As of 1 January 2023, the new Act on the Protection of Whistleblowers (Fi: Laki Euroopan unionin ja kansallisen oikeuden rikkomisesta ilmoittavien henkilöiden suojelusta, the “Whistleblower Act”) entered into force in Finland, concluding the lengthy implementation process of the Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law. The objective of the Whistleblower Act is to protect persons (the so-called whistleblowers) who report on certain breaches of national and Union law.
Protected People and the Prohibition of Countermeasures
Employees, shareholders, board members and certain other people related to the entity in question that discover certain serious breaches of that entity in connection with their work are now protected against any countermeasures for reporting of such breaches. The Whistleblower Act is only applied when the reported breach relates to one of the specific legal areas listed in the Whistleblower Act, such as public procurement, prevention of money laundering and terrorist financing, consumer protection, competition law, and taxation, to name a few. It should be noted that reporting of, for example, HR related issues is not protected under the Whistleblower Act.
Prohibited countermeasures include imposing any kind of negative consequences upon the reporting person based on the report. The threshold of interpreting any negative consequence as a prohibited countermeasure appears to be low and, consequently, postponing an upcoming promotion, offering a termination agreement, terminating a cooperation relationship, or any weakening of employment terms may be mentioned as examples of prohibited countermeasures. In addition, preventing reporting is also prohibited under the Whistleblower Act. Therefore, it is worth ensuring that no non-disclosure or similar agreement restricts a person from reporting on breaches.
A person who becomes subject to countermeasures shall be entitled to compensation and damages, as applicable, by the relevant entity, the amounts of which shall be decided on a case-by-case basis.
The Whistleblowing Channel
The Whistleblower Act obliges companies regularly employing at least 50 employees, in addition to certain other entities, to introduce an internal reporting channel (the “whistleblowing channel”). The obliged entity may also entrust an external service provider to set up its whistleblower channel. A group of companies may establish one common whistleblowing channel. Pursuant to the Whistleblower Act, entities employing at least 250 employees shall introduce the whistleblowing channel within three months of the Whistleblower Act entering into force, i.e., by 31 March 2023. Entities employing 50-249 employees shall have a longer transition period and are required to introduce the internal whistleblowing channel by 17 December 2023.
The requirements for the whistleblower channel include designating an independent and non-biased person (or persons) to be in charge of handling of the reports, providing the whistleblower with information on follow-up measures within three months of the acknowledgment of receipt of the report, and confidentiality of the whistleblowing channel. It shall be ensured that the entity has available clear and easy-to-access information about reporting, related procedures and conditions for protection for its employees and other people that are eligible for protection.
The obliged entities may decide if they allow anonymous reporting. The aforementioned follow-up actions will not be required in case of anonymous reporting, however, an anonymous whistleblower, if later identified, shall also be protected against countermeasures.
If an obliged entity fails to establish an internal whistleblowing channel as required under the Whistleblower Act, the whistleblower may report the breach to the competent authority through a centralised external whistleblowing channel managed by the Office of the Chancellor of Justice. Such centralised whistleblowing channel is meant to be used also in situations where, inter alia, the reporting person has reasonable grounds to believe that the breach cannot be effectively addressed internally or that the whistleblower will be at risk of countermeasures as a result of the report.
In addition, a whistleblower shall in certain circumstances be entitled to publish the breach. Such circumstances relate to, for example, the whistleblower having reasonable grounds to believe that the breach may result to an immediate and evident risk to the public interest or that the competent authority does not take effective actions in the matter due to specific circumstances.
The whistleblower is protected against countermeasures whether they report the breach through the internal whistleblower channel, the centralised whistleblower channel of the Office of the Chancellor of Justice or whether they publish the breach in accordance with the Whistleblower Act.
Please do not hesitate to reach out to us in case you need any assistance with regard to the new Whistleblower Act.