The deadline for implementing the European Whistleblower Directive ((EU) 2019/1937) into German law passed on 17 December 2021 without implementation. A draft bill on the Whistleblower Protection Act submitted by the Federal Ministry of Justice and Consumer Protection (Bundesministerium für Justiz und Verbraucherschutz), which was supposed to implement the Directive, failed in April 2021. Long overdue, the parties of the current government coalition now intend to finally get the German Whistleblower Protection Act off the ground.

The EU Whistleblower Directive requires organisations in the private and public sectors to establish safe and reliable channels for reporting breaches so that whistleblowers can report breaches without fear of reprisals. The aim is to create minimum standards for the protection of whistleblowers across the EU.

In principle, EU directives do not apply directly in the member states but must first be implemented into national law. However, the EU Whistleblower Directive gives the member states significant leeway in its implementation despite setting minimum standards. As a result, the German legislator may also introduce more extensive protection for whistleblowers.

EU directives do not have ‘direct effect’ (that is, they do not have legal status in their own right in the member states) before they are implemented. As a result, affected individuals cannot derive claims or rights directly from the directive.

However, if a member state does not implement the directive in due time or lawfully, the legal situation is different. If the deadline for implementation has expired, the European Court of Justice assumes the directive has direct effect if its provisions are drafted in a clear and unambiguous way so that they do not longer require further specification or clarification from national legislators.

If these conditions are met, the directives will have direct effect, particularly for the public sector. This applies not only to corporations, foundations, and institutions established under public law (including authorities, administrations and establishments), but also, according to European Court of Justice case law, to companies established under private law which are entrusted with the performance of public tasks and are vested with special rights for this purpose.

For these organisations, we cannot now rule out an immediate duty to act to implement the requirements of the Whistleblower Directive, especially with regard to the establishment of internal reporting channels.

The Whistleblower Directive provides in principle for an exemption from the obligation to establish internal reporting channels for public sector legal entities with fewer than 50 employees or municipalities with fewer than 10,000 inhabitants. However, since this exemption is merely an implementation option for the individual member states, it is only safe to assume that there is an exemption for these legal entities in Germany once the German legislator has actually implemented a sectoral exemption.

The question of the direct effect of European directives between private individuals, for example employers and employees, is more difficult to assess. Here, according to European Court of Justice case law, an EU directive which has not been implemented into national law cannot in principle lead to the imposition of direct obligations on private individuals or companies, as the addressees of the directive are only the member states.

For companies with 50 to 249 employees, the German legislator has a later implementation deadline of 17 December 2023 for the obligation to set up internal reporting channels, so there is no direct effect of this provision of the Whistleblower Directive at this point in time.

However, even if direct effect of the Whistleblower Directive on private companies seems difficult to justify at present, this does not mean that the provisions of the Directive cannot nevertheless have an impact on employment relationships. This is because labour courts are obliged to interpret German law in conformity with EU law. After the deadline for implementation of an EU Directive has expired, courts have to interpret national law in such a way that it is in line with the wording and objectives of the Directive as far as possible.

This could become relevant in particular from the following point of view: The Whistleblower Directive includes a reversal of the burden of proof for legal proceedings. The Directive prohibits employers from taking or even threatening reprisals, such as dismissal, against whistleblowers. However, if the employment relationship is terminated after a report and the whistleblower claims that the termination was a consequence of his or her report, the Directive introduces a presumption that the employment action was in fact an (illegal) reprisal for reporting or disclosing breaches. It is then up to the employer to prove otherwise and rebut the legal presumption.

For public sector employers in particular, it will now no longer be possible to rule out direct effect for the Whistleblower Directive, since the deadline for implementation into German law has expired. But even if a direct effect for private companies does not exist according to the prevailing view, these employers also face legal uncertainty in dealing with whistleblowers.

Employers, regardless of the sector, are therefore already recommended to establish internal reporting channels for whistleblowers or to review existing reporting systems and policies and, if necessary, redesign them to meet the requirements of the EU Whistleblower Directive. This is the only way to limit the liability risk until the German Whistleblower Act is passed.