Whistleblower Protection Act - Information and news

Executive Summary Whistleblower Protection Act

The Whistleblower Protection Act plays a central role in promoting transparency and integrity in companies by protecting individuals who report violations of legal or internal company requirements from reprisals. The requirements under the Whistleblower Protection Act include the obligation to set up internal reporting offices and to train employees to ensure permanent whistleblower protection. By implementing these measures, companies not only emphasize their compliance, but also actively contribute to promoting an ethical business climate.

The legislation offers comprehensive legal protection for people who uncover wrongdoing in companies or organizations, thereby promoting a culture of transparency and responsibility. It protects whistleblowers from reprisals such as dismissal or discrimination and obliges companies to set up confidential internal reporting systems. Core components of the law include the prohibition of reprisals, which places the burden of proof on the perpetrator of a detrimental act, the right to compensation in the event of such measures, as well as liability for damages caused by false reports. The overall aim of the law is to combat corruption, fraud and other unethical practices and to strengthen confidence in the integrity of corporate processes.

Companies with at least 250 employees have been obliged to implement secure whistleblower systems since July 2, 2023. The law has applied to companies with 50 to 249 employees since December 17, 2023. The requirements are aimed at private employers, authorities and municipalities with 50 or more employees, whereby financial service providers are affected regardless of the number of employees. Public institutions as well as cities and municipalities with over 10,000 inhabitants have also been obliged to provide such systems since July 2023, while the organization in federal and state authorities is determined by the highest authorities.

The law covers the reporting of all violations subject to criminal penalties and fines, particularly with regard to EU and national law. Potentially harmful practices such as corruption, fraud, breaches of data protection and environmental protection and many other relevant areas can be reported, thus ensuring transparency and compliance in public and economic life.

Employers are obliged to implement comprehensive measures to protect whistleblowers. The main obligations include the establishment and operation of internal reporting channels, employee training, protection of the whistleblower's identity and the prevention of reprisals.

Employers who fail to implement the law face considerable fines. § Section 40 of the Act regulates administrative offenses in connection with the disclosure of information and the operation of internal reporting offices. Individuals who knowingly provide false information or obstruct proper reporting are in breach of the law and risk legal consequences. In addition, failing to set up internal reporting points and taking reprisals are treated as administrative offenses. Breaches of confidentiality or negligent actions can also be punished with substantial fines. The amount of the fines varies depending on the severity of the offense and can range from ten to fifty thousand euros.

The Whistleblower Protection Act presents companies with the challenge of introducing reporting systems that ensure both the protection of whistleblowers and confidentiality. At the same time, it opens up the opportunity to promote a culture of transparency and integrity by optimizing internal controls and processes. This culture strengthens the trust of stakeholders and thus contributes to the company's long-term competitiveness.

1 What is the Whistleblower Protection Act (HinschG)?

The Whistleblower Protection Act is intended to ensure better protection for people who report wrongdoing or illegal behavior in companies or public authorities. The aim of the Act is to create a safe and confidential environment for whistleblowers in order to help uncover and prevent misconduct. The Whistleblower Act contains comprehensive regulations to protect the identity of whistleblowers as well as requirements for setting up internal reporting channels in companies. Particular attention is paid to compliance with the requirements of the EU Whistleblower Directive in order to ensure a uniform standard of protection in national and international contexts. Companies are obliged to provide effective mechanisms for reporting and processing information and to ensure that whistleblowers do not have to fear reprisals.

1.1 Definition and meaning of the law

The Whistleblower Protection Act is legislation designed to ensure the protection of individuals who report information about wrongdoing or illegal activities within a company or organization. These whistleblowers are also known as whistleblowers. The law is central to promoting transparency and integrity in business processes.

The HinSchG obliges companies above a certain size to set up internal reporting systems that enable employees to report concerns or violations securely and confidentially. The aim of this law is to protect whistleblowers from reprisals such as dismissal, bullying or other retaliatory measures.

