There is no specific legislation on whistle-blowing in Germany despite growing attention on this topic. Efforts to regulate whistle-blowing have failed in the past especially due to objections from employers’ associations.
In a broad sense, whistle-blowing is the publishing of true or alleged wrongdoings or violations in companies (e.g., illegal actions, corruption, violations of tax, social security, occupational health and safety and environmental protection rules) through critical statements, complaints or reports by an employee.
Since there are no specific institutions and mechanisms to receive and investigate disclosures and to grant whistle-blowers any kind of security, any potential protection results from general labor law regulations such as protection against unfair dismissal and the fact that an employer may not penalize employees making reasonable use of their rights.
Breach of contractual duty of loyalty
Labor law sanctions in reaction to an employee’s complaint against their employer have been the subject of labor court jurisdiction in single cases.
The reporting of wrongdoings in a company creates a conflict between the employer’s interest in protecting his good reputation, his business interests and the secrecy of internal processes and data on the one hand, and the employee’s legitimate interest in correcting the wrongdoings by involving and informing the public in the event of a significant violation on the other hand.
A balancing of these interests is particularly important in the context of protection against dismissal, namely in whether the employee’s complaint against the employer constitutes an unlawful breach of the duty of loyalty under the employment contract and thus an important reason for dismissal.
An assessment depends on the circumstances of the individual case, whereby the previous conduct of the parties, the motive for the complaint and the quality of the possibly threatened legal interests are also of importance.
Employee’s right to notification
In the past, complaints against the employer were considered a breach of the duty of loyalty under the employment contract and thus a reason for dismissal.
Employee protection has become more important in court decisions. According to the highest labor court, employees’ actions motivated by the rule of law cannot justify a termination without notice.
But it is a consequence of the contractual duty of consideration of the employee that the employee is only entitled to report if he/she has a legitimate interest in exercising the existing civil right and that the report does not constitute a disproportionate or hasty reaction to information that has become known and must not result in any damage to the employer (e.g. if the negative publicity associated with the initiation of criminal proceedings endangers the existence of the employer).
A report may be unreasonable especially if the employee has not previously tried to solve the problem within the company. However, an internal complaint cannot be expected from the employee if it is not merely a minor offense or if employees would otherwise expose themselves to prosecution.
Internal whistle-blowing rules
In principle, every employee is obligated to immediately notify his employer or superior of any foreseeable damage or disruption.
Further notification obligations may result from internal whistle-blowing rules. Internal compliance or ethics guidelines can be used to impose certain conduct on employees, combined with the obligation to report violations of the provisions of the code of conduct in accordance with a defined procedure. With the introduction of such internal reporting procedures, management ensures that it is aware of all information relating to compliance,
in particular the conduct of employees who are not in compliance with the law or internal rules of conduct.
Country-by-country and EU whistle-blowing rules need to be taken into account in setting the best practices and policies in this growing area of risk, including what an employer must do when faced with a whistle-blower claim, such as whether an investigation is required, protections of the employee who complained of company practices and litigation issues.
Best practice requires companies to take action in advance by creating a hotline and training its employees in ethical behavior.