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Clifford Chance

Regulatory Investigations and Financial Crime Insights

Focus on the protection of whistleblowers in Poland and the EU

The current proposal of the new Polish law on corporate criminal liability provides for protection for whistleblowers. This is in line with the most recent EU policy.

To date, despite calls for such action voiced by multiple NGOs and employee organisations, Polish law has not had any set of universal provisions protecting whistleblowers, i.e. persons reporting irregularities within an organisation, from adverse actions.

However, on 11 January 2019, a draft of the proposed new law on corporate criminal liability (the Draft Corporate Criminal Liability Act) was submitted to the Polish parliament.

Notably, it expressly states that the organisations should aim to ensure that whistleblowers are protected from repression, discrimination and other unfair treatment. It also obliges the organisations to conduct an internal investigation into the information obtained from a whistleblower and to remedy the reported irregularities, if they could be relevant to the organisation's criminal liability, under pain of a high financial penalty of approximately EUR 14 million.

The Draft Corporate Criminal Liability Act is still in the legislative process. Once adopted, it will come into force six months after its date of publication.

The whistleblower-related provisions of the Draft Corporate Criminal Liability Act are a foretaste of further EU law requirements on the protection of whistleblowers that are likely to be imposed on EU Member States in the coming months.

Who will be considered a whistleblower

Any employee of an organisation, board member or person acting for or on behalf of the organisation based on a contract or any other act in law falls within the definition of a whistleblower under the Draft Corporate Criminal Liability Act.

If a whistleblower informs the organisation, in the public interest, of irregularities within it that may lead to the organisation's criminal liability, i.e. suspicion of an offence or preparation for an offence, non-compliance or abuse of rights, or the organisation's corporate bodies' failure to act with due care, he/she is to be protected under the Draft Corporate Criminal Liability Act.

Protection offered to whistleblowers

The Draft Corporate Criminal Liability Act provides that if the whistleblower's relationship with the organisation is terminated because he/she reported irregularities, the whistleblower will be entitled to demand reinstatement at work and/or payment of damages in court.

At the same time, the whistleblower will be required to prove that the information reported was justified and could have prevented an offence or allowed its earlier discovery, and it remains to be seen how the courts will assess this.

Obligation to conduct an internal investigation and to remedy an irregularity reported

The whistleblower-related provisions will also significantly change the framework for internal investigations.

Under the Draft Corporate Criminal Liability Act, a report from a whistleblower should result in the organisation's investigating the irregularity.

If the compliance officer (or other body responsible for compliance) does not conduct such an investigation or does not remedy the irregularity and an offence is committed, the organisation will be liable to a penalty of up to PLN 60 million (approximately EUR 14 million).

The planned EU law requirements

The approach taken by the Draft Corporate Criminal Liability Act is in line with the European Union's recent policy aimed at providing minimum standards ensuring effective whistleblower protection that would be common to all EU Member States.

On 16 April 2019, the European Parliament adopted a resolution on the proposal for a directive of the European Parliament and of the Council on the protection of persons reporting breaches of Union law (the Whistleblower Protection Directive).

In the resolution, the European Parliament noted the need to prevent and detect fraud and corruption in the context of the implementation of the EU budget, including procurement.

Among other things, the adopted text of the Whistleblower Protection Directive provides that:

a) public and private organisations with more than 50 employees will have to set up internal reporting channels that allow people to report within the organisation;

b) the national authorities will also have to establish independent external reporting channels;

c) all forms of retaliation for reporting, including demotion, suspension or dismissal, are prohibited;

d) the EU Member States are to provide whistleblowers with legal, financial and psychological support as well as access to information on reporting channels and procedure.

The adopted text of the Whistleblower Protection Directive can be found here: European Parliament Resolution. It is currently awaiting approval by the EU Council. Once adopted, the EU Member States will have two years to implement it.

Conclusions

There is no doubt that the introduction of provisions on the protection of whistleblowers in Polish law will change the rules of the game within the framework for corporate criminal liability. Clearly, organisations operating in Poland need to prepare for these new regulations when introducing or updating their compliance programmes.

It remains to be seen, however, whether the whistleblower protections will be used by employees for ill-founded causes, such as protection from demotion, rather than good faith reporting of irregularities.