1.2 Creation and publication in the Federal Law Gazette(BGBl. 2023 I No. 140)

The Whistleblower Protection Act is part of the implementation of the EU Whistleblower Directive, which harmonizes the protection of whistleblowers in the European Union. The development of the Whistleblower Protection Act was a necessary step to transpose the obligations of the EU Directive into national law and harmonizes the protection of whistleblowers in Germany.

The development of the Whistleblower Protection Act began with the adoption of the EU Whistleblower Directive in October 2019. At the beginning of 2021, the SPD-led Ministry of Justice submitted a draft to the grand coalition for departmental coordination, but this failed due to objections from the CDU/CSU. The new traffic light coalition included the HinSchG in the coalition agreement at the end of 2021 and committed to implementing it. As Germany was unable to meet the EU deadline of December 17, 2021, the EU initiated infringement proceedings. The Federal Minister of Justice published a new draft bill in April 2022, which was followed by a government bill in July 2022. The German Bundestag and Bundesrat debated the law in September 2022. After further amendments, the Bundestag passed the HinSchG on December 16, 2022, but the Bundesrat prevented its implementation in February 2023 due to criticism from CDU-led federal states. A new draft was discussed in the Bundestag on March 17, 2023, and the federal government called the Mediation Committee on April 5, 2023. The HinSchG was finally passed on May 12, 2023 and came into force on July 2, 2023, one month after publication in the Federal Law Gazette (*BGBl. 2023 I No. 140)*.

The legal framework of the Whistleblower Protection Act aims to protect people who report abuses or violations of the law within a company or organization from reprisals. It obliges companies and organizations to set up secure and confidential channels through which whistleblowers can report information. In addition, companies are required to implement transparent processes to ensure that reports received are properly processed and the information concerned is investigated.

1.3 Relationship to the EU Whistleblower Directive

The Whistleblower Protection Act in Germany is closely linked to the EU Whistleblower Directive. This directive was adopted to ensure uniform protection for whistleblowers in Europe and to oblige companies to provide secure channels for reporting wrongdoing. The HinSchG implements these requirements from EU law at a national level and strengthens the protection of individuals who report information about breaches of the law.

Essentially, the EU Whistleblower Directive requires companies above a certain size to set up and operate internal reporting channels. These whistleblower systems are intended to protect the confidentiality of the identity of whistleblowers and prevent reprisals. The Whistleblower Protection Act supplements the Directive by providing specific regulations for implementation and compliance in Germany. This empowers companies to strengthen their compliance structures and at the same time promote integrity and transparency in their work processes.

2 Objectives and background of the Whistleblower Protection Act

The purpose of the Whistleblower Protection Act is to provide legal protection to individuals who expose wrongdoing in companies or organizations. This regulation is fundamental to promoting a culture of transparency and responsibility in the corporate world. The law creates a formal framework that ensures that whistleblowers are protected from retaliation, such as dismissal or discrimination. At the same time, companies are obliged to set up internal reporting systems in order to process reports efficiently and confidentially. The background to the law lies in the need to combat corruption, fraud and other unethical practices that can jeopardize the reputation and integrity of companies.

2.1 Protection of whistleblowers from reprisals

The Whistleblower Protection Act ensures that individuals who report wrongdoing in companies or institutions are comprehensively protected against possible reprisals. This protection is crucial in order to create an environment in which employees can report information openly and without fear of negative consequences. The law provides that whistleblowers enjoy legal protection in the event of dismissal, professional discrimination or other reprisals. These measures strengthen trust in internal reporting processes and encourage more people to actively promote integrity and transparency.

§ 36 regulates the prohibition of reprisals against whistleblowers and establishes a reversal of the burden of proof. Reprisals, including threats or attempts, are prohibited. If a person is disadvantaged in connection with their professional activity due to their report under this Act, it is assumed that this disadvantage constitutes reprisals. In this case, the burden of proof is reversed. The person who has suffered the disadvantage must prove that the disadvantage is based on legally justified reasons or is not related to the report.

