Insights

While in certain instances the reporting of sensitive issues may be part of the individual’s role within the organisation (e.g. auditors), whistleblowing is generally held to arise when the individual not bound by a duty to report wrongdoing finds it necessary to reveal such findings to organisational members outside the normal chain of command.

The primary aim of whistleblowing procedures is to ensure that concerns about wrongdoing can be properly and safely raised by employees within the organisation and addressed within the organisation, without the fear of repercussions for the whistleblower. Prior to the recognition of the importance of whistleblowing, an employee who blew the whistle on his employer could expect to suffer serious consequences ranging from poor performance evaluations and punitive transfers to job loss. Historically, whistleblowers have found that they have made a decision that entails many risks and no rewards; indeed the initial perception of whistleblowers is that they are ‘traitors’ to the organisation they work for.

This is not just misguided but self-defeating as information from the workforce enables the organisation to deal internally with any wrongdoing and in so doing, to minimise the consequences of such wrongdoing. Therefore the aim of a law on whistleblowing is basically to encourage the disclosure of information about wrongdoing to a greater audience, thus ensuring that more people are able to take responsibility for taking action against it.

The aim is to escalate a problem until it is indeed acted upon rather than allowing a problem to be hidden or forgotten. People are less likely to engage in wrong-doing if they risk being exposed and prosecuted – therefore the greater the risk of exposure and prosecution, the lower the likelihood is that a person will do something he knows is wrong.

Malta got its very own whistleblowing legislation with the enactment of the Protection of the Whistleblower Act 2013, which came into force towards the end of last year. This Act may be described as revolutionary in the protections it affords to whistleblowers under Maltese law. Prior to its enactment Maltese whistleblowers were protected only by sporadic provisions incorporated in different pieces of legislation – therefore the enactment of a comprehensive act affording the Maltese whistleblower protection from a wide range of reprisals is a huge step forward. Maltese culture in itself seems to favour secrecy and non-reporting and therefore the enactment of a law which seeks to change this culture is a big step forward in itself.

The Act protects an employee who makes a protected disclosure about an improper practice committed by his employer from detrimental action. The employee/employer relationship implies duties of loyalty and confidentiality – hence need for protection of the employee who breaches this duty by disclosing information about his employer.

The whistleblower is someone close enough to the organisation to potentially suffer retaliation – the protections afforded under the Act therefore do not extend to the general public but are afforded to those who fall within the definition of ‘employee’ in the Act.

In terms of the Act, an employer is required to have procedures in place for receiving and processing reports of “improper practices” made by his employees. Each employer (including the public administration) must have internal whistleblowing procedures and a whistleblowing reporting officer i.e. a person to whom a protected disclosure may be made internally within the employer. The Act promotes the making of internal disclosures before escalation to external disclosures by requiring an employee to first make a disclosure internally – this aims to minimise the impact of the improper practice being committed.

An ‘employer’ is defined as a “natural person, legal organisation or statutory body whether forming part of the public administration or the private sector who: (a) enters into a contract of service with an employee; or (b) who employs or engages or permits any other person in any manner to assist in the carrying on or conducting of his business; or (c) who seeks to employ other persons.” This also includes voluntary organisations in relation to volunteers who render services to such voluntary organisation on a voluntary basis or otherwise.

The second schedule to the Act further clarifies the employers who are subject to the requirements of the Act and who are required to have in place internal whistleblowing procedures.

These are (a) each ministry of the government of Malta; (b) any organisation within the private sector which, according to its last annual or consolidated accounts, meets at least two of the following criteria: (i) an average number of employees, during the financial year, of more than 250; (ii) a total balance sheet exceeding €43,000,000; and (iii) an annual turnover exceeding €50,000,000 and (c) any voluntary organisation which annually raises more than €500,000 from public collections and other donations.

Although all government ministries are required to have in place internal procedures for receiving and processing reports, within the private and voluntary sectors it is only employers who satisfy the thresholds set out in the second schedule who are subject to this obligation.

Superficially, this might appear to be a negative aspect of the Act. However, upon deeper consideration and in the light of the substantial culture change which a law of this type is going to require in Malta, these limitations appear justified since they start by imposing the requirements of having internal whistleblowing procedures only on big organisations who are by virtue of their size and set up, best placed to begin implementing the requirements of the Act.

It should be noted that the Act empowers the Minister of Justice to amend the schedule for the better implementation of the Act and therefore the minister may at any time extend the thresholds set out in the second schedule.

Furthermore, these restrictions do not in any way restrict the protections afforded to the whistleblower under the Act since if there are no internal procedures established for receiving and dealing with information about an improper practice, the whistleblower may make an internal disclosure to the head or deputy head of the organisation.

As a further safeguard, if the whistleblower reasonably believes that the head of the organisation is or may be involved in the wrongdoing alleged in the disclosure, then the whistleblower may make a protected disclosure to the whistleblowing reports unit of the authority within whose remit the activities carried out by the organisation fall (as set out in the first schedule of the Act).

Although as per the above, the whistleblower is protected even if his employer does not fall within the categories set out in the second schedule of the Act, all organisations – even those who do not fall within the thresholds set out in the second schedule of the Act – should consider introducing and putting into place internal whistleblowing procedures.

Internal whistleblowing procedures are a very effective internal tool for detecting and rectifying wrongdoing being done within the organisation.

These procedures can also potentially minimise the impact of the wrong doing being committed by having the wrongdoing solved internally before escalation to external supervisory authorities.

This article was published in the Times of Malta, 2 June 2014.