France transposes the EU Directive on the protection of whistleblowers

On 16 February 2022, France definitively passed into law the bills intended to improve its whistleblower protection regime established under the Sapin II Law, filling the delay in the transposition of the European Directive 2019/1937 of 23 October 2019, which aims to unify the protection of whistleblowers within the EU. To do so, the French legislature has not been reluctant to go beyond what was required by the European legislature, as a form of reaction to the criticisms levelled by a part of the public opinion against the existing system provided by the Sapin II Law, which is still recent in its developments.

The adoption of these two bills comes almost two months to the day after the expiry of the deadline set by the European Commission for EU Member States to transpose the said Directive. However, France was not the only latecomer, since no other Member State had transposed the Directive into its national law before the deadline expired.

It is in this context, and after almost 3 month of discussions, the following were finally adopted:

• an “ordinary” law aimed at improving the protection of whistleblowers;
• an “organic” law aimed at strengthening the role of the French Human Rights Defender (“Défenseur des droits”) in terms of whistleblowing.

To date, the French whistleblower protection regime is derived from Law n°2016-1691 of 9 December 2016, known as the "Sapin II Law", which more generally constitutes the French anti-corruption standard.

It is moreover on part of the recommendations of the Information Report on the evaluation of the Sapin II Law of 7 July 2021 that the two newly adopted bills are based.

For the record, this report makes a total of 50 recommendations which led, on 19 October 2021, to a bill aimed at significantly strengthening the fight against corruption. It is thus the entire legislative arsenal of the fight against corruption in France that should evolve in the coming months. The ordinary law and the newly adopted organic law on the protection of whistleblowers will be the first step. The next update could wait a few more months – the bill dated 19 October 2021 is still waiting to be included in the legislative calendar – or even go through the advent of legislation standardising the fight against corruption within the EU Member States...

All this recent legislative work echoes the releasing, on 16 December 2021, of its Phase 4 Evaluation Report on France by the Organisation for Economic Co-operation and Development (OECD) Working Group on Bribery in International Business Transactions. It should be noted that the report does not fail to highlight the progress that remains to be made in the prevention of corruption risks, which, according to the working group, requires greater mobilisation of whistleblowers. The latter position is not likely to surprise any compliance officers who handle the internal whistleblowing system in their respective organisations.

That being said, some aspects deserve particular attention from companies established in France, whose workforce exceeds 50 employees, and which are therefore subject to the obligation to set up whistleblower protection mechanisms under the Sapin II Law and Decree n°2017-564 of 19 April 2017 – which still constitute the applicable law to date.

Reshaping the French definition of whistleblower. A whistleblower is now defined as "a natural person who reports or discloses, without direct financial consideration and in good faith, information relating to a crime, an offence, a threat or harm to the general interest, a violation or an attempt to conceal a violation of an international commitment regularly ratified or approved by France, a unilateral act of an international organisation taken on the basis of such a commitment, European Union law, or the law or regulations".

In particular, it appears that :

• The legislator intended to maintain the requirement of "good faith", while substituting the condition requiring any author of an alert to act in a "disinterested way” with that of the absence of "direct financial consideration".

  This new concept may, at first sight, appear less ambiguous than that of disinterest, since it refers, in a concrete manner, to direct financial interest. Nevertheless, from the point of view of companies deploying a whistleblowing system, this notion may raise legitimate questions, since it eliminates any notion of interest other than pecuniary which could nevertheless guide the author of the alert. The most revealing example is certainly that of the author of an alert who acts only to harm his company. In such a case, if the author of the alert does not appear to be totally disinterested (his or her interest being to harm his or her company), he or she could, in absolute terms, still benefit from the protection due to the whistleblower (provided that the other conditions for the application of the protective regime are nevertheless met).

• It is no longer necessary for the subject matter of the alert (crimes, offences and violations of a norm) to be of a "serious and manifest" nature, nor is it necessary for the whistleblower to have had personal knowledge of the facts he or she is reporting, with the exception of information that has not been obtained in the context of his/her professional duties.

Thus, while some aspects of the definition of whistleblower have been rewritten to extend the scope of the protection granted by the legislator, the main features of the already broad definition, in many ways, introduced in Article 6 of the Sapin II Law, remain intact.

While the removal of the condition requiring the violation concerned by the alert to be "serious and manifest" may raise questions about the risk that the reporting of even the slightest violation could, in the future, confer on the author of the alert the protection afforded to whistleblowers, the experience of handling internal whistleblowing system within companies tends to show the opposite. Indeed, this change seems to be more in line with practical reality, since it is very often very difficult for a company to refuse the protective status of whistleblower to an author of an alert on the grounds that the alert does not concern an allegedly "serious" violation.