Section 37 Compensation for damages after reprisals states that in the event of a breach of the prohibition of reprisals, the perpetrator is obliged to compensate the whistleblower for the damage caused by this breach. Furthermore, such a breach does not give rise to any entitlement to the establishment of an employment relationship or professional benefits.

§Section 38 regulates compensation for damages resulting from a false report. The whistleblower is liable for damages resulting from the intentional or grossly negligent reporting of incorrect information.

Section 39 declares that agreements that restrict the rights of whistleblowers or protected persons under this Act are invalid.

2.2 Promoting the detection of grievances

The HinSchG serves as an instrument to promote the timely detection of misconduct and grievances within organizations. By making it possible to report indications of wrongdoing effectively and securely, the law helps to identify and remedy potential damage at an early stage. This is not only in the interest of individual companies, but also in the interest of the public. By exposing wrongdoing, trust in companies and markets is restored. Promoting a culture of openness and accountability is a central concern of the Whistleblower Protection Act.

2.3 Strengthening compliance in companies and institutions

The introduction of the Whistleblower Protection Act significantly strengthens compliance within companies and institutions. Companies are now required to provide safe and accessible channels for whistleblowing and to ensure that all reports are properly investigated. This promotes a proactive compliance culture where legal regulations and ethical standards are not only adhered to, but become an integral part of corporate governance. Adherence to such standards helps to minimize legal risks and protect and promote the company's reputation.

3 Who is affected by the Whistleblower Protection Act?

According to Section 1 HinSchG, the law regulates the protection of natural persons who have obtained information about breaches in the course of their professional activities or prior to such activities. Those who are regarded as informants must enjoy protection if they pass on or disclose this information to the reporting bodies specified in the Act.

3.1 Obligated companies by size and sector

Companies with 250 or more employees have been obliged to implement a secure whistleblower system since July 2, 2023 Companies with 50 to 249 employees have been obliged to do so since December 17, 2023.

3.2 Public institutions and their duties

The law also applies to public institutions as well as cities and municipalities with a population of more than 10,000 people. These have also had to provide corresponding whistleblower systems since the beginning of July 2023.

For federal or state authorities, the highest authorities determine the corresponding organizational units. This obligation also applies to municipalities and companies under municipal control, but is subject to the respective state laws.

4 Grievances that fall under the Whistleblower Protection Act

The law regulates the reporting and disclosure of information on various types of legal violations. These include violations subject to criminal penalties and fines, in particular those relating to the protection of life, health and employee rights. It also includes legislation to combat money laundering, product safety, road safety, environmental and data protection regulations. In addition, regulations on competition and tax law as well as the protection of the EU's financial interests are taken into account. The law therefore applies comprehensively to numerous areas of public and economic life in order to ensure transparency and compliance.

4.1 Violations of EU law and national laws

The Whistleblower Protection Act applies to violations of EU and national law, in particular if they are criminal offenses (criminal offense) or offenses punishable by a fine (administrative offense) that endanger health or life.

The Act also deals with other breaches of national and EU law that are necessary to regulate areas such as money laundering, security and environmental protection. These include requirements for protection against money laundering and terrorist financing, product safety, transport safety (road, rail, air and sea), environmental protection, radiation protection and consumer protection. Data protection rules in accordance with the General Data Protection Regulation (GDPR) and IT security requirements for digital services are also addressed.

4.2 Corruption and fraud

The Whistleblower Protection Act regulates the reporting and disclosure of information on legal violations such as corruption and fraud. It covers violations of federal regulations on the award of public contracts, tax law standards and competitive behavior in accordance with the EU treaties. It also relates to regulations in the digital sector to ensure fair markets. The regulations offer comprehensive protection for whistleblowers in various areas of law and thus promote integrity in business transactions.

