Draft of legislative decree about whistleblowing

On December 12^th 2022, the Italian Government transmitted to the Chamber of Deputies the draft of legislative decree for the implementation of Directive (EU) 2019/1937, concerning the protection of individuals who report violations of EU law (so-called whistleblowers) and containing provisions about the protection of individuals who report violations of national regulatory provisions.

The text had been approved by the Council of Ministers on December 9^th 2022 – one day before the deadline of 3 months after the implementation of the enabling Law no. 127 dated August 4^th 2022 – and was promptly assigned to the competent parliamentary commissions (II – Justice, XI – Labour, V – Financial statement and Treasury and XIV – EU policies), which will have until January 19^th 2023 to make their assessments.

Directive (EU) 2019/1937

The Directive, provides for the obligation to adopt internal reporting channels exist for the following entities:

• all public entities, with an exemption for municipalities with less than 10,000 inhabitants and for public entities with fewer than 50 employees;
• private entities with more than 50 employees, as well as those operating in determined and specific sectors, regardless of the number of employees.

Reports can be made through three different channels: internal, external andthrough public disclosure.

Italian legal system

In Italy, the phenomenon of whistleblowing was already contemplated and regulated, both for the public and private sectors, by Law 179/2017, which will therefore be superseded in case of approval of the decree.

SUBJECTIVE SCOPE OF APPLICATION OF THE DECREE

The main innovations with respect to the provisions currently in force concern the private sector.

In fact, whereas for public employees the Italian legislation is mostly aligned with EU law, the protection of whistleblowers in the private sector is currently very limited, as it applies only to employees and collaborators of private entities that have adopted the organization model pursuant to legislative decree 8 June 2001, n. 231 and only in relation to relevant offenses according to said decree.

The new regulation being examined by the Chamber instead concerns, in line with the provisions of the Directive, both all private entities with at least 50 employees and those operating in certain sectors and which adopt organization and management models pursuant to legislative decree 8 June 2001, n. 231, regardless of the number of their employees.

OBJECTIVE SCOPE OF APPLICATION OF THE DECREE

From an objective point of view, the new legislation would apply with regard to the following categories of offences:

1. administrative, accounting, civil or criminal offenses, not included in numbers 3), 4), 5) and 6);
2. significant illegal conduct pursuant to legislative decree 8 June 2001, n. 231, or violations of the organization and management models provided by such decree, which do not fall within numbers 3), 4), 5) and 6);
3. offenses relating to public procurement; financial services, products and markets and the prevention of money laundering and terrorist financing; product safety and compliance; transport safety; environmental Protection; radiation protection and nuclear safety; food and feed safety and animal health and welfare; public health; consumer protection; privacy and personal data protection and security of networks and information systems;
4. acts or omissions affecting the financial interests of the EU;
5. acts or omissions concerning the internal market of the EU;
6. acts or behaviors which frustrate the object or purpose of the provisions of the EU measures in the areas indicated in numbers 3), 4) and 5).

CHANNELS OF REPORTING

As for the channels of reporting, consistently with the EU provisions, the following are provided:

• internal channels;
• external channels, through a report to the National Anti-Corruption Authority (ANAC), or other relevant authority;
• the possibility to make public disclosures.

PROTECTIVE MEASURES

In order to protect whistleblowers, the following protective measures are provided:

• first, there is a prohibition of retaliation (art. 17), which can occur in the following cases:
• dismissal, suspension or equivalent measures;
• demotion or failure to promote;
• change of functions or of the place of work, reduction of salary, change of working hours;
• suspension of training or any restriction of access to the same;
• negative merit notes or negative references;
• adoption of disciplinary measures or other sanctions, including financial ones;
• coercion, intimidation, harassment or ostracism;
• discrimination or otherwise unfavorable treatment;
• failure to convert a fixed-term employment contract into a temporary employment contract permanent, where the worker has a legitimate expectation of such conversion;
• non-renewal or early termination of a fixed-term employment contract;
• damage, including to the worker’s reputation, particularly on social media, or economic or financial prejudice, including loss of economic opportunities and loss of income;
• improper listing based on a formal or informal sector or industry agreement, which may result in the person being unable to find employment in the sector or industry in the future;
• early termination of the contract for the supply of goods or services;
• termination of a license or permit;
• the request for submission to psychiatric or medical tests.