Extension of the protection to the whistleblower’s entourage ("facilitators"). The debates on transposition have focused in particular on the granting of a protective status to legal entities. In this respect, the extension of the protection granted to whistleblowers to natural persons close to them and to certain legal entities corresponds to one of the recommendations made in the opinion of the Défenseur des droits on the transposition of the Directive of 16 December 2020, by targeting here the intermediaries, particularly non-profit organisations, on which whistleblowers must be able to rely during the process.

The new law thus defines facilitators as "any natural person or non-profit legal entity [organisation] under private law who assists a whistleblower in making a report or disclosure".

This compromise version authorising the recognition of a protective status for non-profit organisations under private law (NGOs, trade unions) makes it possible to dispel the fears raised by some during the adoption of the directive about the possible admission of a protective status for "whistleblowing" activist associations.

Removal of the hierarchy between internal and external reporting channels. As a preliminary point, it should be noted that the redesigned definition of whistleblower incorporates a new distinction between (i) “reporting” – which refers to information communicated orally or in writing through internal and external reporting channels – and (ii) “disclosing”, which refers to information made known to the public.

One of the most noticeable changes in the new system comes directly from the EU Directive: while the system currently in force in France requires that an internal report be made first in order to qualify for protection status, the French legislator, in line with the EU Directive, abolishes the priority given to the internal reporting channel and, at the same time, the hierarchy between internal and external reporting channels (i.e.: with public authorities – the list of which will soon be fixed by decree), which may now be activated by whistleblowers in an alternative or cumulative way.

Companies with more than 50 employees will nevertheless note with interest that this removal of the priority given to internal reporting in the current system does not mean that the obligation to establish a specific procedure for collecting such reports has disappeared. Indeed, while this obligation is still not punished by any sanction in the event of non-compliance, the new removal of the priority given to internal reporting channel and the risk of damage to their reputation by external reporting or public disclosure seems to call, at least, for companies to consolidate their internal line of whistleblowing, so that any whistleblower favours the internal reporting channel. Such a consolidation will especially require a reinforcement of communication and training actions for employees.

Furthermore, it is worth noting that, for groups of companies employing more than 250 employees, the French legislator allows the internal whistleblowing system to be centralised at group level.

In this respect, the European legislator favoured a "decentralised" approach, requiring that the whistleblowing system be set up within the subsidiaries with staff over 250 employees. Insofar as experience tends to show that large companies have preferred to centralise their internal reporting channel(s), the approach adopted by the French legislator seems also to reflect a certain practical reality of handling and managing internal whistleblowing systems. Nevertheless, it is not excluded that the French approach may be invalidated in the future by the European Commission.

Public disclosure remains possible in the following three hypothesis:

• when the external reporting, possibly preceded by an internal reporting, has not produced an appropriate measure by the end of a the time limits that will be set by decree;
• if the external reporting "would expose the author to a risk of retaliation" or "would not allow the subject of the report to be effectively remedied, given the particular circumstances of the case, in particular if evidence can be concealed or destroyed or if the reporting person has serious grounds for believing that the authority may be in a conflict of interests, in collusion with the author of the alleged facts or implicated in those facts";
• in cases of serious and imminent danger.

Reinforcement of whistleblower protection measures. The French legislator extends the protection measures currently in force in order to facilitate whistleblowing.

Thus:

• the guarantees of confidentiality are strengthened, in particular concerning "any third party mentioned in the alert";
• the list of measures protecting whistleblowers or their relatives against retaliation prohibited by the French Labour Code is consolidated, as is the protection of whistleblowers against abusive defamation proceedings (ie the maximum fine is increased to EUR 60,000 and the whistleblower may be awarded a provision for legal costs, which the judge may decide at any time is "definitively acquired" to him/her).

In addition, the French legislator has taken a position on the sensitive issue – which has also raised questions under the current system established by the Sapin II Law – of the illicit obtaining of the information reported by the author of an alert.

The compromise reached during the debates on the bill was not to extend the principle of non-criminal liability to any offences committed in order to illegally obtain information. Nevertheless, based on the new law, any person who has lawfully obtained information will not be criminally liable if he or she "misappropriates or conceals the documents or any other medium containing the information of which [he or she] has lawfully obtained knowledge". Case law developments on this new provision are likely to be commented and raised new questions, with judges being invited to review the proportionality and necessity of the offence committed for the purposes of exercising the right to alert.

Entry into force. The new legislation is scheduled to come into force "on the first day of the sixth month following its promulgation", which is in principle 1 August 2022. However, the deadline for promulgation of the new laws will have to wait for a forthcoming decision rendered by the French Constitutional Council (“Conseil Constitutionnel”), which has been seized on both laws by the Prime Minister on 18 February 2022.

We are at your disposal to discuss and, if necessary, answer any questions you may have on the consequences of these changes for your organisations.

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