4.3 What can be reported? Types of violations and grievances

Violations and irregularities that endanger the public interest, such as corruption, fraud, violations of laws and regulations, violations of EU law and other serious irregularities, can be reported. This also includes suspected cases.

A non-exhaustive list of violations and grievances:

• Violations of criminal law: Any criminal offense under German law can be reported.
• Administrative offenses: Violations that are punishable by a fine and affect the protection of life, limb, health or the rights of employees can be reported.
• Violations of EU law: Violations of directly applicable EU legislation, e.g. in relation to money laundering, product safety, environmental protection, data protection, etc.
• Violations of laws and regulations: Violations of all federal and state legislation adopted to implement European regulations.
• Other serious irregularities: breaches of internal rules that jeopardize the public interest, e.g. human rights violations, fraud, corruption, data protection violations, environmental crimes.
• Statements made by civil servants: Statements that constitute a breach of the duty of loyalty to the constitution.
• Violations in the area of money laundering, financing of terrorism, insider trading.

4.4 Right to choose between internal and external reporting

The Whistleblower Protection Act grants whistleblowers the right to choose between internal and external reporting. Whistleblowers can either contact an internal reporting office (as described in Section 12 HinSchG) or an external reporting office (as described in Sections 19 to 24 HinSchG). As a rule, whistleblowers should prefer to report internally if they are certain that effective action can be taken internally against the violation and do not have to fear reprisals. If no internal remedy has been found, external reporting remains an option.

5 Employers' obligations under the Whistleblower Protection Act: Implementation in the company

The Whistleblower Protection Act places clear requirements on employers to ensure the protection of whistleblowers and to properly handle their reports of wrongdoing in companies. Employers are obliged to set up an internal reporting channel that allows employees to confidentially and securely submit information about any legal violations or unethical behavior. These channels must be both easily accessible and data protection compliant to ensure the protection of whistleblowers and the integrity of the data.

Employers must also ensure that all reports are investigated promptly, impartially and thoroughly. This also includes the training of employees who are entrusted with receiving and processing the reports. Appropriate documentation of cases and regular reporting on the progress of investigations are essential to promote transparency and trust in dealing with reports.

Furthermore, the law prohibits any reprisals against whistleblowers. Employers must take measures to prevent retaliation and protect the rights of whistleblowers. This also includes educating and raising awareness among the entire workforce about the protection mechanisms and their rights under the Whistleblower Protection Act.

Overall, these obligations help to promote an open corporate culture in which integrity and responsibility are strengthened. Employers who take their obligations seriously benefit from a more trusting working environment and make an important contribution to the compliance and ethical management of their company.

5.1 Establishment of internal reporting points

The internal reporting offices are responsible for providing reporting channels in accordance with § 16, carrying out the procedure in accordance with § 17 and taking follow-up measures in accordance with § 18. They also provide employees with clear and accessible information on external reporting procedures and relevant procedures of EU institutions.

The persons responsible for an internal reporting office must act independently in their work and may perform other tasks at the same time, provided this does not lead to conflicts of interest. Employers are obliged to ensure that these persons have the necessary expertise. This regulation also applies accordingly to organizational units of the federal or state governments.

Section 16 regulates the establishment of internal reporting channels for employers. These channels enable employees and temporary workers to report violations anonymously or by name. External persons with professional contact to the employer can also submit reports. Access to incoming information is restricted to the responsible employees only. Furthermore, reports must be possible both verbally and in writing. Verbal reports can be made by telephone, and a personal meeting must be organized within a reasonable period of time at the request of the whistleblower, including virtually if necessary.

5.2 Procedure for internal reports and follow-up measures

The procedure is explained in detail in Section 17 of the Whistleblower Protection Act. The internal reporting office confirms receipt of a report within seven days and checks whether the reported violation is relevant in accordance with Section 2. Throughout the entire procedure, it remains in contact with the whistleblower, checks the report for validity and requests further information if necessary.

