Czechia's major whistleblowing law comes into force on Aug. 1

Tomorrow, Aug. 1, Czechia’s long-awaited Whistleblower Protection Act, which is designed to safeguard employees who report their employer’s misdemeanors, comes into effect. The law seeks to better protect the anonymity of whistleblowers and safeguard them against the potential revenge of their (former) employers.

The new law will require up to 15,000 companies nationwide to have a so-called ethics line – a transparent internal system for reporting illegal practices that employees have encountered at work – that is operational. Failure to set up one will be punishable with a fine of up to CZK 1 million.

Businesses with at least 250 employees will need to have an established whistleblowing channel in place from Aug. 1. The Czech Chamber of Deputies and Senate passed the act earlier this year.

The law protects both the whistleblowers themselves, and their relatives or friends. These can be, for example, a spouse working in the same company, or perhaps a colleague who helped file a complaint. 

They obtain legal protection against any retaliatory measures by the employer, especially in the form of suspension, dismissal, transfer to a lower position or another team, or salary reduction. Any retaliatory measure is liable to a punishment of CZK 1 million.

The new bill does not obligate companies to accept anonymous whistleblowing reports but requires the identity of the whistleblower to be kept totally confidential. The law also envisages an independent investigation of suspected wrongdoing within 30 days at the latest. Companies must confirm receipt of a report within seven days, and designate an authorized person – known as a “report solver” – to assess the claim.

Whistleblowers may report a range of wrongdoings, such as: financial crime (tax fraud); underpayment (or lack of); inappropriate employee conduct; racism, ageism, or sexism; a breach of personal data protection and privacy; a violation of consumer rights; and a transgression of environmental-related laws.

The act from August will apply to firms with over 250 employees, although later this year, in December at the latest, it will apply to companies with a minimum of 50 workers. These smaller companies have until the end of the year to establish a whistleblowing channel.

Notably, the law will also apply to self-employed workers, ex-employees of a company, volunteers, and members of statutory bodies.

At present, people can report serious employer transgressions by contacting the Ministry of Justice. This can have a more fundamental procedural, financial, and reputational impact on the company than via dealing with an issue internally. Employees will continue to have this right. Companies will likely prefer to deal with complaints through internal channels. 

Czechia’s implementation of the law has been considerably delayed. The EU published a directive in 2019 instructing all of its member states to ensure adequate legislation for whistleblowers – the deadline for this was December 2021. Czechia will have to pay the European Commission a fine of about CZK 64 million for missing the deadline.