The German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz – LkSG) commences in 2023. Within the first step, companies with more than 3,000 employees fall into the scope. From 01.01.2024, the threshold drops to 1,000 employees. In addition to the requirements for risk analysis and prevention regarding compliance with environmental protection and human rights, companies within the scope of the law are also required to implement a complaints procedure, which has only been regulated partially by law. However, the effective usability of this procedure is part of risk management, in addition to the fact that improper implementation or failure to implement it is subject to a fine. Only if the complaints mechanism works along the supply chain can companies be sure that there is neither a violation of the covered twelve human rights nor of the covered eight environmental risks, or that there is a sufficient probability of such a violation.
Not just the company – but along the entire supply chain
The law itself and therefore the legal obligation in § 8 LkSG is linked to the company. In fact, however, an internal company implementation would not be sufficient but rather the establishment of a complaints system which could be used within the entire supply chain is necessary. That must cover all direct (§ 8 LkSG) and indirect (§ 9 LkSG) suppliers. An external system could be used, but this does not exempt companies from the obligation to comply with the statutory regulations. The obligation solely changes to review/monitor the activities of the external provider.
Accessibility of the complaints procedure
The complaints procedure must be publicly accessible, clear and understandable. In addition to the fact that “persons”, not “employees”, can make use of it, the complaint procedure must be implemented for all individuals within the supply chain. Consequently, it is necessary to set up a system that has no restrictions in use, be it linguistic, textual, technical or local. This raises various questions for implementation, such as the language in which the procedure is to be used and how to deal with people who cannot read nor write or who do not have access to the internet, insofar as a technical system is set up. The restriction in usability usually results from the supply chain as such. It is not necessary that “anyone” can make a complaint. Rather, “only” everyone along the supply chain must be given this opportunity. Thus, the question of the type of system as well as the content requirements differs according to where potential whistleblowers are employed.
Confidentiality not anonymity is key
Confidentiality of those involved in the complaint process must be maintained. There is agreement that this means that the identity of the complainant must be protected. This protection must be ensured comprehensively, so that any further information that allows a conclusion to be drawn about the identity of the whistleblower must also be treated confidentially.
Confidentiality does not mean anonymity. The most important task therefore is to protect the complainant. This protection must be ensured comprehensively, so that any further information that allows a conclusion to be drawn about the identity of the whistleblower must also be treated confidentially. Confidentiality is essential to the extent that the implementation of such a procedure can only be profitable if it is also used. If the confidentiality of the entire procedure cannot be adequately maintained, the likelihood of its use is reduced. The use of the complaint procedure is based on a free will decision by the complainant, so that this will only take place in cases where trust in its use can be built up. In any event, this means that only those who are absolutely necessary for the investigation or resolution of the incident can be involved.
Confidentiality also extends to the company, but not to the subject of the complaint. The report and the subject matter can thus be treated separately, provided that no inferences can be drawn.
Protection against any unreasonable disadvantage
This covers any action by the company that represents a – negative – reaction to the filing of the complaint. It is immanent that comparable other employees who have not filed a complaint do not experience this and are thus treated differently. All unilateral measures are covered, such as warnings, transfers, dismissals, leaves of absence, etc. Inadmissible, however, would also be a failure to act, which could be reflected, for example, in a promotion not being granted. In a first right conclusion, further measures are also prohibited. Examples include intimidation, threats, and coercion. This should also include third parties, i.e., not only the person making the complaint but also his or her relatives and other related persons.
The prohibition of discrimination applies both to persons who make a justified complaint and to those whose complaint is unjustified. The intention is to protect the willful decision about the use of the procedure.
Participation of (local) committees
The explanatory memorandum to the Act provides that the target groups of the grievance mechanism are to be consulted about the design of the procedure. However, no statement is made on the nature of the participation as such. The participation of all persons involved in the supply chain can be regarded as unrealistic, so that here, too, reference can be made to employee representatives in the indirect and more direct supplier companies.
If for the German company a works council exists, a right of co-determination can be assumed in any case insofar as legal requirements are not implemented solely and exclusively. Section 87 (1) No. 1 of the Works Council Constitution Act (BetrVG) is applicable for the establishment of binding rules of conduct as well as Section 87 (1) No. 6 in the event a technical system is used for issuing the complaints.
Next steps to take
Implementation in individual cases is complex due to the large number of premises to be fulfilled and cases to be depicted. It is therefore essential to deal comprehensively with the individual situation in the company, not only to fulfill the legal requirements with regard to implementation, but also to do justice to the immense significance. The complaint procedure is used to report possible violations of prohibitions. This can only work in cases where there is confidence in the process as such on the part of the complainant.