Once these checks have been completed, the internal reporting office will provide feedback within three months (or at the latest three months and seven days after receipt if no receipt has been confirmed) on planned and already taken measures and their reasons. The feedback is provided in consideration of internal investigations and to protect the rights of the persons concerned.

As follow-up measures pursuant to § 18, the internal reporting office may in particular:

1. conduct internal investigations at the employer or at the respective organizational unit and contact affected persons and work units,
2. refer the whistleblower to other competent bodies,
3. close the proceedings for lack of evidence or for other reasons, or
4. hand over the procedure to the responsible work unit or a competent authority for further investigation.

5.3 Employee training and information on reporting channels

Under the Whistleblower Protection Act, training employees and informing them about reporting channels is a duty, as it contributes significantly to promoting a culture of compliance within a company. Employees must be fully informed about their rights and obligations as well as the available reporting channels. This is the only way to report grievances or violations of legal regulations safely and efficiently. Appropriate training ensures that all employees have the necessary knowledge to recognize signs of misconduct at an early stage and report them correctly. This not only contributes to compliance with legal regulations, but also strengthens trust in internal processes and the company's commitment to transparency and integrity.

5.4 Protection of the identity of whistleblowers

The central principle of the Whistleblower Protection Act is the confidentiality requirement, which is enshrined in Section 8. This requirement ensures that the identity of whistleblowers is protected at all times, creating a safe environment for reporting possible violations.

Reporting offices are obliged to treat the identity of the following persons confidentially:

1. the whistleblower if the information reported concerns relevant breaches or the whistleblower has reason to believe that this is the case;
   
2. the persons named in the notification; and
   
3. of all other persons named.
   

The identity may only be disclosed to the persons responsible for receiving reports or taking follow-up measures and their supporters. The confidentiality requirement applies regardless of the responsibility of the reporting office for the report received.

§ 9 regulates exceptions to the confidentiality requirement for whistleblowers. The identity of persons who intentionally or grossly negligently report false information is not protected. Identity information may be disclosed to competent authorities, including law enforcement authorities and regulatory bodies, under certain conditions. The Reporting Office must inform the whistleblower before disclosure, unless this would jeopardize an investigation. In addition, such information may be disclosed if the whistleblower consents and this is necessary for follow-up action. Information about the identity of the persons named in the tip-off may also be disclosed under specific conditions.

6 Requirements for external reporting offices

The Whistleblower Protection Act sets out specific requirements for external reporting offices in order to ensure effective protection of whistleblowers and the proper processing of reports. Here are the main requirements:

Independent and impartial external reporting offices promote the trust of whistleblowers and avoid conflicts of interest. They are obliged to protect the identity of whistleblowers and third parties confidentially and not to make any unauthorized disclosures. Accessibility is crucial; therefore, various communication channels should be provided to make information about the reporting procedure easily accessible. Knowledgeable employees must competently assess incoming reports and initiate necessary follow-up measures. Feedback to whistleblowers is required within set deadlines in order to communicate the status of investigations. Comprehensive documentation of all reports and measures taken ensures transparency and enables the effectiveness of the reporting system to be evaluated. In addition, protective measures must be taken to prevent reprisals against whistleblowers.

These requirements help to ensure the integrity and efficiency of external reporting offices and promote a culture of openness and responsibility in organizations.

6.1 Responsible external bodies and their tasks

The federal government has set up an independent external reporting office at the Federal Office of Justice, which is organizationally separate from the rest of the Office's area of responsibility (Section 19 HinSchG). This structure guarantees the confidentiality and independence of reports and strengthens confidence in the fulfillment of legal requirements.

