Whistleblowers protection in a new bill on liability of collective entities

The Polish Sejm is now working on a new bill on liability of collective entities for punishable offences. Its objective is to extend the list of situations in which collective entity may be held liable for punishable offences. The bill also adopts provisions improving the protection of whistleblowers or persons reporting operational irregularities of an entity. 

Increased protection of whistleblowers

The bill drafters points out to analyses showing that the existing regulations provided for by i.a. the Labour Code do not guarantee adequate protection against retaliation to persons reporting irregularities in collective entities. That is why new regulations have been proposed to guarantee them adequate freedom to act by eliminating the usual threats related to whistleblowing activity, such as loss of job.   

The proposed regulations are to improve records as regards abiding the principles of rule of law by collective entities. In justification to the bill, the drafters stated that the most serious irregularity which carries the largest possible burden to be reported by a whistleblower is the notification of suspected criminal offence.

What is a collective entity

The bill imposes an obligation on collective entities to provide whistleblowers with protection. The definition of a collective entity will be very broad to include:

• legal persons;
• organisational units without legal personality to which separate provisions grant legal capacity;
• commercial companies with participation of the State Treasury, with participation of local government units or their unions,
• companies in organisation;
• entities in liquidation;
• economic operators other than natural persons;

The bill excludes from definition of collective entity the State Treasury, local government units and their unions.

Reporting irregularities

The bill provides no definition of a “reporting person”, however, the term “reporting irregularities” is defined. In accordance with the bill, the governing authorities of a collective entity will have to provide explanation with regard to notifications made by employees, members of governing bodies, persons acting on behalf of or in the interest of collective entities concerning:

• suspected preparatory offence, attempt to perpetrate or perpetration of a prohibited act;
• breach of duty or abuse of power by:
  • governing bodies of an entity;
  • members of governing bodies;
  • attorneys-in-fact;
  • employees;
  • associates;
  • trading partners,
• failure to maintain due diligence required in the given circumstances from governing bodies of an entity or the above mentioned persons,
• irregularities in operational organisation of the collective entity which may lead to perpetration of a prohibited act.

Protective measures

Pursuant to the bill, the governing bodies of a collective entity, in particular a body of a collective entity appointed to supervise the compliance with the rules and regulations governing the entity’s operations or persons in charge for internal supervision will seek to provide adequate protection to whistleblowers against activities such as:

• retaliation;
• discrimination;
• other forms of unfair treatment.

In the event that retaliation practice is found as a result of filing notification which consists in the infringement of employee’s rights of a person making the notification or termination of employment relation or contract with such a person, the court, upon a motion of a person reporting the information, may award:

• reinstatement to work
• compensation.

The court, when awarding compensation for infringement of employee’s rights or termination of employment relation, will determine its amount on the basis of the provisions of Labour Code. In justified cases, the court will be able to award compensation for the entire period out of employment. This is however under condition that the reported information are well-founded and may help to prevent the perpetration of a prohibited ac or its detection. The protection will not extend to perpetrators unless they disclose to collective entity and law enforcement agency all material circumstances of such act.

It should be noted that the currently binding Act on Liability of Collective Entities for Punishable Offences of 28 October 2002 entered into force several years ago, however, courts have entered few judgements on its basis. Therefore, due to inefficiency of the existing regulations and the need to improve the effectiveness of instruments to combat serious economic and fiscal crime, the legislature found it necessary to adopt the new regulations.

Learn more: Whistleblowers – draft directive to protect persons revealing breaches of EU law

Author:

Sylwia Składzień
Attorney-at-law, Associate
TGC Corporate Lawyers

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