Lack of specific German legislation provides scope for action by employers

By Pascal R. Kremp, LL.M. (Wake Forest), and Thomas Wiedmann

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Whistleblowing still receives a lot of attention: The media regularly reports about serious abuses that would have only come to light from information provided by insiders. The biggest recent scandals have even yielded whistleblowers who have become world famous. But away from the spotlight, employees in Germany also demonstrate moral courage by exposing corruption, publicizing tax evasion and reporting environmental crimes. Employers have to deal with all of this properly.

However, the topic remains a complex matter involving opposing interests: On the one hand, there is the public interest in ensuring that companies, authorities and organizations comply with the law. Then on the other hand, there is the importance of employees maintaining their fiduciary duty of fidelity to their employers as well as employers’ interest in protecting their reputation and their desire to internally remedy any possible misconduct before having to go public. In the midst of all this, there is uncertainty about the legal consequences for the employee who blew the whistle.

Legal protection of whistleblowers

Other than a few regulations regarding civil servants and employees in the finance sector, Germany lacks specific legislation concerning whistleblowing: No general laws encourage employees to raise concerns about corporate wrongdoing. As a result, whistleblowers are only protected from termination or other detrimental actions taken by the employer through general laws such as the Dismissal Protection Act (Kündigungsschutzgesetz, KSchG), which states that employees can only be terminated for a specific reason.

Generally speaking, internal rather than external reporting is encouraged. An employee may even be obligated to disclose wrongdoing to the employer because he or she holds certain functions or special agreements are in place or as a result of the employee’s general duty to exercise loyalty as a secondary contractual obligation. Therefore, internal reporting, especially when carried out in good faith and due to a legitimate concern, usually cannot be classified as a valid reason for termination. In contrast, external reporting may constitute a breach of contract and therefore a valid reason for termination, especially if the employee made deliberate or grossly negligent false claims or the information disclosed would likely damage the employer’s reputation.

Furthermore, external reporting may also violate the employee’s general legal obligation to not disclose the employer’s business secrets as stated in Section 17 of the German Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG). However, disclosing information outside the company might also be justified by the whistleblower’s civil obligations as well as his or her freedom of speech with regard to public interest. The question of whether whistleblowing must be classified as a breach of duty or a legitimate action has to be decided on a case-by-case basis.

Generally, the employee has to report any concerns to the employer first before he or she discloses information outside the company. In addition, external whistleblowing is only permissible if internal reporting has proved unsuccessful or appears unreasonable, for example in the case of an employee reporting a criminal offence committed by an employer.

If an employee is dismissed for having disclosed information and the termination has no valid reason, the employer either must continue to employ the employee under the same conditions as before or attempt to end the employment relationship by making a severance payment.

Corporate whistleblowing programs

Companies do not have to notify regulatory bodies or obtain their approval prior to establishing a corporate whistleblowing program, nor do they have to consult with employees and obtain their consent. There are, however, certain aspects of such a program that may be subject to works councils’ codetermination rights as stated in the Works Constitution Act (Betriebsverfassungsgesetz, BetrVG). Furthermore, as such programs typically collect personal data, they are subject to the Federal Data Protection Act (Bundesdatenschutzgesetz, BDSG), and the employer should consult with the internal data protection officer prior to implementing such a program.

There are no statutory limits on who may submit a report as part of a corporate whistleblowing program, and operating corporate programs that solely encourage employees to report concerns generally tends to be compliant with German laws. However, programs imposing obligations on employees to report all wrongdoing no matter the circumstances of the individual case may not be covered by the employer’s right to give directions, and the corresponding provisions may be void.

Whistleblowing hotlines

Whistleblowing hotlines or online portals implemented by the employer to enable employees to anonymously report concerns are permissible, however these hotlines are viewed critically as their anonymity may encourage false and malicious reporting. In contrast, hotlines requiring users to reveal their identity may discourage employees from using them because of fears about the consequences of taking this step; as a result, they might not be as effective.

Because these hotlines collect personal data on the user as well as the accused person, they are also subject to data protection laws.

Employers offering whistleblowing hotlines often provide an option to report anonymously as well as an option to report openly with personal information that is then handled confidentially.

Latest developments

In July 2016, new legislation regarding employees in the finance sector was enacted to protect whistleblowers. Anyone can now provide information on violations of regulations that fall under the supervision of the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin). Such information can be provided anonymously; otherwise, the Federal Financial Supervisory Authority is legally obliged to protect the identity of the whistleblower and the individual under investigation.

This does not, however apply where court rulings or other laws demand disclosure of the person’s identity. If employees in the finance sector provide such information, no criminal or employment-law consequences may be attached to this action. Moreover, an exemption from any claims for damages applies unless a false notification was made with intent or gross negligence. These whistleblower rights are not subject to contractual agreements.

Most importantly, this demonstrates that the issue is acknowledged by both society and political leaders.


Due to the lack of specific legislation on whistleblowing in Germany – despite the fact that the topic is receiving more attention – employers are well advised to provide clarification about the procedure at their companies for making such a disclosure. Employers should consider whether it is appropriate to introduce a policy for disclosing such information. A whistleblowing policy might include a whistleblowing hotline or an online portal. Introduction of a whistleblowing policy is subject to codetermination rights of the works council.

However, it is not possible to reach an agreement with an employee (in advance) that he or she will not submit a legitimate disclosure. Any term of agreement between an employee and his or her employer is null and void insofar as it purports to preclude the employee from making a permitted disclosure.


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