Are you obliged to establish an internal whistleblower scheme?
As of 17 December 2023, Danish companies with more than 50 employees are obliged to set up an internal whistleblower scheme.
This article highlights the main questions to consider in this respect:
- Who is required to establish a whistleblower scheme?
The Danish Whistleblowing Act, which incorporates the EU Whistleblower Protection Directive, states that private companies with between 50 and 249 employees are required to establish an internal whistleblower scheme no later than 17 December 2023. The scheme enables employees to report violations in a safely and confidential manner without fearing reprisals.
Companies with more than 249 employees have been covered by these rules since 17 December 2021.
- How shall the 50 employees be calculated?
The requirement of a whistleblower scheme applies to any legal entity, meaning any company registered in the Danish Central Business Register (CVR) with a CVR-number. However, it is possible to establish a group-wide whistleblower scheme, whereby a whistleblower scheme can be set up for the entire group. We can assist with further advice regarding this matter.
The obligation to establish a whistleblower scheme comes into effect when the company has had an average of 50 employees or more in the last four preceding quarters. When calculating the number of employees in the company, both full-time, part-time, fixed-term and temporary employees shall be included.
- Who can report through the whistleblower scheme?
Companies who are required to establish a whistleblower scheme, must as a minimum establish a scheme whereby its employees can file a reporting. Both full-time, part-time, fixed-term and temporary employees who are employed in the company shall be able to file a report. The company can on a voluntary basis decide that certain other groups, e.g., former employees or job applicants can file a reporting as well.
- Which matters can be reported through the whistleblower scheme?
The whistleblowing scheme must enable the employees to report violations of specific areas of EU law, such as the rules on financial services, prevention of money laundering and financing of terrorism etc. In addition, the whistleblower scheme must enable that employees can report serious legal offences or other serious matters, e.g., breaches of Danish legislation, sexual harassment, or other severe harassment. An offense or a matter will be considered serious if it is in the public interest to disclose.
- What are the requirements for a whistleblower scheme?
Companies, who are required to establish a whistleblower scheme shall establish the following:
- Establish a reporting channel,
- Prepare a whistleblower policy,
- And appoint a so-called whistleblower unit handling the incoming reports.
As for the first requirement, the reporting channel must provide confidentiality for the identity of the whistleblower, and other individuals mentioned in the report, and must prevent unauthorized access.
Depending on the company’s decision, the reporting channel can be designed to include anonymous reports, and either written or oral reports (or both). The Danish market offers several digital whistleblower scheme solutions, for example whistleblowersoftware.com or integrityline.com.
As for the second requirement, the company must document and disclose the procedures of the whistleblower scheme. It is therefore important that there is a whistleblower policy describing the procedures for filing and processing a report, informing about the matters that can be reported under the scheme, the rights of the whistleblower etc.
Lastly, the company must appoint a whistleblower unit, which can be a person, department or a third party. The whistleblower unit shall be impartial and is responsible for handling and follow up on reports received through the reporting channel. Often the function of whistleblower unit is placed in the HR department.
It is possible to outsource these tasks wholly or in part to an external third party, e.g., to a whistleblower scheme provider, whereby reports can be submitted and processed in a confidential manner.
At LEAD Rödl & Partner, we can assist you with setting up a whistleblower scheme, prepare a whistleblower policy or act as receiving unit, assessing incoming reports.
For further questions, please contact us!