Unfair labour practices can be easily reported. Companies have until mid-december to sort it out

Companies will have to have an internal whistleblowing system in place to report illegal practices that employees have encountered at work. The new obligation under the Whistleblower Protection Act will apply from 15 December 2023 for companies with between 50 and 249 employees. These medium-sized companies constitute the majority in the Czech Republic. They will join the larger companies for which the law has already been in force since August this year. Companies can extend the whistleblowing system, or ethics hotline, to other wrongdoing such as workplace harassment, bullying or bossing. If they have not yet developed their own system, they still have one last chance to turn to external solution providers.

A wide range of individuals can become whistleblowers. In addition to employees, this can include self-employed persons, job applicants, volunteers, interns, members of the board of directors or supervisory board. It is therefore important that the possibility to make a whistleblowing report is easily accessible to all these entities.

Whistleblowers obtain the protection of the law. The whistleblowing system must conceal their identity and protect them from retaliation, especially in the form of firing, demotion, pay cut or transfer to another team. Both the whistleblowers themselves and their loved ones are protected by law. This could be, for example, a spouse working in the same company, or a colleague who helped to complete the report or supply certain information.

Although the law did not pass in a form requiring companies to accept anonymous reports, companies can make anonymous reporting available on a voluntary basis. They can also make reporting available, for example, to their customers who are not protected by the law.

The law provides for an independent investigation of suspected violations within 30 days of being reported. The whistleblower also has the right to know the conclusions of the investigation within this deadline, which can be extended twice more in justified cases.

Companies should welcome the law as it could save them tens of millions of crowns

The law can be a great benefit for companies and other entities, as it allows them to learn more quickly about violations of binding rules, prevent them and avoid further damage, whether financial or reputational. Whistleblowing channels are now commonplace among global companies, with 70% having one, according to data from last year.

From a corporate perspective, it is important that the notification 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 though, for example, there was no violation of the law. However, if there is an available and credible reporting channel, employees generally prefer to use that option. The reason is quite simple: they are pragmatic, and they know that if anyone can resolve the issue in the short term, it is the employer.

Companies will be fined up to CZK 1 million for failing to comply with their obligations under the Whistleblower Protection Act.

Stanislav Klika