In June 2019 the National Council of the Swiss Parliament – again – rejected a draft bill designed to introduce clear rules and procedures for whistleblowers in the private sector. While politicians cannot reach a consensus as to what level of protection is necessary for employees and what rules and restrictions should be in place for private businesses, the legal situation for whistleblowers in Switzerland remains unresolved.
However, despite the failure of the draft bill, companies cannot afford to adjourn the issue. They must prepare their organization to adequately deal with whistleblowing, especially in the present era of social media. In this Newsletter we will outline a) what the current law requires of employees who wish to report a misconduct or irregularity and b) name the key provisions employers should put in place to avoid exposure and liabilities.
What is the process for reporting a misconduct or irregularity?
Under the current legal regime whistleblowing in the private sector is still governed by the general rules and principles of Swiss employment law, company law, criminal law and data protection law. Following case law of the Federal Supreme Court, an employee must effectively respect a three-step process if he or she wishes to report a perceived wrong:
- The employee must raise the issue or irregularity with the employer directly and thereby observe any internal rules or guidelines that were put in place. Contractual loyalty and confidentiality obligations require the employee to exhaust all internal means of reporting prior to contacting and releasing information to authorities or the public.
- Reporting to official authorities is permissible only if there is a public interest in the disclosure that overrides the employer's interest in keeping unlawful conduct confidential.
- Disclosing information to the public is only permissible if the notified authorities fail to take action.
In sum, the situation for whistleblowers in the private sector is not easy: There are no incentives offered for persons who report suspected misconduct. The onus to respect the escalation process and to ensure proportionality of his or her actions is on the whistleblower.
Also, there is no specific protection afforded to whistleblowers in comparison to other employees and unlike in the public sector no official reporting point exist. Hence, under the existing law, whistleblowers must be highly intrinsically motivated and risk dismissal when reporting irregularities or misconduct.
What measures should employers take to encourage whistleblowers?
Formally, Swiss law does not require businesses to prepare rules or guidelines for its employees or to set up an internal or external whistleblowing unit. Factually, however, if no rules or guidelines are in place companies risk that employees report an issue or irregularity to outsiders rather than internally. Hence, the first step is to set up internal rules and guidelines for employees.
In line with international guidelines and best practices many of the big corporations operating in Switzerland have introduced whistleblowing guidelines and designated independent entities as reporting points. As recent studies show about 64 per cent of all companies in Switzerland named units where suspected misconduct can be reported. While these numbers have significantly increased in recent years about 50% of Swiss SME's still have no reporting point (See: HTW Chur, 'Whistleblowing Report 2019', https://whistleblowingreport.eqs.com.) Therefore, step two is to designate an independent whistle blowing unit or reporting point.
Companies should encourage whistleblowers and establish sound compliance programs for a series of reasons. First, the law on corporate criminal liability sanctions organizational deficiencies and if a felony or misdemeanor is committed in the business domain that is not attributable to an individual perpetrator, criminal liability of the company may ensue. Further, it is in the company's interest that employees report misconduct internally and help protecting the integrity and safety of the company, its products and services. And finally, the company has a duty of care towards its employees and must respect their personality rights. Hence, in step three, companies must ensure that reported irregularities and misconduct are followed up adequately and professionally.
How to implement a whistleblowing program?
In practice following up on reported irregularities and misconduct is not an easy task. It often requires legal expertise and investigative know how. Many SME's do not have the means to set up a compliance department or independent units within their organization that is capable and equipped to take such tasks at hand. A solution for such companies is to designate competent online whistleblower portals and to appoint external lawyers to assess and follow up on reports of irregularities and misconduct.
At Altenburger Ltd legal + tax, we recommend our clients to seek legal advice and to establish a relationship with external advisors prior to being confronted with the first whistleblowing issue.
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.