The scope of the Austrian Whistleblower Protection Act

Which reports of legal violations are protected by the Whistleblower Protection Act and what do companies need to consider?

The Whistleblower Protection Act (“HinweisgeberInnenschutzgesetz”, HSchG) is based on the Whistleblower Directive (EU) 2019/1937 and aims to protect whistleblowers who report certain legal violations. However, the protective effects of the Whistleblower Protection Act only apply within the statutory scope of application, which does not cover all reports of (criminally relevant) wrongdoing. In practice, this leads to considerable gaps in protection. For example, whistleblowers who report suspicions of offences that are particularly relevant in business life, such as embezzlement (Sec 153 Criminal Code) or fraud (Sec 146 Criminal Code), are not protected under the Austrian Whistleblower Protection Act. However, which legal violations are actually covered by the material scope of the Austrian Whistleblower Protection Act? And what options do companies have to voluntarily extend the material scope of application? These two questions, which are frequently asked in practice, are addressed in more detail below.

Which indications of legal violations are covered by the Austrian Whistleblower Protection Act?

The Whistleblower Protection Act generally (only) applies to reports of (possible) legal violations in companies and legal entities in the public sector with 50 or more employees. The Whistleblower Protection Act is therefore only applicable if there are at least 50 employees in the relevant institution and one of the areas specified in Sec 3 Whistleblower Protection Act is affected.

The material scope of application of the Austrian Whistleblower Protection Act was largely adopted from the Whistleblower Directive and includes in particular the eleven matters listed in Sec 3 para 3 Whistleblower Protection Act. Ten of these are specified by the Whistleblower Directive (Sec 3 para 3 no 1 to 10 Whistleblower Protection Act), with only one point being partially extended to (essentially) abuse of office and corruption (Sec 3 para 3 no 11 Whistleblower Protection Act). The eleven matters that fall within the material scope of the Whistleblower Protection Act pursuant to Sec 3 para 3 Whistleblower Protection Act are:

  1. Public procurement,
  2. Financial services, financial products and financial markets as well as the prevention of money laundering and terrorist financing,
  3. Product safety and conformity,
  4. Transport safety,
  5. Protection of the environment,
  6. Radiation protection and nuclear safety,
  7. Food and feed safety, animal health and welfare,
  8. Public health,
  9. Consumer protection,
  10. Protection of privacy and personal data as well as security of network and information systems,
  11. Prevention and prosecution of criminal offences according to Sec 302 to 309 Criminal Code.

The Whistleblower Directive leaves it open to the Member States to extend the minimum standard set to include national areas of law. The Austrian legislator has slightly expanded the material scope of the Whistleblower Protection Act in Sec 3 para 3 no 11 Whistleblower Protection Act and thus included in particular the abuse of official authority and criminal law on corruption (Sec 302 – Sec 309 Criminal Code) in the material scope of the Whistleblower Protection Act.

With regard to the matters listed in Sec 3 para 3 Whistleblower Protection Act, the Austrian federal legislator has decided that it does not matter whether the infringement is based on national or Union law. However, this is different for the nine state Whistleblower Protection Laws.

Infringements to the detriment of the Union’s financial interests

Pursuant to Sec 3 para 4 Whistleblower Protection Act, the Whistleblower Protection Act also applies to indications of (possible) violations of the law to the detriment of the financial interests of the Union pursuant to 325 TFEU and pursuant to special definitions in relevant Union measures. This primarily concerns expenditure-based fraud to the detriment of the financial interests of the European Union (Sec 168f Criminal Code) and the misuse of funds and assets to the detriment of the financial interests of the European Union (Sec 168g Criminal Code). Fraud (Sec 146 et seq. Criminal Code), breach of trust (Sec 153 Criminal Code), misuse of funding (Sec 153b Criminal Code) and other offences under the Austrian Criminal Code (StGB) may also be included if the act was committed to the detriment of the financial interests of the Union.

Internal market rules, competition, state aid and corporate tax rules

In addition, the material scope of application pursuant to Sec 3 para 5 Whistleblower Protection Act extends to infringements of internal market provisions within the meaning of Art 26 para 2 TFEU, such as the free movement of goods (Art 34 et seq. TFEU) or the freedom to provide services (Art 56 et seq. TFEU). In addition, violations of Union rules on competition and state aid are also included in the scope of application. Violations of internal market regulations in relation to actions that violate corporate tax liability also fall within the material scope of the Whistleblower Protection Act. The same applies to agreements aimed at obtaining a tax advantage contrary to the object or purpose of corporate tax law.

Excursus: Exceptions to the scope of application

Sec 3 para 6 Whistleblower Protection Act regulates certain exceptions in which the Austrian Whistleblower Protection Act does not apply. These include, for example, confidentiality obligations of persons subject to professional secrecy. This affects legally regulated healthcare professions such as doctors, psychologists or nurses, but also lawyers, notaries and chartered accountants. Closely related to this, information entrusted to a pastor of a legally recognized church or religious society is also not covered by the scope of application. There is also an exception for the award of public contracts and concessions that affect essential security interests. The Whistleblower Protection Act also does not affect the application of the Code of Criminal Procedure (StPO) from the time of the initial suspicion of a criminal offence (Section 1(3) of the Code of Criminal Procedure). In my opinion, the applicability of the Code of Criminal Procedure therefore means that the rights of the accused in the context of criminal defense cannot be restricted by provisions of the Whistleblower Protection Act.

Voluntary internal extension of the scope of application in the interest of the company

As described above, numerous criminal offences that may be relevant for whistleblowers do not generally fall within the scope of the Whistleblower Protection Act. Whistleblowers are not subject to the protection of the Whistleblower Protection Act for these offences, which is why an internal report is usually risky and therefore unattractive for them. However, it is also a risk for companies if whistleblowers refrain from making an internal report and instead file an (anonymous) complaint with the criminal law enforcement authorities such as police and the public prosecution office. This is often accompanied by lengthy investigation proceedings with an uncertain outcome and potentially considerable reputational damage.

It is therefore advisable to obtain legal expertise on the subject of whistleblowing and to close the gaps in the scope of application by voluntarily extending the scope of the internal reporting channel to include offences relevant under criminal law and other areas of law relevant to the company. This can motivate employees to make a primary internal report. However, a number of legal requirements must be observed, particularly with regard to data protection and labor law provisions. If implemented correctly, the company benefits from the fact that the internal office can voluntarily grant whistleblowers the protection of the Whistleblower Protection Act even if the law (e.g. in the case of suspected fraud) would not have granted this protection. In addition to the Whistleblower Protection Act, (at least) all provisions of criminal and administrative criminal law must potentially be taken into account when legally examining whistleblower hints, so that it is also advisable to seek the advice of a specialist for the initial legal examination of a whistleblower tip if the relevant expertise is not available within the company.

CONCLUSION

In practice, it is important to know the material scope of the Whistleblower Protection Act in order to comply with its provisions. When implementing a voluntary, extended internal reporting channel, it is also essential to consider the needs of the company and the legal requirements in order to increase the attractiveness of internal reporting for whistleblowers. It may be advisable to consult an expert in this area during the process of setting up an internal reporting system to ensure that all regulations are applied in a practical, sensible and correct manner. If you have any questions on these topics or need support from an experienced expert, I will be happy to assist you.
Dr. Elias Schönborn

Dr. Elias Schönborn

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