The external reporting office performs its tasks independently, but is subject to the supervision of the President of the Federal Office without compromising its independence. It receives the necessary personnel and material resources to fulfill its tasks. It shall be responsible for all cases unless other external reporting offices are responsible pursuant to Sections 20 to 23. Each Land also has the option of setting up its own external reporting offices for matters relating to the respective Land and municipal administrations.

For example, pursuant to Section 22 HinSchG, the Federal Cartel Office is the competent external reporting office for reporting information on breaches of EU competition law (Art. 101 and 102 TFEU) and German competition law (Section 81 (2) nos. 1, 2a, 5 and (3) ARC). Violations of the Digital Markets Act (DMA, Regulation (EU) 2022/1925) are also mentioned.

Section 24 regulates the tasks of the external reporting offices. They are responsible for operating reporting channels, checking incoming reports and carrying out the corresponding procedure. They also provide comprehensive information and advice to persons considering making a report, in particular with regard to internal reporting options and protection against reprisals. External hotlines publish easily accessible information on their website on the following topics: Requirements for protection, explanations of the reporting process, confidentiality and possible follow-up, and remediation options. They also provide clear information about their availability and liability conditions. They shall also ensure access to their reporting procedures for internal bodies in accordance with Article 13(2).

The external reporting offices are also obliged to prepare an annual report that is made available to the public. It must be ensured that no conclusions can be drawn about the whistleblowers or the companies concerned (Section 26 HinSchG).

The external bodies examine the reported violation for relevance and exceptions in accordance with § 2 and § 5. The parties involved are entitled to inspect the files in compliance with confidentiality obligations, while the rights of third parties must also be safeguarded.

The whistleblower will receive feedback within a reasonable period of time, but no later than three months. In more complex cases, an extension of up to six months is possible, whereby the reasons for this must be communicated. Particularly serious violations can be prioritized without affecting the above-mentioned deadlines for feedback.

6.2 Requirements for the protection of confidentiality

The Whistleblower Protection Act requires that external reporting bodies comply with strict requirements to protect confidentiality. These requirements are intended to ensure that the identity of the whistleblower and all information provided is protected from unauthorized access.

The most important requirements for the reporting office include

• the confidentiality obligation to protect the identity of the whistleblower;
• the use of secure communication channels to maintain this confidentiality;
• as well as comprehensive data security through encryption in accordance with current data protection standards.

Access rights should be strictly regulated so that only authorized persons can access the information in order to prevent unauthorized access. It is also essential to offer anonymity options to further ensure the protection of whistleblowers.

6.3 Cooperation with internal reporting offices

The external reporting offices provide clear and easily accessible information on their reporting procedures, which internal reporting offices can access in order to fulfill their duty to provide information in accordance with Section 13 (2). The federal government's external reporting office also provides comprehensive information on these procedures. This is crucial to ensure that employees are able to easily and effectively report potential grievances or legal violations. Internal reporting offices are therefore required to provide their employees with clear, concise and easily understandable information relating to the external reporting procedures.

This information must also include relevant reporting systems of European Union institutions, bodies, offices or agencies. This means that all employees must be informed of the options available to them to raise issues safely and anonymously. Providing such information fosters a climate of trust and openness within the organization. As a result, it ensures that all employees can speak up without fear of reprisals.

7 Sanctions for violations of the Whistleblower Protection Act

The Whistleblower Protection Act serves to protect those who draw attention to grievances within a company or organization. Companies face serious consequences if they fail to comply with the provisions set out in the Act. Possible sanctions include high fines, which can significantly increase the financial pressure on the company. There is also the risk of high-profile measures that could cause lasting damage to the company's reputation. Companies are therefore obliged to implement suitable mechanisms for reporting and processing information and to ensure that their internal guidelines comply with legal requirements.

