A whistleblower scheme is designed to provide company employees the opportunity to report any irregularities under Danish or EU law relating to, for example, corruption, evasion of environmental and consumer protection regulations, safety, financial/economic transactions, or other serious matters. Companies are free to invite their clients and suppliers to report under the company's whistleblower scheme. Employees cannot use the whistleblower scheme to complain about their personal employment conditions, unless a serious offense, such as gross sexual harassment or other serious harassment, is involved.
Requirements of the scheme and companies’ responsibility
Companies must designate a trusted (internal or external) person or unit independent of the company's management to receive reports from whistleblowers. This person or unit is obliged to investigate the validity of reports in an impartial and confidential manner, and to ensure the confidentiality of the whistleblower's identity.
The law sets out a series of formal criteria for setting up a whistleblower unit, including requirements to acknowledge receipt of reports within seven days, to carefully investigate and follow up on reports, to liaise with whistleblowers, and to give whistleblowers feedback on reports within three months of receiving a report.
Companies are also required to communicate clearly to all employees and others eligible to report about where and how to report, e.g., in the form of a whistleblower policy that is available on the company's website and intranet.
Finally, companies are also required to document that a whistleblower scheme has been set up and that it is operated in a way that ensures the confidentiality of the whistleblower's identity and the rights of other persons to confidentiality.
More to this task than meets the eye
In other words, setting up an internal whistleblower unit that fulfills all the legal requirements, especially regarding the protection of reports and whistleblowers, as well as impartial, legally correct, and professional processing of reports within the timeframes and procedural rules laid down by law, is a complicated matter.
This is why some companies choose to work with an external partner that acts as an external whistleblower unit. In this case, employees do not have to worry about the potential lack of confidentiality and impartiality, and the external partner usually has good access to the company's senior management when making decisions about acting on relevant reports.
The external partner can ensure the professional and digital processing of reports and take care of the subsequent investigation. However, in the event of an inspection, the companies themselves must be able to document that a whistleblower scheme has been set up. Companies must appoint an internal person to liaise with any external partner and ensure the implementation and communication of a whistleblower policy.
Considerations when setting up a whistleblower scheme
At Azets, we advise companies who are unsure about how to initiate the setup of a whistleblower scheme. Companies should generally consider the following:
Basic legal requirements: Setting up an internal or external whistleblower scheme is an undeniable legal requirement, so companies must be sufficiently familiar with the legal requirements to comply with the inspections that naturally accompany the law.
Internal vs external competences and resources: What competences and resources does your company have to set up and operate an internal whistleblower scheme, including the requirement for confidentiality and protection of whistleblowers, as well as impartial and correct investigation of reports? Or is it more appropriate for your company to work with an external partner?
Confidentiality and protection of whistleblowers: The benefit of a whistleblower scheme is its ability to uncover corruption, fraud, and other irregularities. What is needed for employees to feel comfortable using the company's whistleblower scheme and for cases to be handled impartially?
Internal accountability and communication: An internal whistleblower officer must be appointed within your company (even if you work with an external partner), and an internal policy must be developed and communicated. The external partner can help with this as well. Communication should include information on how to investigate and report suspicious activities and how whistleblowers will be protected.
Follow-up: Companies’ senior management must be available to act on reports and ensure that any issues and irregularities are resolved.
Let us help you get started
As Denmark's largest outsourcing partner within finance, payroll, and HR, Azets already handles a wide range of confidential and regulatory tasks for companies, but we are now also able to offer our clients advice on setting up a whistleblower scheme. This includes providing a digitally secure reporting line and acting as an impartial report investigator.