A reward system to encourage employees to make reports under the internal whistleblowing procedure

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by ​Katarzyna Adamczak

2 November 2022


The legislator continues its efforts to adopt the Whistleblower Protection Bill, currently in its fourth version. Each subsequent version of the bill comes with new regulations. One of them seeks to introduce a reward system to encourage employees to report wrongdoing within their companies.

Is the reward system mandatory?


Interestingly, the first bill did not mention any reward system as part of the internal whistleblowing procedure (then called the 'internal whistleblowing policy'). It wasn’t until the second bill that the regulations on this matter were introduced, reading that “The internal procedure may additionally include in particular: a system of rewards for making reports under the internal whistleblowing procedure” [1].

This meant that those obliged to introduce the procedure could, but did not have to,  introduce a reward system. The bill did not penalise the failure to introduce this solution as part of the internal whistleblowing procedure. It was not until the third bill that the reward system was made a mandatory part of the internal whistleblowing procedure, but under certain conditions.

The internal whistleblowing procedure provides for a system of rewards for blowing the whistle whereas:
  • The legal entity must be able to effectively resolve the matter within its organisational structure;
  • The person making the report believes that there is no risk of retaliation [2].

It is therefore important for the legal entity to have mechanisms in place that will allow it to resolve a reported breach of the law within its organisation without involving external actors. The person making the report (the whistleblower) should furthermore be confident that there will be no retaliation against them and that there is no such risk. 

The latest, fourth bill has not changed these regulations. 

A reward system – what is it?


None of the bills or their explanatory notes specify what should be understood by the term “reward system” or how legal entities should define and implement it within their organisations.

The Directive (EU) of the European Parliament and of the Council (EU) on the protection of persons who report breaches of Union law [3] does not answer this question, either.

It reads that “Member States shall encourage reporting through internal reporting channels before reporting through external reporting channels, where the breach can be addressed effectively internally and where the reporting person considers that there is no risk of retaliation” [3a] but it does not at the same time specify how to encourage whistleblowing.  

Thus it can be concluded that, as of now, the specific design of a reward system will be up to the legal entity. In this respect, solutions that have already been on the market for many years can be helpful. Many organisations already have benefit systems in place where benefits are awarded to employees either for specific activities (e.g. assistance with the induction of a new team member) or as a tool to increase the attractiveness of the legal entity in the labour market. Legal entities will be able to take advantage of solutions that are often already available within their organisations, which can be a big help. 

In addition, in order to encourage whistleblowing, the legal entity may also consider introducing regulations that create a more comfortable working environment for the whistleblower. Although the person making the report is assured of no retaliation, the situation may cause them some discomfort. Therefore, it may be important for them not to have direct contact with the reported person or persons. 

To encourage whistleblowing, legal entities can consider encouragement in the form of redeploying the whistleblower to another job for a period of time agreed with them. In addition, if possible, organisations could consider encouraging whistleblowing by offering whistleblowers an option to work remotely for the time of processing the report. If this is impossible, organisations could consider granting additional paid time off for a period of time individually agreed with the whistleblower (depending on the nature of the report and the actions that will have to be taken). 

Such solutions are not a financial reward for the whistleblower but may influence their decision whether to report a breach. They are thus a reward mentioned in the bill. 

Consequences of failing to implement a reward system


A reward system is a mandatory element of the external whistleblowing procedure. The bill provides for fines for failing to implement the internal whistleblowing procedure or for implementing it in a defective manner [4].

Summary


It can be concluded that the way the reward system will operate will be clarified in practice or by the legislator in subsequent bills. At this point, it seems that a cafeteria system, the option to work remotely, or additional time off could be a solution.


Legal basis:
[1] Second Whistleblower Protection Bill, Article 25(2)(3).
[2] Third Whistleblower Protection Bill, Article 25(1)(3).
[3] Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law
      [3a] Article 7 (2)
[4] Fourth Whistleblower Protection Bill, Article 55

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