Luxembourg: Whistleblowing In Luxembourg

Last Updated: 28 November 2013
Article by Emmanuelle Ragot

Whistleblowing, is a term which has been developed in the 1970s in the US and is the process of reporting wrongful, unethical or unlawful behaviour, misconduct internally or externally i.e. to a third party organisation.

A company may be seen as being more transparent and trust worthy by having a robust process and protections for people who wish to report misconduct.

It has become an increasingly relevant issue at work in the last few years as it implies labour law issues, data protection issues and regulatory since under CSSF Circular 12/552, banks are required to have appropriate whistleblowing procedures in place.

Whistleblowing remains a hot topic and has been formally enacted by a law of 13 February 2011 strengthening the means to fight against corruption.  This legislation is not dedicated solely to whistleblowing protection but does include provisions on the fight against corruption offences and criminal procedural rules. While the whistleblowing protection legislation amends pre-existing codes of laws or statutes, it is a standalone and comprehensive legislation providing whistleblowing protection. 

LABOUR LAW

The law dated 13 February 20111 strengthening the means to fight against corruption and amending the Luxembourg Labour law Code, the Code of criminal procedure law, the Criminal code Penal Code, the Law dated 16 April 1979 determining civil servants' status and the Law dated 24 December 1985 determining local civil servants' status.

The law of 13 February 2011 added a section to the Labour Code on the protection of the employees against corruption, traffic of influence and the misuse of privileged information.

There is no general obligation for private individuals to denounce criminal offences known to them.

Employees who report a colleague's misconduct to the employer, or wrongdoing by the company to the competent authorities may face retaliation up to a dismissal.

→ According to this law, an employer is not authorised to retaliate against the person who has filed a complaint or informed the employer of any wrongdoing. Assuming that an employee is victim of an adverse reaction of its employer, the employer bears the burden of proof to justify that the negative influence on the employee does not stem from retaliation against the whistleblowing action.

Any wrongful retaliation gives rise to damages covering the actual loss suffered.

An employee cannot be a victim of reprisals because of his/her protests or refusal opposed to a fact that he/she considers, in good faith, as being constitutive of illegal catch of interests, corruption or influence, that this fact is committed by his/her employer or any other senior in rank, colleagues, or external people in relation to the employer (article L.271-1(2) of the Luxembourg Labour Code).

Any termination of the employment contract because of whistleblowing is therefore null and void (article L.271-1 (3) of the Luxembourg Labour Code).

This solution has been confirmed by the European Court of Human Rights: see European Court of Human Rights "ECHR", Heinisch v/Germany, 21 July 20112.

In this case, a geriatric nurse had been dismissed after having brought a criminal complaint against her employer alleging deficiencies in the care provided.

The ECHR had to deal with such a dismissal without notice of a whistleblower and examined if the refusal of reinstatement of the whistleblower infringed his right to freedom of expression protected by the European Convention on Human Rights.

The ECHR concluded that the employee acted in good faith and that the dismissal without notice, which was "disproportionally severe", violated the employee's human rights.
On the other hand, a complaint is considered to be slanderous if, directed against a private person, the relevant facts prove not to be a criminal offence and are rejected as such by a court of law.

DATA PROTECTION

ANONYMITY AND CONFIDENTIALITY OF THE WHISTLEBLOWER

The confidentiality and the anonymity of whistleblowers raise two difficulties.

Should whistleblowers be anonymous or their identity only be confidential?

The main idea is to find a balance between (1) the rights of the whistleblower – who must be protected against any possible retaliation and (2) the rights of the person being denounced – who must be promptly informed of any accusation against him/her to enable him/her to defend himself/herself.

Art. 29 Working Party provided that anonymity should not be a good solution for the whistleblower or for the organisation for the various reasons listed above:

  • Being anonymous does not stop others from successfully guessing who raised the concern;
  • It is harder to investigate the concern if people cannot ask follow-up questions;
  • It is easier to organise the protection of the whistleblower against retaliation, especially if such protection is granted by law, if the concerns are raised openly;
  • Anonymous report can lead people to focus on the whistleblower, maybe suspecting that he or she is raising the concern maliciously;
  • An organisation runs the risk of developing a culture of receiving anonymous malevolent reports;
  • The social climate within the organisation could deteriorate if employees are aware that anonymous reports concerning them may be filed through the scheme at any time.

Art. 29 WP had therefore considered in its analysis that only identified report should be communicated through whistleblowing schemes in order to justify this requirement.

This position is similar to the French position.

According to the CNIL, whistleblowing is not anonymous in principle.

