with 250 or more employees to share whistleblowing reporting channels. The original bill was in accordance with the above mentioned interpretation of the EU whistleblowing directive by the European Commission and the Danish Ministry of Justice. The change was made on the basis of criticism from a number of major Danish companies and interest groups. Among other things, the companies expressed concern that establishing a whistleblowing reporting channel in each company would provide a lower degree of protection for the whistleblower than a group whistleblower channel.
On this background, the whistleblowing act contains a so-called “authorization provision”, according to which the Danish Minister of Justice may decide that companies with 250 or more employees may not share whistleblowing reporting channels, if this turns out not to be compliant with the EU whistleblowing directive. The consequence of such a change would be that each company within a group would be required to establish their own internal whistleblowing reporting channels, and handle the report and the following investigation by itself. It appears from the explanatory notes to the act that the authorization provision must be applied if it is not considered sufficiently clear that the obligation to establish an internal whistleblowing scheme can be fulfilled by a group solution, and therefore is not in compliance with the EU whistleblowing directive.
When assessing whether it is sufficiently clear and in compliance with the EU whistleblowing directive, the Ministry of Justice will, among other things, look to how the other EU member states have implemented the EU whistleblowing directive.
Based on the above, the Minister of Justice can make use of the authorization provision, if it is sufficiently clear that allowing companies with 250 or more employees, which are a part of a group, to share the same whistleblowing channel, is not compliant with the EU whistleblowing directive.
Former Advocate General to the European Court of Justice, and now Partner at Gorrissen Federspiel, Henrik Øe, notes that there are reasons to question the above mentioned interpretation that precludes companies with 250 or more employees from sharing the same whistleblowing reporting channel, while complying with the obligation to establish an internal whistleblowing scheme.
Firstly, because the opportunity for companies with 50-249 employees to share resources cannot be interpreted, a contrario, as this is not a derogation from the obligation for companies with 50 or more employees to establish an internal whistleblowing reporting channel, but a privilege to share resources. Only derogations can be interpreted a contrario. Therefore, this privilege does not preclude companies with 250 or more employees to share resources, if the companies comply with the obligations following from the directive, as for example each company must provide feedback to the whistleblower and address the reported breach.
Secondly, because it is a fundamental principle that an action is allowed if it is not prohibited by law. The directive does not contain a section that explicitly prohibits group companies from upholding a group whistleblowing channel, if the companies comply with the obligations following from the directive. The EU whistleblowing directive obligates legal entities with at least 50 employees to establish an internal whistleblowing reporting channel, and it is not prohibited to fulfil this obligation by establishing a uniform whistleblowing scheme within the group. This is again without prejudice to the other obligations laid down in the whistleblowing legislation.
On this background, it does not seem sufficiently clear that companies with 250 or more employees, which are a part of a group, cannot fulfil the obligation to establish an internal whistleblowing scheme through sharing of a whistleblowing channel with the group. Consequently, there are good arguments for maintaining the provision inserted by the Danish Parliament during the legislative process, and continue to allow companies with 250 or more employees to share a whistleblowing reporting channel with other group companies.
The Ministry of Justice has prepared guidance on the whistleblowing act.
As the act will enter into force on Friday 17 December 2021, it is important to establish the required whistleblowing channels as soon as possible, if not already in place.
Our Compliance & CSR team at Gorrissen Federspiel has extensive experience with establishing whistleblowing schemes, and is available for any question related to the new whistleblowing act.