New whistleblowing directive in Spain

Preliminary Draft Law regulating the protection of persons who report on regulatory infringements and the fight against corruption in order to transpose Directive (EU) 2019/1937

A. Background

On 4 March, the Council of Ministers approved a Preliminary Draft Law for the (late) transposition of Directive (EU) 2019/1937, adopted in 2019.

The Preliminary Draft is currently at the parliamentary stage and is therefore subject to amendments by the parliamentary groups. In this respect, it is important to bear in mind that the content of the future law that will be approved may differ from the Preliminary Draft. However, there is so much expectation surrounding this law that we consider it to be a matter of sufficient relevance to advance the content of the Preliminary Draft, which already indicates where the future law will be moving.

B. Material scope of application

The law will protect natural persons who report:

a) Infringements of European Union Law, as defined in the Directive, which affect the financial interests of the Union or have an impact on the internal market, as well as infringements of company tax rules or practices aimed at obtaining a tax advantage that would defeat the object or purpose of the legislation applicable to company taxation.

b) Actions or omissions that may constitute a serious or very serious criminal or administrative offence or any violation of the rest of the Spanish legislation, provided that, in either case, they directly affect or undermine the general interest, and do not have a specific regulation. In any case, the general interest shall be understood to be affected when the action or omission in question involves financial loss for the Public Treasury.

C. Personal scope of application

The Preliminary Draft extends protection to persons working in the private and public sector, including in all cases:

a) persons having the status of public employees and employees;

b) self-employed;

c) shareholders, members and persons belonging to the administrative, management or supervisory body of an undertaking, including non-executive members;

d) any person working for or under the supervision and direction of contractors, subcontractors and suppliers.

e) informants reporting information on infringements obtained in the framework of an employment or statutory relationship that has already ended, volunteers, trainees, trainees in training, whether or not they receive remuneration, as well as those whose employment relationship has not yet started, in cases where the information on infringements has been obtained during the recruitment process or pre-contractual negotiation.

D. Entities concerned

In the private sector, all of the following entities are subject to the obligation:

a) Individuals or legal entities in the private sector with 50 or more employees. However, legal entities in the private sector with fewer than 249 workers will have until 1 January 2023 to apply the law, according to the Preliminary Draft.

b) Legal entities in the private sector that fall within the scope of application of European Union acts on financial services, products and markets, prevention of money laundering or terrorist financing, transport security and environmental protection, which shall be governed by the Law in those aspects not regulated in their specific regulations.

c) Political parties, trade unions, employers' organisations and foundations set up by them, as they receive or manage public funds.

In the public sector, all public entities are obliged to comply.  

E. Internal and external information systems

The Preliminary Draft regulates the legal regime of the internal information systems that all the aforementioned entities must have. The requirements for setting up these systems include: affordable use, guarantees of confidentiality, good practices for monitoring, investigation and protection of the informant, as well as the designation of a person responsible for their correct operation. It also regulates the external channel through which any natural person may report directly or after having used the internal channel.

The information may be provided anonymously or by means of a reserved identity, in written or verbal form, and the entity must preserve the confidentiality of the informant's data.

In particular, the procedure must meet certain minimum contents and principles, including the following:

• Need to send acknowledgement of receipt of the communication to the reporter within seven calendar days of receipt.

• The right of the person under investigation to be informed of the acts or omissions attributed to him or her, and to be heard at any time.

• Demanding respect for the presumption of innocence, the right to be heard and the honour of the persons under investigation.

• Determination of the maximum duration of the investigation, which may not exceed three months from receipt of the notification, except in cases of particular complexity requiring an extension of the period, in which case it may be extended for a maximum of three additional months.

• Inclusion of clear and easily accessible information on external channels of communication with the competent authorities and, where appropriate, with the institutions, bodies, offices or agencies of the European Union.

• Guarantee of confidentiality and respect for the provisions on the protection of personal data.

F. Informant protection measures 

The main informant protection measure is the prohibition of retaliation, understood as any acts or omissions which are prohibited by law, or which, directly or indirectly, result in unfavourable treatment that places the persons suffering them at a particular disadvantage compared to another in the employment or professional context, provided that such acts or omissions occur during the duration of the investigation procedure or within two years of the completion of the investigation procedure or of the date on which the public disclosure took place.

The Draft also includes, for labour proceedings, a reversal of the burden of proof provided that the informant who has reasonably demonstrated that he or she has suffered prejudice as a result of having made a communication in accordance with the provisions of the Act.  

They are excluded from the protection measures: 

• Communications that have been inadmissible for lack of credibility or manifestly unfounded, when the facts reported do not constitute an infringement of the legal system or do not affect the general interest or when it is a reproduction of another inadmissible or investigated communication.

• Information linked to interpersonal conflicts or affecting only the informant and the persons to whom the communication refers.

• Information already available to the public or which constitutes mere hearsay.

• Actions or omissions outside the scope of the law.  

Another novel aspect of the future law is the implementation of a leniency programme for the informant who is also one of the offenders. This type of programme exempts the person who participates in the commission of the administrative offence, if he or she reports the existence of the offence before the initiation of the investigation or sanctioning procedure has been notified. The competent body may exempt him/her from compliance with the administrative sanction when the following requirements are met:

• Cease to commit the offence at the time of submission of the communication;

• Cooperate fully, continuously and diligently in the process;

• Provide truthful and relevant information, evidence or significant data to substantiate the facts disclosed; and

• Make reparation for the damage caused that can be attributed to it.

Finally, the Independent Authority for the Protection of the Informant (attached to the Ministry of Justice) is established. The Authority may exercise regulatory powers by issuing circulars and implementing regulations. It may also exercise the power to impose penalties.

At Simmons & Simmons we will be keeping an eye on the parliamentary evolution of the Law and its approval.