Second attempt at a bill on whistleblower protection

Under EU Directive 2019/1937, Germany is required to establish regulations for the protection of whistleblowers. The federal government has so far been slow to meet this obligation—the resolution on the Whistleblower Protection Act most recently failed in February 2023 due to opposition from the Bundesrat. In March, the governing parties made another attempt in the Bundestag to get the law passed. Now, a conflict between the government and the opposition over the Whistleblower Act could arise once again. We’ll bring you up to speed as a tax advisor in Düsseldorf
and Oberhausen
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Background

Germany is currently subject to infringement proceedings because it has not implemented the EU directive by the deadline. The directive aims to make it easier for whistleblowers to draw attention to legal and regulatory violations in companies and government agencies. The directive is intended to protect them from retaliation.

The federal states where the CDU and CSU are part of the governing coalition have so far refused to approve it. They fear it would place too heavy a burden on small and medium-sized enterprises.

The core of the draft law is the establishment of reporting offices within companies and institutions to which whistleblowers can turn, even anonymously. Whistleblowers who experience retaliation should be able to claim financial compensation even if the retaliation does not result in financial loss. If a whistleblower suffers professional disadvantages after reporting misconduct, the law provides for a reversal of the burden of proof to the employer. The employer would then have to prove that the employee’s disadvantage is not due to the report. Employees of suppliers as well as shareholders are also to be protected by the law.

Split into two laws

The new draft of the Whistleblower Protection Act, introduced on March 17, 2023, is very similar to the draft passed by the Bundestag on December 16, 2022. Unlike the earlier version, the current draft excludes from its scope civil servants of the states, municipalities, and municipal associations, as well as other bodies subject to state supervision, public-law institutions and foundations, and judges in state service. According to the political groups that introduced the bill, this means that the Bundesrat’s approval is no longer required for the law to be enacted.

However, in a second draft introduced on the same day “to supplement the regulations on whistleblower protection,” this restriction is, however, lifted again, and the aforementioned groups of persons will once again fall within the personal scope of the law. The coalition parliamentary groups thus intend for the provisions they have proposed to take effect even without the consent of the Bundesrat.

Assessment

What initially appears illogical makes sense when one considers the underlying plan of the governing parties to finally get the law—which had been blocked by the Bundesrat—on track: If the “supplementary” law enters into force during the period between the promulgation and the entry into force of the Whistleblower Protection Act, it could amend the draft Whistleblower Protection Act that has already been introduced. Whether this is a realistic assessment, the states led by the Union will certainly evaluate differently in the Legal Affairs Committee, and in case of doubt, will also involve the Federal Constitutional Court for a final ruling. On March 30, the law was scheduled to be debated in the second and third readings in the Bundestag—however, the Parliament’s Council of Elders agreed to postpone the bill for the time being—so it remains unclear how things will proceed and for which groups the law will become relevant.