4. 3. 2024

How to Protect Whistle-Blowers

Finally, the Act on the Protection of Whistle-blowers has been adopted in the Czech Republic. All companies meeting certain thresholds have to provide internal reporting channels and designate persons responsible for whistle-blowing.

The new whistle-blowers’ protection has led to many interpretation questions. Especially international companies ask: “May we share the internal reporting channel with our parent company?” and “May we outsource the whistle-blowing protection system including the internal reporting channel as the whole group?” Simple questions at first sight. However, the answers to these questions are unfortunately not so obvious, as there is a fine line between sharing and outsourcing. 

Sharing: The basic rules for the sharing of one internal reporting channel by several companies seem to be quite simple. Each of the sharing companies must have a maximum of 249 employees. This limitation relates to each of the sharing companies separately, i.e. the number of employees in the sharing companies shall not be counted together. If only one company in a larger business group (no matter if national or international) exceeds this threshold, the respective company requires establishment of a separate reporting channel and it is not allowed to share the reporting channel with the remaining group members. Such separate solution might cause significant additional costs on the group level and it seems that the legislator (even on the EU level) did not properly consider such situations and the potential adverse effects connected therewith, in particular significant administrative costs. 

Outsourcing: The new law generally approves outsourcing of the operation of internal reporting channels. No threshold with respect to the number of employees has been set. Companies are entitled to outsource the complete whistle-blower protection solution, including the person responsible for the fulfilment of the statutory duties. It is also admissible to outsource the internal reporting channel from the parent company regardless of the number of the employees in any of the participating companies. However, it is important that the outsourced reporting channel is separate from the reporting channel of the providing company. This approach of the legislator appears to be difficult to understand. While, sharing is (after exceeding a threshold of 249 employees) prohibited, outsourcing shall be possible. 

Nevertheless, outsourcing of reporting channels could be the choice for larger business groups that prefer a unified solution. Key factors are sufficient separation of reporting channels, independence of the designated responsible persons and security of the channels. In case of international groups, the designated person should be able to secure proper communication on the national level as well as the proper assessment of the case with respect to the particular national legislation. 

Are you not sure which solution might be the best for your company? Just let us discuss the appropriate ways for the introduction, operation and setting of internal reporting channel in your firm. Together, we will create a tailor-made solution suitable for your business model.

By Mgr. Ing. Jan Valíček

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Mgr. Ing. Jan Valíček

Mgr. Ing. Jan Valíček

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