Published On: August 31st, 2022

Last year, we wrote that it is the intention of the new legislation that eventually each legal entity with more than 49 employees must set up its own reporting channels and appoint an independent coordinator. Some organizations even have to do this anyway, regardless of the number of employees. This applies, for example, to all organisations that fall under financial or anti-money laundering legislation.

This not only means that multinationals, which have independent legal entities in several EU countries, must set up local reporting channels in all these EU countries. It also means that Dutch companies with multiple legal entities in The Netherlands will have to set up a separate reporting channel for each entity, depending on the size of the organisation and the industry in which it operates.

In order to get a better idea of what this means, we contacted the Dutch Ministry of the Interior. Below you will find a summary of the questions and answers.

Questions to the Dutch Ministry of the Interior

Question: Suppose I have a retail organisation and each shop is an independent legal entity with more than 49 employees, does each shop have to open a reporting channel (from the end of 2023)? The same for restaurants? This can occur at franchise organizations, for example.

Answer: Yes, every shop or restaurant will have to open its own reporting channel. If they have between 50 and 249 employees, they may share resources for receiving reports and conducting investigations.

Question: Suppose I have a chain of installation companies, but each installation company has less than 50 employees. Do I have to do nothing?

Answer: The obligation to set up internal reporting channels does not apply if the employees are employed by the individual installation companies. However, there are a number of exceptions, such as for organisations working in the fields of financial services, products and markets, prevention of money laundering and terrorist financing, civil aviation, maritime labour and port state control, and offshore oil and gas activities. They should always set up reporting channels. However, having an internal reporting procedure is recommended, especially if the companies have close to 50 employees and/or if the chain as a whole employs many people.

Question: Car dealers are subject to the Anti-Money Laundering and Terrorist Financing Act (Wwft). Suppose I have a chain of independent car dealers, each with fewer than 50 employees, must each car dealer open reporting channels, regardless of the number of employees?

Answer: Organisations engaged in the prevention of money laundering and terrorist financing are indeed required by the EU Directive to have an internal reporting channel even if they have fewer than 50 employees.

As a result of the new legislation, many organisations will have to establish reporting channels and appoint independent coordinators. In itself, there is something to be said for having reports handled by people who are familiar with the local situation and local legislation. However, it is also our experience that many whistleblowers prefer not to have their report investigated by the local management, for example because their report is about the local management, and they prefer to turn to a function at group level, which operates at a distance. The European Commission has indicated that organisations may give reporters a choice as to whether they wish to report at local or group level. The organisation may also ask the reporter whether the report may be investigated by a central investigation department at the head office. The choice is therefore up to the reporter. Entities with between 50 and 249 employees may share reporting and investigation facilities. However, the employer remains responsible for addressing the issue and providing feedback to the reporter. Organizations can also outsource the receipt of and follow-up on reports to third parties.

A number of specialised software companies with reporting platforms have found an elegant solution to the local/central problem. When the whistleblower fills in a report form, he or she is offered the choice of reporting at local or group level. In this way, all reports can still be handled in one system. However, the organization will still have to appoint local coordinators. And the head office should not have access to the content of the local reports, unless the reporter has agreed to this.

Would you like to know more about these software solutions? Or are you still looking for a local coordinator in a particular EU country? Then please contact us.

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