The legislative proposal known as ‘House for Whistleblowers’ is pending in the Netherlands. The proposal introduces an independent and impartial governmental institution that investigates wrongdoing and assists employees in disclosure proceedings: the House for Whistleblowers. In addition, the proposal introduces several rules to protect whistleblowers. The situation under current Dutch law and under the House for Whistleblowers Act will be described below.
Current protection under Dutch law
In the Netherlands there is currently no specific legislation on whistleblowing. Protection of employees depends largely on self-regulation. Under the Dutch Corporate Governance Code, companies listed on the stock exchange must have a whistleblower procedure in place. The Dutch Labour Foundation has established a code of conduct. However, employers seldom adopt this code in an unadjusted form and courts frequently disregard it.
Decisions in Dutch courts are usually based on article 7:611 of the Dutch Civil Code, which is a general legal requirement to maintain good employer and employee practices. For employees there is a risk that the employer might counter a disclosure by claiming damages for a breach of the confidentiality clause in the employment agreement. There are no arrangements for financial compensation, and damages awarded by courts are usually very limited. This framework will remain unchanged under the new legislation.
The House for Whistleblowers
The House will provide advice to the employee on steps that should be taken and whether the facts presented by the employee qualify as wrongdoing. The proposal defines wrongdoing as an act or omission that puts public interests at stake. This could be the case due to threats to public health, the safety of individuals, the environment or the functioning of public service institutions and companies. The House can start an investigation upon the employee’s request, both on wrongdoing and on how the disclosure was handled by the employer. The House will publish general recommendations for employers on how to handle disclosures of wrongdoing.
New measures for employee protection
- In case the relationship between employer and employee is impaired due to a disclosure of potential wrongdoing by the whistleblower, the employee remains entitled to continued payment of wages. There are two conditions: the disclosure was made in good faith and by following the correct procedures.
- A correct procedure must start with internal disclosure. According to case law this is already a requirement, because the employee has a duty of loyalty, reserve and discretion towards the employer. External disclosure at the House is possible if internal disclosure would be futile. Disclosure to other governmental institutions is possible if external disclosure is prescribed by internal or statutory rules. In addition, there may be specific circumstances that require an immediate external disclosure (e.g. if the management of the company is involved in wrongdoing).
- Prohibition on disadvantaging the employee due to his disclosure. This could be in the form of a salary reduction, restricted promotion prospects etc.
- Prohibition on the employer from terminating the employment agreement while the House is investigating a disclosure. In the event that wrongdoing is found to be probable, the employment agreement cannot be terminated for another full year. If the employer terminates the employment agreement anyway, the whistleblower can invoke a right to nullify the termination within two months.
- Internal disclosure procedures must be established in companies with 50 or more employees.
The legislative proposal “House for Whistleblowers” will be the first codification of rules and procedures that specifically address whistleblowing. This increases the protection of employees. It is important for all employers to have a good internal whistleblowing procedure in place, even though this will only be obligatory for companies with 50 employees or more. It can help to prevent external disclosures of wrongdoing and potential reputational damage. Updates on the status of the proposal and any changes in its content will be provided on this blog.