Legal entities

Whistleblowing


One of the key tools for detecting wrongdoing within a legal entity is the promotion of whistleblowing, i.e. reporting suspected wrongdoing. Building an internal whistleblowing system can serve this purpose.

The Whistleblower Protection Act has been adopted recently. Hence, a number of whistleblowing obligations is in force. The regulation is applied to employers with at least 50 employees, employers in specific fields, public procurers (except for exceptions) and selected public authorities. These obliged entities have to establish an internal whistleblowing system through which notifications can be made under the proposed law (some of them since December 2023).

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Should other entities also implement an internal notification system?

The introduction of whistleblowing mechanisms can also be recommended to "non-obliged" entities. That is, to such persons to whom the Whistleblower Protection Act does not directly apply.

The establishment of an internal notification system is an important part of the so-called compliance programs, which are especially advantageous with regard to the possibility of exoneration from criminal liability. With a functioning internal notification system, the person in question can prevent the occurrence of damages, as this method of prevention sometimes proves to be more effective than an audit. It can also prevent reputational damage.

The introduction of an internal reporting system can also be a signal that the entity supports an open corporate culture and ethical principles. Resp. that the employer takes compliance with legal and ethical standards seriously and does not tolerate their violation. In some cases, this may also be a requirement of some business partners.

What are the penalties for non-fulfillment of obligations?

The law stipulates a whole range of obligations and associated sanctions in the event of their non-fulfilment. The amount of the sanction can reach up to 1,000,000 CZK.

However, it must be remembered that non-fulfillment of imposed obligations does not only result in the risk of legal sanctions. A legal entity is also exposed to the threat of other negative phenomena (damages, reputational damage, etc.).

How to ensure the efficient functioning of the system?

The legal regulation of whistleblowing brings very specific obligations, such as strict deadlines and serious sanctions. For the effective fulfillment of the obligations brougth by the new law, it is important to ensure two levels: legal and technical. Each notice must be properly assessed and appropriate legal consequences must be drawn. This requires, in particular, comprehensive legal knowledge and experience across many legal fields. This can be provided by a person with legal training, typically a lawyer. A practical software platform in which received notifications are managed can help with the efficient functioning of the internal notification system.