• Support measures are as well guaranteed to whistleblowers (art. 18), such as free information, assistance and advice about the methods of reporting and on the protection from retaliation offered by national and EU law, about the whistleblower’s rights, as well as about the methods and conditions of access to legal aid;

• In order to ensure protection of the subjective legal situation triggered, measures (art. 19), even temporary ones, will be adopted in favor of whistleblowers, such as:
• compensation for damages;
• reintegration into employment
• order to cease the conduct constituting retaliation
• declaration of nullity of the acts adopted in execution of the conduct constituting retaliation.

• Limitations of whistleblowers’ liability are also provided (art. 20), if the report leads to a violation of:
• confidentiality obligation
• copyright
•  personal data protection
• or to an offense to the reputation of the person involved or reported;

• Finally, the National Anti-Corruption Authority (ANAC) is capable of imposing sanctions (art. 21) against the person responsible, such as:

A) Pecuniary Sanctions:

• from € 5,000 up to € 30,000 in the event of retaliation, an attempt to hinder the reporting or breach of the obligation of confidentiality;
• from € 10,000 up to € 50,000 in the event of failure to establish reporting channels, failure to adopt procedures for making and managing reports or failure to carry out verification and analysis activities on the reports received;

B) Disciplinary Sanctions

OBBLIGATION OF CONFIDENTIALITY

For the same purpose of protecting whistleblowers, there is an obligation of confidentiality (art. 12) regarding the whistleblowers’ identity, which cannot be revealed or divulged, without their express consent, to authorities other than those competent to receive or follow up on the report.

This obligation is already provided by art. 54 bis, paragraph 3, of Legislative Decree 165/2001. The main change, however, concerns the need for consent to be express, as required by the EU Directive.

In the event of disclosure of the whistleblowers’ identity, aprior written communication of the reasons for the disclosure of the confidential data must be given.

A protection equal to that granted to whistleblowers is also provided for the individuals involved and or mentioned in the report, including the reported person himself.

Finally, all those involved have the right to an effective remedy system, to an impartial judge, to the presumption of innocence and to a more general right of defense.

The press release from the Council of Ministers:

“The directive regulates the protection of whistleblowers (or ‘segnalanti’ in the Italian translation of the text) within the Union, through minimum protection standards, aimed at standardizing national regulations, taking into account that those who report threats or prejudices to the public interest of which they have come to know in the course of their professional activities are exercising the right to freedom of expression. The purpose of the rules is to strengthen the principles of transparency and accountability and to prevent the commission of crimes.

The scope is limited to violations of Community legislation in the sectors expressly indicated (including: public procurement, financial services, product and transport safety, environment, food, public health, privacy, network and IT systems security, competition). The directive provides for protection for the whistleblower without differentiating between the public sector and the private sector.

In addition to the obligation of confidentiality regarding the identity of the whistleblower, the persons involved and the person reported, there is a prohibition of retaliation, with an example of retaliatory cases, and support measures in favor of the whistleblower, which consist of information, assistance and free advice on the rights of the person involved and on the methods and conditions of access to legal aid”. Finally, the Chairman of National Anti-Corruption Authority (ANAC) G. Busia, stated as follows:

“The protection of whistleblowers is a fundamental right, recognized internationally, and an extension of the right to freedom of expression. Preserving whistleblowers from retaliatory behavior is the imperative of the Authority: those who responsibly report any irregularities know they can find protection, without fearing retaliation from their superiors. Therefore, the strengthening of these powers of the Authority by the government is welcome, as well as the expansion of the scope of application, as requested by the European Union”.

At this link it is possible to download some overview slides