7.1 Sanctions for companies and employers

The Whistleblower Protection Act provides for various sanctions for companies and employers who violate the regulations. In the event of a breach of the Whistleblower Protection Act, companies and employers may face the following consequences:

1. Fines: Companies may be subject to substantial fines if they fail to comply with their obligation to set up and operate an internal whistleblowing system or if they take inappropriate reprisals against whistleblowers.
2. Reputational damage: A violation of the HinSchG can significantly damage a company's reputation. Negative reporting and a loss of trust on the part of stakeholders can be the result.
3. Civil law consequences: Employers could face civil law claims if they discriminate against whistleblowers or impose disciplinary sanctions, which can lead to claims for damages.
4. Criminal consequences: In serious cases, criminal investigations may be launched, especially if the violation of the HinSchG is connected to other criminal acts.

Companies should therefore ensure that their compliance departments are familiar with the legal requirements and take proactive measures to avoid violations of the HinSchG.

7.2 Fines and legal consequences

Liability under the Whistleblower Protection Act exists if the organization of a company is flawed and violations of the law or damage cannot be prevented. This applies in particular to company management who are responsible for setting up internal reporting offices and preventing reprisals against whistleblowers. Liability factors under the HinSchG:

Section 40 of the provisions on fines regulates administrative offenses in relation to the disclosure of information and the operation of internal reporting offices. Anyone who knowingly discloses false information in accordance with Section 32 (2) or obstructs reporting in accordance with Section 7 (2) is committing an administrative offense. In addition, failing to set up internal reporting offices (Section 12 (1)) and taking reprisals (Section 36 (1)) are also considered an offense. Breaches of confidentiality pursuant to Section 8 and negligent acts may be punished. Fines range from ten to fifty thousand euros, depending on the severity of the offense.

Missing or inadequate internal reporting points: Companies with more than 50 employees must set up an internal reporting office to receive reports of legal violations. The reporting office must have access to employees and enable anonymous reporting.

Breach of the duty of confidentiality: The HinSchG protects the identity of the whistleblower and the persons who are the subject of the report. Violation of this confidentiality obligation can lead to fines.

Reprisals against whistleblowers: The HinSchG prohibits any reprisals against persons who report grievances. This can lead to civil law claims by the whistleblower against the company if the perpetrator of the reprisal is identified.

8 Challenges and opportunities presented by the Whistleblower Protection Act

The Whistleblower Protection Act presents both challenges and opportunities for companies that actively engage with ESG compliance.

8.1 Challenges in the implementation of internal systems

The implementation of internal whistleblowing systems presents companies with numerous challenges that need to be addressed carefully. First of all, it is crucial that the systems fully comply with all legal requirements of the Whistleblower Protection Act. This means not only a comprehensive examination of the legal framework, but also the implementation of specific requirements that ensure the protection of whistleblowers.

In order to meet these requirements, considerable investment in technical infrastructure is usually required. These investments include, for example, the acquisition and implementation of secure software solutions that enable employees to express their concerns anonymously and confidentially. At the same time, it is essential to develop training programs for employees. These programs should aim to raise awareness of the importance of the whistleblowing system and make everyone involved familiar with the processes. Targeted training will not only provide the necessary knowledge, but also create a positive climate in which potential whistleblowers can feel safe to raise their concerns.

Another key aspect is ensuring data protection and confidentiality. Companies must take transparent measures to gain and maintain the trust of potential whistleblowers. This can be achieved through clear communication strategies that show how information is processed and what steps are taken to protect the identity of whistleblowers. Only when whistleblowers are sure that their information will be treated anonymously and that they will not fear reprisals will they be willing to report wrongdoing or unethical behavior.

