The Committee on European Affairs of the Chamber of Deputies have discussed the proposal for a directive of the European Parliament and of the Council on the protection of persons reporting on breaches (COM(2018) 218). Thus, the three-year long period in which the Directive should be implemented in the Czech Republic has commenced in the second half of May 2018.

As the Directive says, illegal practices and abuse of law can happen in any organization. These may manifest in various different ways, e.g. corruption or fraud, professional misconduct or negligence. If these cases are not dealt with, they can bring consequences which are violations of the general interest.

The Directive aims at legal entities in the public sector, and also legal entities in the private sector, specifically those that:

• have 50 or more employees,
• show annual turnover or annual balance sheet total of EUR 10 million or more,
• operate in the area of financial services, or are susceptible to money laundering or terrorist financing (regardless of the size of the legal entity).

Member states of the EU have the right to add into their implementing laws other legal entities which should be obliged to follow the rules set by the Directive.

These entities are obliged to establish “internal reporting channels and procedures for receiving and following-up on reports”. This gives rise to a communication channel for an employee who is the reporting party, and who will not be in conflict with the commitment to confidentiality, and will be promised legal protection of their person (not only in regard to the employer). The reporting party must at the same time be protected in accordance with the General Data Protection Regulation.

The report may be given in different forms, which include for example: written statement, oral conversation with an authorized person, recording of a phone-call, etc.

The internal channels will enable other persons in contact with the given entity to report, however, they will not be restricted to using them. The channels can be operated internally or externally by a third party provided that guarantees and requirements stipulated by the Directive will be observed. 

Member states are to establish independent an self-sufficient external channels for reporting which will be linked to internal channels of individual legal entities. The states will also establish organs which will consist of instructed experts who will be looking into the received reports during given time periods. Member states are also to implement regulations providing for e.g. reversal of the burden of proof in legal proceedings where in prima facie cases of retaliation it is up to the person taking action against a whistleblower to prove that it is not retaliating against the act of whistleblowing.

Each state is to determine adequate penalties against legal or natural persons that do not abide by the law stemming from the Directive, specifically those who:

1. a) hinder or attempt to hinder reporting;
2. b) take retaliatory measures against reporting persons;
3. c) bring vexatious proceedings against reporting persons;
4. d) breach the duty of maintaining the confidentiality of the identity of reporting persons.

Member States shall also provide for effective, proportionate and dissuasive penalties applicable to persons making malicious or abusive reports.

The European Commission quoted that the current legal provisions regarding protection of reporting persons in the EU are considerably fragmented. They are guaranteed full protection in only 10 out of the 28 states. In the case of the Czech Republic, this issue has been discussed since 2013. Last year, this discussion led to the proposal of the Act on Protection of Reporting Persons. This proposal was approved by the Government halfway through 2017, however, the adoption process itself is still underway in the Parliament of the Czech Republic.

In connection to services provided by our company, we are keeping an eye on the development of relevant provisions and their possible effects on entrepreneurs, thus making sure our clients are ready for the implementation of provisions laid down

in the Directive and the corresponding Czech legislation.