The Whistleblower Protection Act came into force on 1 August 2023. It requires up to 15,000 companies to have an ethics hotline - an internal whistleblowing system for reporting illegal practices that employees have encountered at work. Companies can voluntarily add unethical practices such as workplace harassment, bullying or bossing to the reporting system. The law applies to companies with 250 or more employees as of 1 August, and in the next wave, companies with 50 to 250 employees will join them no later than 15 December.
For the world's large companies, a whistleblowing channel is almost a given, with 70% of global companies having one in place, according to last year's data. Yet we see first-hand that having an ethics hotline in place boosts trust and employee satisfaction. Moreover, it helps companies improve their reputation as a responsible business and detecting a problem often can save them significant sums of money.
The Czech Republic is considerably late in adopting the law. The law is based on the European directive on whistleblowing, which the Czech Republic has committed to adopt into its legal system by 17 December 2021. Because of this, the Czech Republic will probably be slapped with the first ever fine from the European Union for failing to meet the deadline for adopting the legislation. According to the European Commission's proposal, the fine should be around CZK 64 million, but the specific amount will be determined by the Court of Justice and may vary.
For example, a trainee can become a whistleblower under the law
A wide range of individuals can become whistleblowers protected by the law. In addition to employees, this can include self-employed persons, job applicants, volunteers, interns, and members of the board of directors or supervisory board. It is therefore important that the possibility to file a report is easily accessible to all these people.
It is also important for companies to ensure that the reporting channel is trustworthy, clear and easy to follow so that employees actually use it. Otherwise, they may use the Ministry of Justice's reporting system directly, which may have a more significant procedural, financial and reputational impact on the company, even if it turns out that there was no violation of the law.
Most whistleblowers prefer to go directly to the company when there is an available and trusted reporting channel, although they may also go through the Ministry's channel, because they are pragmatic and know that if anyone can resolve the problem in the short term, it is the employer.
Close persons also get protection, but anonymous whistleblowers do not
Although the law does not order companies to accept even anonymous reports, the reporting system must keep the identity of whistleblowers confidential. At the same time, companies can make anonymous reporting available on a voluntary basis or, for example, to their customers who are not protected by the law.
Both the whistleblowers themselves and their relatives are protected by law. These may be, for example, a spouse working in the same company or a colleague who helped fill in the report or supply certain information. They receive legal protection from any retaliation by their employer, especially in the form of dismissal, demotion, pay cut or transfer to another team.
The law provides for an independent investigation of suspected violations within 30 days of a report. The whistleblower also gets the right to know the conclusions of the investigation within this deadline, which can be extended twice more in justified cases.
According to data from the Czech Credit Bureau (CRIF), the obligation will affect up to 15,000 entities, as well as all contracting authorities and selected public authorities, except for municipalities with a population of up to 10,000. Companies will always face a fine of up to CZK 1 million for non-compliance with the Whistleblower Protection Act.