In every company, especially large ones, there may be irregularities that could lead to financial losses and damage the company’s reputation in the market. However, entrepreneurs are not always pleased when such irregularities come to light and may punish the employee who uncovered and reported them, even by terminating their employment. Now, this will no longer be possible, as entrepreneurs are obligated to implement new procedures to protect such individuals in their companies. This is mandated by a new EU Directive.

Who is a whistleblower?

A whistleblower is a person who reports irregularities within a given enterprise. The whistleblower identifies and detects unlawful actions or omissions in the company and counteracts them by reporting them to their employer or the relevant authorities. The whistleblower is an anonymous person. It can be an employee, a self-employed collaborator, a partner, a contractor, a subcontractor, a supplier, or even an intern, a person in recruitment, or a former employee. Whistleblowers are obligated to report irregularities through specially designated channels of communication. The employer, in turn, is obligated to protect the whistleblower’s identity and safeguard their interests against negative consequences of whistleblowing. Therefore, the employer cannot in any way punish the whistleblower, such as by termination of employment, salary reduction, or any other means.

What does the entrepreneur have to do?

Entrepreneurs are obligated to prepare internal reporting channels, which are ways that a whistleblower will have at their disposal to make a report. This can include personal reporting channels, a telephone channel, an application, a dedicated email, a hotline, or a dedicated online communicator. The choice belongs to the entrepreneur. The more channels proposed to the whistleblower, the greater the likelihood that they will decide to report irregularities. The minimum requirement is to establish one channel for written reports and one for oral reports. For the proper implementation of reporting channels for violations, it is also necessary to designate appropriate individuals or departments responsible for receiving and handling whistleblower reports. These designated employees must be adequately trained to know what to do after receiving a report of irregularities from a whistleblower. Handling whistleblowers can also be outsourced to an external firm, but this comes with associated costs.

What consequences will reporting a breach of law by a whistleblower have for the entrepreneur?

The individuals designated to handle the procedure for reporting inappropriate actions by the entrepreneur must verify the report after informing the whistleblower of its acceptance. They can do this by analyzing the data provided by the whistleblower and conducting interviews with witnesses, suspects, or even the whistleblower themselves. The aim of the investigation is to determine whether any irregularities occurred and their severity. Based on the final findings, further actions are taken. If the improper actions are confirmed, the entrepreneur is obligated to rectify the shortcomings and, for example, hold the employee responsible for them accountable. Failure to do so, as well as in cases of serious violations, may result in reporting the matter to the relevant state authorities, who will then take action against the entrepreneur or the employee responsible for the violations.

Amnesty for an employee reporting undeclared work

The Ministry of Finance has also prepared a plan to combat the so-called black market. An employee will be able to report working illegally, for which their employer will be penalized accordingly. Previously, if illegal employment was detected, the employee had to pay the unpaid income tax with interest for delay and also faced criminal liability for not declaring the tax. Now, they will no longer have to do so if they report illegal employment to the appropriate authorities. Instead, the employer will be required to settle the unpaid income tax of the employee along with interest for delay. Additionally, the employer will pay an additional penalty, which is the tax on the minimum wage for each month of employing the worker illegally. Moreover, the additional taxes paid will not be deductible as expenses for income tax purposes, neither for PIT nor for CIT. The Ministry does not expect a sudden influx of whistleblowers due to these changes, but it hopes that employers will become more afraid of illegal employment and that these changes will help reduce budget losses resulting from the existence of the shadow economy.

Since when are the whistleblower provisions coming into force?

Large enterprises with more than 250 employees, as well as entities in the public sector, are required to implement whistleblower protection procedures by December 17, 2021. Therefore, there is not much time left for this. Smaller companies with 50 to 250 employees will have more time, as they have until December 17, 2023. However, it’s important to note that the limit of 50 employees does not apply to enterprises in the financial sector, civil aviation, maritime transport, as well as entities operating in areas of natural gas and oil deposits in maritime zones. The amnesty for employees who admit to working illegally is set to come into effect on January 1, 2022.