German Whistleblower Protection Act: or the police may suddenly come knocking

The criminal complaint alleging commercial fraud and aiding and abetting fraud contained detailed information about the suspects, the location and the times of the offences. It had just one blemish: it had been submitted anonymously. No matter, ruled Nuremberg-Fürth Regional Court on 14 February 2024 (case no. 18 Qs 49/23). It issued a search warrant on the basis of the complaint, which had been received through an external whistleblowing system. The court clarified that anonymous complaints may serve as the basis for criminal procedural measures such as searches, provided they are of considerable substantive quality or supported by coherent factual material. In other words, the complaint must contain sufficiently specific and verifiable information to establish initial suspicion. In this case, it contained enough well-informed detail, and enquiries from the investigating authorities were answered reliably.

Not all employees comply with the law at all times. But what can their colleagues do if they observe misconduct at their employer? Should they go to the police as whistleblowers? The legislator offers an alternative. The German Whistleblower Protection Act (HinSchG) requires companies with 50 or more employees to establish internal reporting offices through which breaches of the law can be reported. Whistleblowers may remain anonymous.

The risk posed by whistleblowers

Many employers hesitate to establish internal reporting offices for whistleblowers. The reason is understandable: the very existence of such an office suggests that not everything may be running properly. Nevertheless, having an internal point of contact is required by law and makes sense — even (or especially) if nobody submits a report. If reports of possible breaches are neither received nor taken seriously, or are not handled properly, companies face significant risks:

• Reputation: If made public, anonymous reports can cause serious damage to a company’s reputation even if the allegations later prove unfounded. If a company does not maintain a suitable internal reporting office, whistleblowers will contact external reporting offices run by public authorities. The company thereby loses the valuable opportunity to clarify the facts through an internal investigation and remedy problems in good time.

• Legal consequences: Failure to respond, or an inadequate response, to reports may result in criminal and civil consequences. As the judgment shows, anonymous reports may indeed form the basis for search warrants and other coercive measures.

• Financial burdens: Defending against allegations and investigating internal misconduct can incur substantial costs.

Benefits of an internal reporting office

The alternative is obvious and, as the legislator requires, is mandatory in any event for companies with more than 50 employees: the internal reporting office. A well-structured point of contact for whistleblowers offers numerous benefits in addressing the risks described above:

• Building trust: An internal reporting office that demonstrably takes its task seriously gives employees confidence that reports will be treated seriously and confidentially.
• Early warning system: Identifying and addressing reports early allows problems to be resolved internally before they escalate and are reported externally.
• Legal compliance: Companies with a functioning internal reporting office show that they take legal requirements seriously and actively contribute to compliance.

Crucial to success: anonymous reporting channels

Anyone reporting misconduct must fear reprisals. The ability to submit reports anonymously is therefore an important aspect of internal reporting offices, as it lowers the threshold for whistleblowers. Confidentiality provides whistleblowers with additional protection, which is particularly important for sensitive matters.

Studies show that the number of reports received rises when anonymity is guaranteed. Employees then feel more secure when reporting misconduct. Even so, the internal reporting office must first prove that it genuinely preserves employees’ anonymity — including when pressure comes from above. To prevent this problem (which potential whistleblowers may perhaps merely assume) from arising at all, the reporting office is often outsourced to a legal ombuds service.

Outsourcing the reporting office and a legal ombuds service

Can an internal reporting office ever truly be neutral? Companies wishing to avoid any debate about this can outsource its duties to an external legal ombuds service. This offers additional benefits:

• Neutrality and independence: Employees perceive an external ombuds service as a neutral and independent body. This lowers the threshold for submitting reports.

• Expertise and experience: Lawyers acting as ombudspersons have the necessary legal expertise and experience in handling sensitive reports and conducting investigations.

• Protection against reprisals: An external ombuds service can protect whistleblowers more effectively and safeguard their anonymity, particularly where serious allegations are involved.

• Efficiency: Outsourcing allows companies to save resources and focus on their core business while the ombudsperson handles reports professionally and discreetly.

Identify and resolve risks early

The judgment of Nuremberg-Fürth Regional Court illustrates the importance and potential impact of anonymous reports on companies. A professional internal reporting office is an essential tool for responding to reports in good time and minimising the associated risks. Outsourcing this function to an external legal ombuds service offers additional benefits in terms of neutrality, expertise and whistleblower protection. Companies should therefore make a serious investment in developing and implementing robust reporting processes to protect themselves from possible adverse consequences and promote a culture of openness and transparency.

The digital reporting office from CLARIUS.LEGAL meets all legal requirements and offers a wide range of reporting channels — including anonymous channels, of course. We can also provide a legal ombuds service to ensure that incoming reports are carefully reviewed and handled — preventing unwanted escalation from arising in the first place.

If you would like to learn more about our services, please contact us.

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