Czechia's new whistleblower laws apply to small companies from today

A new law in Czechia has, from today, extended whistleblower-protection requirements to companies that have at least 50 or more employees. Previously, only large firms with 250 or more workers had to implement systems allowing staff to safely report issues internally with confidentiality.

A whistleblower is someone who exposes or reports information about wrongdoing, illegal activities, or unethical behavior within an organization or government to the authorities or the public.

The new rules are meant to shield whistleblowers from retaliation after bringing issues like corruption or wrongdoing to light. Under the legislation, if an employer were to terminate an employee after a report from the worker about bad practices, the company would bear the burden of proving the dismissal was not retaliatory.

Josef Jaroš, chairman of the Association of Small and Medium-sized Enterprises, told Czech news site ČT24 that around half of smaller companies in Czechia are unprepared for implementing whistleblower systems. "Based on previous experiences introducing regulations like GDPR, we estimate approximately 50 percent of firms do not yet have the necessary whistleblower regulations in place," Jaroš explained.

Complying with the law has posed difficulties, especially for small businesses with tight budgets. "It just adds to the feeling of over-regulation that many entrepreneurs struggle with," Jaroš commented. Setting up proper whistleblower channels and procedures comes with costs that vary significantly.

Hiring an outside firm to develop a customized system for whistleblowing can cost tens of thousands of crowns, if not more for larger companies. Doing it in-house requires diverting staff time and resources. "For a small business, even just a few thousand to implement the basics is a lot of money," David Svoboda, policy director for the Confederation of Industry, told the site.

Training employees on their rights and responsibilities under the new system also presents logistical hurdles. While webinars and online modules have helped, reaching remote workers remains challenging for some. This is especially the case "in industries like construction, where people are outside, making in-person training difficult," noted Svoboda.

Despite facing fines for non-compliance, the Ministry of Justice's promise to avoid proactively inspecting companies to check if they have whistleblowing systems has provided some reassurance.

However, many smaller outfits continue scrambling to fulfill the legal requirements. With the latest measures for small companies to set up whistleblower systems now in place, further steps may be needed from officials to reasonably support all businesses in building robust and accessible channels where whistleblowers feel protected from retaliation when raising integrity concerns.