What does it mean – whistleblowing?

On February 4, 2022, a new Whistleblowing Law came into force in Latvia, improving the existing regulation on whistleblowing, and clarifying in which fields particularly one can blow the whistle on violations. The aim of the law is to invariably promote reporting on violations related to public interest, and to ensure the establishment and functioning of whistleblowing mechanisms, as well as the proper protection of whistleblowers.

Whistleblowing is a process in which a whistleblower, that is, a natural person who is or was in an employment relationship or other civil-law relationship with a company related to the conduct of work or internship, as well as a volunteer, submits a report on any violation observed at the place of work or internship, which may harm the public interest.

Until the entry into force of this Law, 15 fields of activity were identified, in which particularly one can blow the whistle (report) on detriment to the public interest, but this list has now been updated, listing a total of 22 fields of activity affecting any employer identified as being of particular importance to blow the whistle on (report), such as tax evasion, corruption, threats to the safety of construction, threats to public health, threats to food safety, threats to occupational safety, threats to environmental safety, violations in the provision of goods and services, violations of privacy and personal data protection, etc. At the same time, it remains the case that this list is not exhaustive.

How can one blow the whistle?

An employee may blow the whistle regarding violations at his or her discretion by choosing one of the whistleblowing mechanisms that he or she trusts and deems most convenient:

• Internally – informing about the violation at his or her workplace;
• External – informing the competent authority of the type of violation, for example, the State Revenue Service, the State Labour Inspectorate, the Food and Veterinary Service, the State Environmental Service, the State Police, the Competition Council, etc.;
• Reporting to the whistleblower contact point at the State Chancellery or the association or foundation which, after assessing the content of the report, will release it to the competent authority;
• Providing the information publicly, if, for objective reasons, the whistle cannot be blown at work or at the competent authority.

Undoubtedly it is in the interest of any company to ensure the employee an option to use whistleblowing rights internally before turning to public institutions.

Who is obliged to set up an internal whistleblowing system?

The internal whistleblowing system must be put in place by any public authority, as well as by private law legal persons:

• who have more than 50 employees;
• who operate in the financial and capital market sector and in the field of the prevention of money laundering and terrorism and proliferation financing, regardless of the number of employees;
• the operation of which is regulated by European Union legislation, which is indicated in the Cabinet of Ministers Regulation No. 96 of February 8, 2022 “Provisions on European Union legislation, violations of which are subject to whistleblowing or other reporting procedures”, regardless of the number of employees.

According to the regulations on whistleblowing, the internal whistleblowing system must be set up by each individual legal person corresponding to one of the abovementioned characteristics. However, medium-sized companies with the combined number of fewer than 249 employees may combine and establish a joint internal whistleblowing system. Both small and medium-sized companies belonging to a particular group of companies (parent and subsidiary companies, branches, etc. affiliates) and other small and medium-sized companies, regardless of whether they are affiliated or not, have the right to merge and establish a joint internal whistleblowing system. In this case, the effective operation of the internal whistleblowing system may be ensured in whole or in part by a third party.

Why is setting up an internal whistleblowing system in the company’s best interests?

From a legal and practical point of view, the establishment of an internal whistleblowing system is in the interest of any private sector employer – a company, and in this case, it is not decisive whether a company belongs to a category that requires the establishment of an internal whistleblowing system.

The existence of an internal whistleblowing system will encourage an employee to report the observed violation first at their place of work or practice or to the chosen outsourced private contact point, rather than at the relevant supervising institution, such as the State Revenue Service, State Labour Inspectorate, State Police, etc. In this way, the company is given the opportunity to be the first to receive information regarding the activities/processes performed in the company or the non-compliance of the actions of the liable individuals with the requirements of normative acts, to rectify the violation in a timely manner and to internally resolve the problems caused by it. Consequently, the establishment of an internal whistleblowing system is not merely a formality but will make it possible, in the future, to prevent any damage caused to the economic activities of a company by an infringement, which has not been remedied in a timely manner and to protect the reputation of the company from any potential detriment.

How can the internal whistleblowing system be effective?

The internal whistleblowing system must meet the strict requirements of the Whistleblowing law, which ensures whistleblower protection and system efficiency, promotes transparency, and protects the whistleblower from potential retaliation and condemning attitude due to reporting.

The company must provide easily accessible, understandable information about the whistleblowing system, its operation, and the protection of the identity of the whistleblower. From the moment the whistleblower’s report is received, the whistleblower’s data must be strictly protected, accessible to a limited number of individuals who need the data only for carrying out the activities laid down in the Whistleblowing law, and must be pseudonymised, i.e. redacted, to prevent data leakage. Each whistleblower should be informed in a timely and substantive manner of the progress and outcome of the review of the report. The alleged infringement referred to in the report must be investigated impartially, carefully, and independently and the company must respond appropriately to the infringement.

Why is it advantageous for a company to outsource maintaining an internal whistleblowing system?

The staff member must be confident that the whistleblower’s report will reach a person who is independent, impartial, of good repute, and of sufficient professional experience, whose report will be handled carefully and responsibly, ensuring the confidentiality of the whistleblower.

In accordance with the provisions of the Whistleblowing Law, it may be a third person who will ensure the operation of the internal whistleblowing system in whole or in part, for example, an independent cooperation partner of the company, a sworn advocate, a sworn auditor, a provider of legal services or a public organisation which performs the monitoring, examination of whistleblowing reports, communication with the whistleblower, adhering to confidentiality requirements, and observance of data protection and confidentiality, and shall notify the company of the measures that shall be taken for the prevention and resolution of violations.

In this case, the responsibility for the internal whistleblowing system is shared between the particular company and the external service provider. Although the rectification of violations detected in a company during the investigation of the whistleblowing report is the responsibility of the company itself, the external service provider may additionally provide objective recommendations and solutions for solving problems.

How can the law firm RER Lextal provide help?

In order to provide support to companies and ensure the establishment and operation of an effective internal whistleblowing system in accordance with the normative acts, the law firm RER Lextal provides legal support for the establishment and implementation of an internal whistleblowing system within a company. This offer includes:

• preparing documentation for the internal whistleblowing system;
• developing internal rules, including rules on the processing of personal data within the framework of the whistleblowing system;
• developing instructions for the responsible individual to manage and process whistleblowing reports;
• individually training the responsible individual in the management and processing of whistleblowing reports;
• preparing answer forms for the whistleblowers;
• training and familiarising of the staff with the internal whistleblowing system;
• consulting the client about the implementation of internal whistleblowing systems.

In addition, the law firm RER Lextal, in cooperation with trusted partners, offers a monthly monitoring service for the internal whistleblowing system. When choosing this service, in compliance with the requirements laid down in the whistleblowing Law, the client may agree to transfer all or part of the internal whistleblowing systems and the functions of the liable person, such as receipt, processing, and pseudonymisation of the whistleblower reports, communication with whistleblower and other functions.

After providing initial recommendations to the company regarding the follow-up to the whistleblowing report, the team of the law firm RER Lextal, in agreement with the client, may provide the client legal support for handling the whistleblower’s report and for investigating violations, as well as for solving detected offences and other legal problems.

For more information on obligations regarding the whistleblowing system and the legal services of RER Lextal, please contact our Labour law specialist partner attorney at law Liene Pommere:

Tel +371 67280685

E-mail: pommere@rer.legal