Corporate compliance officers in the United States know just how extensive and widely enforced whistleblower protections are in their own backyard, but those same rights in many other parts of the world aren’t nearly as well enforced—leaving compliance officers for foreign businesses a bit unclear on how to proceed.
Historically, many countries have at least some form of whistleblower protections, often falling under the umbrella of employment law, which requires termination for cause. If an employer wrongly fires an employee for reporting unlawful conduct, for example, the legal recourse in many countries is to reinstate that employee’s job. Countries with such laws include Australia, the United Kingdom, India, South Africa, Japan, and China.
What distinguishes the United States from most other countries in the world is the extent of legal protections that whistleblowers are afforded. “There’s no country in the world whose whistleblower protection laws come close to what we’ve developed in the United States,” says Philip Berkowitz, a shareholder with law firm Littler Mendelson and U.S. co-chair of its international employment law practice.
Employees here are protected against a wide range of conduct—“whether they report actual violations of law, perceived violations of law, or even violations of employer policies and ethics,” Berkowitz adds. Moreover, whistleblower protections in other parts of the world generally are rarely enforced by the countries that have them, or are so new that they haven't been tested by courts.
To get a better idea of what whistleblower protections exist outside the United States, we set out to conduct a country-by-country analysis of whistleblower protection laws around the word.
Similar to the United States, the United Kingdom has express protections for whistleblowers in the workplace under the U.K.’s Public Interest Disclosure Act. Under that law, employees must have a reasonable belief that their disclosure is “made in the public interest,” and satisfies any one of the following categories:
“There’s no country in the world whose whistleblower protection laws come close to what we’ve developed in the United States.”
Philip Berkowitz, Shareholder, Littler Mendelson
A criminal offense;
Breach of any legal obligation, including an obligation contained in an employment contract;
Miscarriage of justice;
Danger to the health and safety of a person;
Damage to the environment;
Deliberate concealing of information about any of the above.
Unlike the SEC’s whistleblower program, however, the United Kingdom does not provide for any financial rewards to whistleblowers. The U.K. Financial Conduct Authority in a report released last year similarly decided against offering rewards to whistleblowers in the financial sector.
“At a time when we are seeking to improve firms’ internal whistleblowing processes, introducing significant financial incentives for whistleblowers to come to the regulator rather than raise their concerns within the firm risks undermining our supervisory approach as well as the improvements in culture we want to encourage,” the report stated.
Canadian securities regulators proposed a whistleblower program of their own this year, in the form of a consultation paper published by the Ontario Securities Commission published in February. The aim of the program, which closely models the U.S. Securities and Exchange Commission’s Whistleblower Program, is to encourage the reporting of potential securities law violations.
The proposed amendments would provide for a civil action against employers that violate newly established anti-retaliation provisions by allowing whistleblower to bypass the Ontario Labor Relations Board and seek punitive damages. If the OSC finds a violation, the employer could be ordered to amend its workplace policies and procedures and pay an additional penalty up to $1 million.
Whistleblowers could be granted a financial award of up to 15 percent where total sanctions or settlement payments exceed $1 million. Unlike the SEC Whistleblower Program, however, the maximum award would be capped at $1.5 million. Whistleblowers would not be required to report issues internally prior to going to the OSC. Individuals who cannot qualify to receive the whistleblower award include chief compliance officers, or those in an equivalent position, as well as current and former directors and officers who acquired the information through internal reporting or investigation processes.
U.K. PUBLIC DISCLOSURE ACT
Below is an excerpt from the United Kingdom’s anti-corruption law, detailing disclosures that qualify for whistleblower protection.
Section 43B: Disclosures qualifying for protection.
1. In this part, a “qualifying disclosure” means any disclosure of information which, in the reasonable belief of the worker making the disclosure, tends to show one or more of the following—
A. That a criminal offense has been committed, is being committed, or is likely to be committed;
B. That a person has failed, is failing or is likely to fail to comply with any legal obligation to which he is subject;
C. That a miscarriage of justice has occurred, is occurring or is likely to occur;
D. That the health or safety of any individual has been, is being or is likely to be endangered;
E. That the environment has been, is being or is likely to be damaged; or
F. That information tending to show any matter falling within any one of the preceding paragraphs has been, is being, or is likely to be deliberately concealed.
2. For the purposes of subsection (1), it is immaterial whether the relevant failure occurred, occurs or would occur in the United Kingdom or elsewhere, and whether the law applying to it is that of the United Kingdom or of any other country or territory.
