What is a whistleblowing channel and which companies are required to have one?

The whistleblowing channel was introduced as a measure to protect all persons who report or disclose cases of corruption, fraud, or breaches of the law in EU countries.

These whistleblowing channels will be protected to prevent retaliation against whistleblowers.
The companies required to set up these whistleblowing channels are:
• Individuals or legal entities with businesses employing 50 or more people.
• Companies in the financial sector, or legal entities that, although not domiciled in Spain, carry on activities through branches or agents without a permanent domicile.
• Political parties, trade unions, employers’ organizations, or foundations created by them that receive public funds.
• Groups of companies.
The deadline for setting up whistleblowing channels in companies with workforces of more than 249 people expired on June 13.
The next deadline is December 1, 2023, for companies with more than 50 people on their workforce.
The Labor Inspectorate will begin fining companies that do not have an effective whistleblowing channel in three months.
What is the purpose of a whistleblowing channel?
Whistleblowing channels are intended to protect all persons who report or disclose cases of corruption, fraud, or breaches of the law in EU countries.
Whistleblowing channels seek to protect whistleblowers working in the private and public sectors who have information and knowledge of work-related infringements.
All workers must be protected, whether permanent, part-time, or on fixed-term contracts.
This also covers civil servants and public-sector workers, as well as third parties who provide information to the whistleblower.
Likewise, protection will extend to third parties who are connected with the whistleblower and may suffer retaliation. These include:
• Persons who assist the whistleblower in reporting a specific irregularity.
• Relatives of the whistleblower who have an employment relationship with the company.
• Entities for which the whistleblower works or with which the whistleblower has a relationship in a work-related context.
In any event, they will be protected provided that they disclose work-related infringements.
It should be stressed that the whistleblower will not lose protection even if it is subsequently established that the information provided was inaccurate or never materialized.
The key point is that the whistleblower must have reasonable and compelling grounds to believe that the information was true at the time the report was made.
New obligations
On February 20, 2023, following its approval by the Congress of Deputies (Congreso), the new Law on the protection of persons who report regulatory breaches and on the fight against corruption was published in the Official State Gazette (BOE).
This Law requires certain companies to implement whistleblowing channels, in accordance with Directive (EU) 2019/1987 of the European Parliament, of October 23.
The Directive imposes an obligation on Member States, requiring the creation of whistleblowing channels, both internal and third-party to the organization, that guarantee confidentiality.
To that end, three levels are established:
• A whistleblowing channel within the entity itself, at the internal level.
• If this channel does not perform its function properly, the next level would apply: the channel of the competent authorities.
• If the authorities fail to act, or imminent dangers are foreseen, the legislation provides for the use of the media.
What can be reported?
Whistleblowing channels will make it possible to report infringements of EU law relating to financial services, environmental protection, public procurement, or public health, among other areas.
Whistleblowing channels protect all persons who report:
• Serious or very serious criminal and administrative offenses.
• Breaches of European Union law that affect the financial interests of the EU.
How is the whistleblower protected?
The Law will prohibit a worker who reports irregularities from:
• Being dismissed or having their employment contract suspended.
• Being subjected to disciplinary measures or any adverse change in their working conditions.
• Suffering harassment or any form of intimidation.
Penalties for failing to comply with the whistleblowing channel requirements
The Law provides for penalties of up to €1 million for companies.
Fines may range:
• From €1,001 to €300,000 for individuals.
• From €10,001 to €1,000,000 for legal entities.
In addition, penalties will be imposed on individuals who file false reports and on companies that disclose such reports.