The author of the alert should identify himself in order to:

  • Allow responsibility to the users of such system and reduce the risks of skidding towards denunciation;
  • Facilitate the protection of the author of the alert against retaliation;
  • Enable better treatment of the alert by opening the possibility to ask the author further details.

Therefore, whistleblowing should discourage anonymous disclosure in order to protect the person being denounced.

In order to ensure the security of the author of the alert, the CNIL3 decided that the author of the alert should identify himself to the organisation in charge with the warning device which will keep his identity confidential.

→ However, to avoid that a whistleblowing system could be considered as unfair against the person being denounced and could lead to the implementation of a system of professional denunciation, art. 29 Working Party stated that he person accused in a whistleblower's report shall be informed by the person in charge of the whistleblowing system as soon as practicably possible.

The person being denounced should have the possibility to defend himself and be protected against whistleblowers who have reported in bad faith. It also stated that the person accused also have rights of access, rectification and erasure if the report is inaccurate, incomplete or outdated (article 12 of Directive 95/46/EC).

The person accused in a whistleblower's report will not obtain information about the whistleblower, except where the whistleblower maliciously makes a false statement. 

→ Luxembourg companies should follow the issued guidelines of the CNPD4 in combination with the recommendation of Art. 29 Working Party. 

RECOMMENDATIONS

According to the CNPD5, the data protection agencies should advocate four main rules to deal with these issues:

  • Restricting the Whistleblowing proceeding to the countable, control of the accounts, banking field and of the fight against corruption;
  • Discouraging the anonymous denunciations while ensuring, as far as possible, the identification of the authors of the alarm;
  • Installation of a specific organisation to collect and treat alarms. The people in charge of such collection must be trained and are subject to confidentiality regarding the data they gain knowledge of;
  • The information of the person being denounced as soon as possible, in order to allow him/her to exert his/her rights of opposition, access and correction.

Thus, the CNPD is trying to establish a code to be followed by companies implementing a whistleblowing policy. 

NEW CSSF CIRCULAR

In December 2012, the Luxembourg Financial Sector Supervisory (CSSF) issued a Circular 12/5526 applicable from 1 July 2013 amending the corporate governance practices.

As a risk and controls concern all staff, one of the key requirements of the Circular is the implementation of a whistleblowing procedure: the possibility for any member of staff to raise important and legitimate concerns on risks and governance issues outside the hierarchical reporting lines, up to the board of directors where necessary.

The Circular7 shall apply to:

  • Credit institutions and investment firms incorporated under Luxembourg Law;
  • On an individual basis;
  • On a consolidated basis (i.e. parent company);
  • Where the institution holds significant participations (between 20% and 50%), but is not the parent company;
  • Non-EU branches of credit institutions and investment firms in Luxembourg;
  • Luxembourg branches of credit institutions and investment firms (for matters where the CSSF has the supervisory responsibility) in the EU / European Economic Area; and
  • Professionals carrying on lending operations.

The circular emphasizes two important points8:

  • the system shall respect and preserve the confidentiality of the whistleblowers;
  • reporting shall be made in good faith and should not be exposed to any sanction, backlash or detrimental consequence. 

CONCLUSION

Even though, the legislation is a huge step forward it lacks certain key elements as a definition of whistleblowing or of a whistleblower. 

However, despite this gap, the CSSF circular establishes standards and creates as such a market practice within the Luxembourg credit institutions.

Therefore, two situations may apply:

  • Companies covered by the CSSF circular have to implement a whistleblowing system, otherwise they could be facing penalties,
  • Luxembourg companies not covered by the CSSF circular may opt in for the implementation of a whistleblowing policy.

An external review of the whistleblowing procedure is highly advisable to confirm its compliance with the current guidelines and practices and enables to identify any legal risk related to its scope, unfair collection of data, infringement of confidentiality and to reduce potential future labour issues.

 Footnotes

1 Law of 13 February 2011 relating to the fight against corruption
2 ECHR, fifth section, case of Heinisch v. Germany, 21 July 2011, No. 28274/08
3 Commission nationale de l'informatique et des libertés

4 National Commission on Data Protection in the Grand Duchy of Luxembourg
5 National Commission on Data Protection in the Grand Duchy of Luxembourg – "Whistleblowing systems and ethical lines", 15 March 2011
6 Circular CSSF 12/552 as amended by Circular CSSF 13/563 on central administration, internal governance and risk management
7 Circular CSSF 12/552 Part I Chapter 2 – Scope
8 Circular CSSF 12/552 Section 5.2.4. – Internal communications and whistleblowers arrangements

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions