Whistleblowing – developments

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A revision of the labour contract law should anchor in law the basic admissibility of reporting malpractices in good faith in order to ensure their removal or sanctioning and make it clear that a resulting notice of termination of employment is deemed to be abusive.The following provides an overview of the possible future legal provisions on the reporting of malpractices by persons in an employment relationship governed by private law. It also provides a practical take on the measures that employers could implement to minimise the risk of external whistleblowing.

“Whistleblowing” refers to the disclosure of illegal or unethical business practices, either by internal means or by making them public. To date the law does not contain any provisions on what an employee must or may do when he uncovers malpractices at the workplace. When deciding whether and how to report on problems known to him, the employee must weigh up his own interests against those of his employer. As the law stands now, this is a minefield of legal uncertainties. Ignorance of the legal provisions and the resulting uncertainties as to whether an employee is justified in making a report mostly convince employees to remain silent.

The planned partial revision of the Swiss Code of Obligations (SCO) to protect employees who report malpractices is intended to provide more clarity and give employees legal guidelines on how to proceed when reporting problems, thereby enhancing legal certainty for both employers and employees. In addition to the introduction of a new Art. 321abis draft SCO which will anchor the admissibility of whistleblowing in law and standardise the procedure for reporting malpractices, it should also be established in law that it is abusive for an employer to terminate the employment relationship of an employee who submitted a report pursuant to Art. 321abis draft SCO.

New guidelines for employees

According to the draft law, an employee does not breach his duty of loyalty to his employer when he reports malpractices to his employer in good faith. Malpractices in this sense refer to everything that is counter to the duties of the company or its employees. This primarily concerns punishable offences.

In the future, employees who report malpractices of their employer will have to follow clearly specified official channels. Art. 321abis draft SCO identifies the employer itself as the first recipient of a report on any uncovered malpractice (“internal whistleblowing”). Under certain circumstances this can be followed by a report to an external authority, but a condition for this “external whistleblowing” is that it is in the public interest to expose the malpractice. If the competent authority also does not take the necessary steps to eliminate the malpractice within a reasonable period or such steps cannot be expected, the employee finally has the right to inform the public of the problems.

General guidelines for employers

The draft law does not prescribe any action on the part of the employer. Employers can nonetheless minimise the risk of external whistleblowing of malpractices by introducing an internal whistleblowing system prescribing the procedure for employees who uncover problems. The following factors should be kept in mind:

The careful implementation of a reporting system includes training for employees to teach them how to use the system and in particular how to submit a report. Employees should also be informed on what will subsequently happen to their reports and what consequences such a report could have for them personally or how they can avoid unpleasant consequences.

The most important prerequisites that should be met by a well-functioning reporting system is that not only should the confidentiality of the report be ensured, but the anonymity of the whistleblower should be protected too. In spite of this need for anonymity, however, it should be possible for the competent unit to communicate with the whistleblower. If a dialogue is not possible because a report has been submitted anonymously, it is very difficult or even impossible to investigate the cases that have been reported. Regular feedback is also useful in keeping employees from coming too quickly to the conclusion that their reports are being ignored.

It will also be important for employees that they can ask questions when things are not clear, and giving employees the opportunity to ask questions will also be an advantage for the employer as it will not only provide the employer with a good overview of the (compliance) questions that plague employees but will also give the employer the opportunity to selectively identify risks and weaknesses and eliminate these at an early stage.

If the employer can engender trust in the system among the employees, they will be motivated to report internal inconsistencies at an early stage without needing to violate their confidentiality and loyalty obligations towards the employer or having to fear revenge actions. This would give the employer early access to information regarding possible inconsistencies as well as the opportunity to act on this information. Malpractices can then be eliminated and serious (reputational) damage can be avoided, which could improve the level of employees’ satisfaction at the workplace and enhance their motivation to do their work. In this way an employer could successfully avoid malpractices altogether, and where there are no malpractices there can also be no whistleblowers.

This overview is based on the following article:
Thomas Kälin / Kerstin Kirchhoff, Whistleblowing – Eine Anleitung, in the Jusletter of 20 June 2011.

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