Below you will find a comprehensive list of the requirements for whistleblower protection systems:

1. Implementation of an ISMS: The ISMS must be implemented in accordance with the requirements of ISO 27001 in order to ensure comprehensive data protection.
2. End-to-end encryption: All sensitive information and data must be protected by end-to-end encryption so that the data arrives on the servers encrypted and cannot be read.
3. Regular auditing: External auditors should carry out regular penetration tests to check IT security and ensure that systems and data are protected.
4. Ensuring anonymity: Technical measures must be implemented to ensure the anonymity of whistleblowers by not storing any identification data such as IP or MAC addresses.
5. GDPR-compliant data processing: The processing of personal data must comply with the requirements of the General Data Protection Regulation and the Federal Data Protection Act, including processing in accordance with documented instructions as a processor.
6. Data hosting in a certified data center: All data must be stored in an ISO/IEC 27001-certified data center in Germany, without data transfer outside the EU.
7. Implementation of deletion requirements: It must be possible to delete personal data in a legally secure manner in accordance with the GDPR and the EU Whistleblower Directive.
8. Ensuring data confidentiality: Use of 2-factor authentication and separate instances for each customer to ensure confidentiality and separation of data.

8.2 Possible conflicts between whistleblowers and companies

Another challenging element of the Whistleblower Protection Act is the potential for conflicts to arise between whistleblowers and the company. Employees who point out grievances or report unethical behavior could be wrongly perceived by their colleagues as disloyal or even troublemakers. This perception can not only lead to internal tensions, but can also put considerable strain on the working atmosphere and impair cooperation within the team.

To avoid such conflicts and create a constructive atmosphere, companies need to develop proactive strategies that promote a culture of openness and trust. It is vital that employees are encouraged to raise their concerns without fear of reprisal. This includes management communicating clearly and being transparent about whistleblowing procedures.

8.3 Opportunities for greater transparency and corporate integrity

Despite the associated challenges, the Whistleblower Protection Act represents a significant opportunity for companies that should not be underestimated. It acts as a catalyst for greater transparency in internal processes and makes a significant contribution to strengthening corporate integrity. The introduction and implementation of this law requires organizations to optimize their internal controls and audited processes and make them more efficient. This means not only adapting to legal requirements, but also the opportunity to sustainably improve operational processes.

A key element of the law is to promote a culture of accountability within companies. This culture enables employees to report wrongdoing without fear of reprisal and actively contribute to improving business ethics. As a result, companies can significantly increase the trust of their stakeholders - including customers, business partners, employees and the general public. An increased level of trust has far-reaching positive effects on the company's reputation, which is crucial in an increasingly transparent business world.

However, the successful implementation of the Whistleblower Protection Act goes beyond mere compliance with legal regulations. It provides an opportunity to embed ethical business practices and create a business environment that promotes integrity and respectful interaction. In the long term, this leads to companies not only meeting compliance requirements, but also building and maintaining positive relationships with their business partners. By committing to responsible management, they position themselves as trustworthy players in their market segment and benefit from sustainable competitiveness.

Overall, the Whistleblower Protection Act is not just a legal necessity; it is a strategic opportunity for companies to review their values and align them sustainably.

9 Conclusion

The Whistleblower Protection Act (HinSchG) protects whistleblowers in companies and public authorities by creating a secure and confidential environment for uncovering misconduct. With a view to the EU Whistleblower Directive, the law obliges companies with 250 or more employees to set up internal reporting systems that guarantee transparent processes for handling reports. This regulation has been in force since July 2, 2023; smaller companies have had to comply with the law since December 17, 2023.

The HinSchG promotes transparency and compliance by ensuring that violations can be detected at an early stage and that whistleblowers are comprehensively protected against retaliation. Employers have clear requirements: They must set up data protection-compliant reporting channels, process all reports promptly and protect the identity of whistleblowers. External reporting offices provide support during processing and are subject to strict confidentiality requirements.

Violations of the HinSchG can result in high fines and reputational damage, which makes proactive compliance measures essential. Company management is responsible for compliance with these regulations; structural errors can lead to fines of up to 50,000 euros.

Despite implementation challenges, the HinSchG offers opportunities for greater integrity and accountability within organizations. It enables employees to report wrongdoing without fear of reprisals, strengthens the trust of stakeholders and improves the company's reputation beyond mere compliance.