3. A disclosure of information is not a qualifying disclosure if the person making the disclosure commits an offence by making it.
4. A disclosure of information in respect of which a claim to legal professional privilege (or, in Scotland, to confidentiality as between client and professional legal adviser) could be maintained in legal proceedings is not a qualifying disclosure if it is made by a person to whom the information had been disclosed in the course of obtaining legal advice.
5. In this part, “the relevant failure”, in relation to a qualifying disclosure, means the matter falling within paragraphs (a) to (f) of subsection (1).
Source: U.K. Public Interest Disclosure Act.
With no national securities regulator, Canada delegates that responsibility to individual provinces—although Ontario is by far the largest and most important. As a result, Ontario’s whistleblower program “would be an impetus for other important securities regulators such as Alberta and British Columbia to follow suit and have their own programs,” says Jordan Deering, a partner with law firm Dentons in Calgary.
Comments on the proposed whistleblower program are due by May 4.
Brazil, Russia, India, and China still have a long road ahead for whistleblower protections in the private sector. Brazil, for example, enacted legislation in 1999 that provides protections for victims or witnesses of crimes who are exposed to serious threats after cooperating with a criminal investigation or proceeding; whistleblowers are not entitled to protection until a criminal investigation ensues.
“Whistleblowing for anti-corruption matters is not a well-established concept in Brazil,” says Matteson Ellis, a member of the international practice of law firm Miller & Chevalier. “People don’t generally think of coming forward when they have knowledge of violations.”
In China, although Chinese law provides for whistleblower protection and prohibits retaliation, these laws are not strictly enforced. A report conducted in 2010 by China’s Supreme People’s Procuratorate, for example, found that more than 70 percent of whistleblowers experienced some form of retaliation, and that the majority of these retaliations were ignored by government or judicial authorities.
In Russia and India no legal protections exist for corporate whistleblowers at all.
In Australia, the Corporations Act offers protections to whistleblowers who make disclosures to companies within the Australian private sector. This protection encourages employees to alert the company, or the Australian Securities and Investments Commission (ASIC), to illegal behavior.
“Australian whistleblower laws are similar to U.S. laws, in that they offer protections to employees from being terminated or otherwise discriminated against in retaliation for exposing suspected dishonest or illegal activities or wrongdoings,” says Guy Underwood, founder of the RISQ Group, a risk management firm. Unlike the SEC, however, ASIC does not give rewards to whistleblowers for reporting such violations.
Under the Act, a whistleblower can be an employee, officer, contractor, or supplier of a company who has reasonable grounds to suspect that the company has, or may have, violated a provision of the Corporations Act. “Like all information provided to ASIC in confidence, information provided by a whistleblower must be kept confidential,” says David Reingold, a consultant at the RISQ Group. “Neither the information nor the identity of the whistleblower may be disclosed unless that disclosure is specifically authorized by law.”
Where compliance with whistleblower laws can prove difficult is when multinational companies bump up against local laws in foreign countries that directly contradict the whistleblower requirements under Section 301 of the Sarbanes-Oxley Act.
Section 301 requires audit committees of issuers listed on U.S. exchanges to establish procedures, including the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters. Such a requirement, however, directly contradicts certain foreign laws. In France, for example, you have to get your whistleblower procedures and hotlines approved through the French Data Protection Authority. Germany has similar requirements in place.
Furthermore, some non-U.S. jurisdictions have laws that expressly forbid the adoption of an anonymous whistleblower hotline. These countries include France, Spain, and Portugal, to name a few.
In countries that discourage anonymous whistleblowing, multinational companies need to tailor their whistleblower programs in such a way that “essentially encourages employees to identify themselves,” Berkowitz says. “They need to work within the confines of those restrictions, but at the same time make sure that they’re taking every reasonable to step to encourage employees to come forward with complaints, to investigate them, and to root out any potential unlawful or unethical conduct.”
From a practical standpoint, multinational companies need to assess their whistleblower policies and procedures on a country-by-country basis. “You have to tailor your hotline and whistleblower procedures to what the local laws allow in the countries that you’re operating in,” says Bryan House, a partner with Foley & Lardner.
To achieve that effectively requires working with local counsel, House says, who are familiar with the particular workings of their jurisdiction and who can offer advice on how to implement a whistleblower policy and hotline in compliance with local laws.