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Setting up a group’s whistleblowing system correctly

For some entities, the Act on the Protection of Whistleblowers entered into effect on 1 August this year. However, its wording still raises questions so far not answered, not even by the methodological guidance of the Ministry of Justice. One of the most discussed topics is the sharing of internal whistleblowing systems within corporate groups; this means uncertainty for many subsidiaries, as their foreign parent entities often want to administer the internal whistleblowing system more or less centrally, with solutions adopted at the highest possible level.

What do the law and the methodology say?

The Whistleblower Protection Act allows companies (except for public procurers) with no more than 249 employees to share a whistleblowing system or use an internal whistleblowing system set up by another entity. The Ministry of Justice's methodology further elaborates on this only to distinguish between the sharing of an internal whistleblowing system and its outsourcing; the difference between these is primarily in the functional (data) separation of individual whistleblowing channels in the case of outsourcing.

The benefits of fully sharing a whistleblowing system within a group are thus available only to companies with a maximum of 249 employees. For companies exceeding this limit, the use of a single technical solution for a whistleblowing system is allowed only if at least the individual group companies’ data are functionally separated in the system.

European Commission’s standpoint

Further guidance on how to set up a group whistleblowing system for medium-sized companies (with a maximum of 249 employees) is provided by the European Commission’s non-binding interpretation standpoint.

According to the Commission, it is possible to have a central whistleblowing system alongside a local whistleblowing system that is functionally separate for a single group company. Whistleblowers may then choose whether to make their notification directly to the subsidiary or centrally to the parent company. There may be various reasons for whistleblowing centrally: for example, the whistleblower may have more confidence that they will be granted adequate protection by the parent company; also, the matter being notified may concern more than one group entity or the group as a whole.

Apart from the requirement for two separate systems, the standpoint lists further requirements for the possibility of dual whistleblowing and sharing of resources. When notifying the parent company, the whistleblower should first be informed that their notification will be dealt with by a relevant person at the parent company. They should then be able to object to this and demand that their notification be dealt with locally. Even if they fail to do so, any feedback to the whistleblower and the resolution of the matter itself should be done locally.

Shared whistleblowing in practice

Unfortunately, neither Czech law nor the methodology so far show how to best set up whistleblowing at a subsidiary in the context of a corporate group. This holds especially true if the parent is a foreign company. Although the European Commission’s interpretation standpoint provides more specific guidance, it is still a non-binding opinion, and practice in the Czech Republic may develop in a different direction. Caution in setting up internal whistleblowing systems within corporate groups is therefore in order. In the light of the above, you should primarily keep in mind the requirements of Czech legislation and not simply give in to a parent company’s pressure to centralise whistleblowing.