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Is your company ready for the new whistleblower protection legislative requirements?
Czech companies are directly impacted by the strengthening of EU whistleblower protection requirements. Under the current Bill, legal entities in the private and public sectors are required to implement secure internal reporting channels, establish procedures for receiving notifications, ensure the confidentiality of the identities of whistleblowers and set follow-up deadlines. The Bill is based on EU Directive 2019/1937, which states the minimum requirements and is currently in the process of being implemented into Czech legislation.
The draft bill on the protection of whistleblowers has not yet been adopted in the Czech Republic. With regard to the legislative process and the planned effectiveness from 1 July 2023, we expect its approval in the first half of 2023.
- Current state of whistleblower protection legislation
- Which entities have an obligation to implement internal reporting system?
- What are the primary obligations arising from the Bill?
- When to start with implementation?
Current state of whistleblower protection legislation
- EU Directive 2019/1937 on the protection of persons who report breaches of Union law (“Whistleblowing Directive”) was not transposed to Czech law by the deadline of 17 December 2021. No new version of the bill is currently known, and the next legislative steps of the relevant authorities have not yet been confirmed. However, the legislature should adopt the relevant bill into Czech law as soon as possible in order to reflect the minimum requirements of the Whistleblowing Directive.
- Specific duties established by the Whistleblowing Directive now only apply to public sector entities. Although private business companies are not obliged to implement an internal whistleblowing system at this moment, their employees and other cooperating individuals may now already use rights assured by the Whistleblowing Directive and report certain infringements directly to the Ministry of Justice of the CR via a hotline, which it has launched.
- At the moment, we have observed increased market interest in the implementation of internal whistleblowing solutions and the possibility to be thus prepared for the new legislation and introduce an internal whistleblowing system in advance.
- A duly set and timely whistleblowing system will enable private companies to present their employees as well as other individuals with the possibility of handling their case internally, to respond appropriately to all notifications brought by a whistleblower and to ensure control over the implications of such notifications in practice. At the same time, the responsible function within your organisation will thus have clear instructions on how to act even before the relevant Czech law is adopted.
- If a business corporation does not have any channel in place that allows for the internal reporting of malpractices, it increases the risk that the whistleblower might directly use the hotline operated by the Ministry of Justice of the CR. In such cases, there is a risk that serious and justified submissions will be handed over by the Ministry of Justice of the Czech Republic to other competent authorities for resolution, without the company concerned having an opportunity to influence or internally resolve the case. This represents not only a legal but also a reputational risk for every company.
Which entities have an obligation to implement internal reporting system?
- Both private and public organisations with more than 25 employees
- Public sector entities, except for the municipalities/villages with less than 5,000 inhabitants
- Companies operating in certain industries or providing services, as, for example:
- civil aviation
- maritime transport
- oil and gas
- provision or facilitation of consumer credit
- capital markets
- investment companies and funds
- insurance and reinsurance
What are the primary obligations arising from the Bill?
- Establishment of reporting channels for receiving and handling notifications of illegal activities
- Appointment of a designated person fully responsible for the administration of the internal reporting system
- Adherence to time deadlines – confirmation of whistleblowers´ report within 7 days of receiving the report and inform the whistleblower of the steps taken to remedy the illegal state of affairs within 1 month
- Employee protection, especially the identity of the employees, securing mechanisms for identifying potential retaliation
When to start with implementation?
- Provide your employees with a suitable and secure channel in order to avoid the potential negative impact on your company's reputation
- The implementation period depends on the size of your company and, in some cases, can take companies up to 6 months
- Gain an edge over others and avoid sanctions that can reach up to CZK 1,000,000
Our team of specialists will design tailor-made services for you.
A team of professionals from PwC with expertise in Compliance will guide you through the entire process, from gap analysis, through solution design and system implementation to the investigation of the initiatives and allegations received and appropriate identification of corrective measures.
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