Whistleblowing plays a key role in protecting transparency and the public interest in organisations by allowing those who are concerned to disclose the wrongdoing they have observed, while protecting them from retaliation.
In the first post on this topic, I will briefly outline the legal requirements to be taken into account when designing a whistleblowing system and who should actually operate a whistleblowing system.
The legislative background
The European Union, recognising the importance of whistleblowing, has taken serious steps to create a safe and supportive environment for whistleblowers. Directive 2019/1937/EU on the protection of persons who report breaches of Union law (the so-called Whistleblowing Directive) set out minimum standards binding for all EU Member States to ensure the operation of whistleblowing systems and the protection of whistleblowers, which were transposed into Hungarian law by Act XXV of 2023 on complaints and rules related to whistleblowing (new Act), which entered into force on 24 July 2023.
Are you affected by the regulation?
It is important to stress that both private and public sector actors are covered by the new Act. The question is under which conditions these actors will have to operate a whistleblowing system and from when exactly.
1.) MUST operate a whistleblowing system from 24 July 2023:
for organisations with more than 250 employees,
organisations subject to Act LIII of 2017 on the prevention and combating of money laundering and terrorist financing, regardless of the number of employees,
employers engaged in offshore oil and gas and civil aviation activities and operators of floating installations, regardless of the number of employees.
2.) From 17 December 2023, organisations with between 50 and 249 employees MUST operate a whistleblowing system.
3.) As of 1 January 2025, municipalities with a population of 10,000, as well as budgetary bodies under their management or supervision, and organisations and companies owned or controlled by municipalities, must operate a whistleblowing system if they employ more than 50 people.
4.) For private sector organisations with fewer than 50 employees, or municipalities with fewer than 10,000 employees, and budgetary bodies under their management or control, or organisations or companies owned or controlled by municipalities, where they employ fewer than 50 people, the introduction of a whistleblowing system is OPTIONAL. (It is important to note that if they do decide to introduce a system, it must be fully compliant with the legal requirements set out in the new Act.)
Role of the whistleblower protection lawyer
In order to carry out tasks related to the reception and handling of reports, an assignment agreement can be concluded with a lawyer for the performance of whistleblower protection lawyer activities. The activity of a whistleblower protection lawyer may also include participation in the internal investigations.
It is important to emphasize that the assignment of whistleblower protection as a lawyer can only be given to lawyers who meet the conflict of interest rules of the new Act. An assignment agreement may not be concluded with an organisation with which the whistleblower protection lawyer has another legal relationship (assignment, employment, or other legal relationship involving the obligation to work), or with which the lawyer had such a legal relationship in the five years prior to the conclusion of the assignment agreement.
Part of good practice can be the use of whistleblower protection lawyers for the system operators, since by using an external person, it is also possible to increase the trust of the whistleblowers in the system, which is essential for the efficient operation of the system.
Criminal law and whistleblowing
It is interesting that according to the provisions of the new Act, in the event that the initiation of criminal proceedings is justified based on the investigations' results, arrangements must be made to file a report in the name of the organization. The new Act therefore, in contrast to the previous rules, imposes a reporting obligation on organizations in the event that a suspicion of committing a crime actually arises as a result of the investigation. An example of this can be mentioned when a report is received about an employee who turns out to be embezzling or even about a member of the management who is suspected of embezzlement. But this may also include cases of defamation.
Based on the above facts, in my opinion, in order to accurately evaluate the results of the investigation, if there is a suspicion of the commission of a crime, it will definitely be worth using the help of a criminal lawyer.
The operation and operating of the whistleblowing systems, as well as the whistleblowers and the sanctions that can be imposed in connection with these systems, will be dealt with in detail in the next post.
If you have any questions on this topic or need advice on how to set up a whistleblowing system, or if you need the assistance of a whistleblower protection lawyer, please do not hesitate to contact me.
To make an appointment, please contact me through e-mail at drtothfanni@gmail.com or via phone on the following number: +36 30 569 7183.
Comments