Documents considered by the Committee on 16 January 2019 Contents

2Whistleblowing and breaches of EU law

Committee’s assessment

Legally and politically important

Committee’s decision

(a) Not cleared from scrutiny; further information requested; (b) and (c) Cleared from scrutiny; drawn to the attention of the Business, Energy and Industrial Strategy Committee

Document details

(a) Proposed Directive on the protection of persons reporting on breaches of Union law; (b) Commission Communication: Strengthening whistleblower protection at EU level; (c) Court of Auditor’s Opinion No 4/2018 on proposal (a)

Legal base

(a) Articles 16, 33, 43, 50, 53(1), 62, 91, 100, 103, 109, 114, 168, 169, 192, 207 and 325(4) TFEU and Article 31 of the Euratom Treaty; ordinary legislative procedure; (b) and (c)—


Business, Energy and Industrial Strategy

Document Numbers

(a) (39695), 8713/18, COM (18) 218; (b) (39696), 8725/18, COM (18) 214; (c) (40122), 13195/18,—

Summary and Committee’s conclusions

2.1“Whistleblowing” is commonly understood to be the act of speaking out and disclosing serious wrongdoing, usually by employees. EU law on whistleblowing already applies in some areas such as financial services, transport safety and environmental protection. The Cambridge Analytica,6 Lux Leaks,7 Dieselgate8 and Paradise/Panama Papers9 scandals have all highlighted the importance but also the vulnerability of whistleblowers. In their wake, the Commission is proposing this Directive (document (a)) to strengthen and extend protection for whistleblowers across the EU who report breaches of a wide range of EU legislation. As this is a minimum harmonisation proposal, it is open to Member States to legislate for higher levels of protection. We set out a full account of the proposal and the Government’s view of it in our last Report of 20 June.10

2.2Irrespective of when the proposal may be adopted, the deadline for implementing the Directive once adopted is currently drafted to be 15 May 2021. This means that as things currently stand the UK would not have to implement the proposal,11 either in the case of “no-deal” or of a negotiated exit where the implementation period is not extended beyond 31 December 2020. However, we considered last time that the UK may either have to align with the proposal as part of the core labour or competition provisions of an EU-UK free trade/other agreement or may choose to do so as part of the Prime Minister’s commitment to build on workers’ rights after the UK’s exit from the EU.

2.3The UK leads the EU in terms of the legal protection it affords to whistleblowers (see the Public Interest Disclosure Act 1998 and the Employment Rights Act 1996). However, initially the Government did not support the proposal. As indicated in its Explanatory Memorandum in June, the Government considers that a non-legislative measure should have first been attempted by the Commission. It highlights the cost and burden on business of setting up internal reporting procedures (the main difference between the proposal and the current UK legal framework).

2.4Further to our last Report, the Court of Auditors (CoA) has produced an Opinion on the proposed Directive, as required by Article 325(4) TFEU. The CoA is an EU institution which acts as an independent external auditor. In summary, the CoA is generally supportive of a horizontal EU approach but is worried that the complexity of the material scope of the proposal creates legal uncertainty about whether potential whistleblowers will be protected or not under the proposal. A fuller summary of the CoA’s assessments is set out in paragraph 12 below.

2.5The Parliamentary Under Secretary of State for Department for Business, Energy and Industrial Strategy (Kelly Tolhurst MP) has provided us with her Explanatory Memorandum of 31 October on the Court of Auditor’s report on the proposal. Noting that the report raises no direct policy implications for the UK, the Minister provided some helpful information on the timetable for the negotiations on the proposed Directive. She said that the European Parliament (EP) had indicated that trilogues on the proposal would begin in the New Year. This would require a General Approach on the proposal to be agreed by the end of December. Given the number of outstanding issues on the proposal she said it was “unclear” that a General Approach could be reached within this timeframe. Indeed, it is now apparent from the Minister’s letter below that no such agreement was reached in the Council in December.

2.6In a letter12 of 21 December , the Minister now writes to update us on the progress of the proposal and to respond to a number of questions set out in the conclusions to our last Report as follows:

2.7We thank the Minister for her letter and her Explanatory Memorandum on the Court of Auditors’ Opinion. Both have been helpful and have assisted our scrutiny of the proposed Directive. Our staff are also grateful for the informal assistance of the department’s officials in keeping them up-to-date with progress on this dossier.

2.8With the UK’s exit from the EU imminent on 29 March, our greatest interest rests with the possible pace of the negotiations on this proposal. We are mindful that if there is any chance that the UK might have to implement the proposal by the transposition deadline of 15 May 2021 (in the case of an extended implementation period under a negotiated exit), it would be best for Government to wield its influence on the text before it loses it voting power in the Council after exit. We infer from the Minister’s letter that there has not been significant progress in the Council, though we are aware from officials that there might be an attempt to try to agree a partial general approach at the end of January. We therefore ask to be kept as closely informed as possible of any progress in the Council.15

2.9We also ask for a further clarification of the Minister’s answer to our question about the availability of legal aid for whistleblowers. Does this mean that where a whistleblower’s claim does not include discrimination, it is not usually possible for them to obtain legal aid both in terms of advice and representation? If this is the case, will the review of Legal Aid be addressing this issue?

2.10We note the Minister’s comments about the Privacy International case concerning the interpretation of the national security exemption provided in Article 4(2) TEU. However, we address this issue in the conclusions to our chapter on the proposed ePrivacy Regulation which also appears in this Report.

2.11Pending further information from the Minister, we retain the proposed Directive under scrutiny. However, we are content to now clear the Communication and the Court of Auditors’ Opinion. We draw this chapter and documents to the attention of the Business, Energy and Industrial Strategy Committee.

Full details of the documents:

(a) Proposal for a Directive of the European Parliament and the Council on the protection of persons reporting on breaches of Union law: (39695), 8713/18 + ADDs 1–3, COM (18) 218; (b) Communication from the Commission to the European Parliament and the Council: Strengthening whistleblower protection at EU level: (39696), 8725/18, COM(18) 214; (c) Opinion No 4/2018 (pursuant to Article 325(4) TFEU) concerning the proposal for a Directive of the European Parliament and of the Council: (40122), 13195/18,—.

Summary of the Court of Auditors’ Opinion

2.12In its Opinion, the Court of Auditors:

Previous Committee Reports

Thirty-second Report HC 301–xxxi (2017–19), chapter 1 (20 June 2018).

6 Facebook and data analytics firm Cambridge Analytica have been accused of harvesting and using personal data to influence the outcome of the US 2016 presidential election and the UK’s referendum on EU exit. See the oral evidence session, Christopher Wylie, 28 March 2018 held as part of the DCMS Committee’s inquiry into “Fake News”.

7 See BBC website, Luxleaks whistleblower Antoine Deltour has conviction quashed. In 2014 two whistleblower employees leaked confidential information concerning PricewaterhouseCoopers dealings with multinational companies in relation to tax rulings in Luxembourg between 2002 and 2010. They were originally both convicted by the Luxembourg courts but one had his conviction overturned in January 2018.

8 See BBC website, Volkswagen: The scandal explained. The German car manufacturer Volkswagen has since admitted cheating diesel emissions tests in the US.

9 A House of Common Debate Briefing paper called The Paradise Papers explains that Paradise papers consisted of “material …leaked from two offshore service providers and 19 tax havens’ company registries” and reported by some of the UK press “reiterating public concerns as to the scale of tax avoidance and evasion, and the ability of offshore jurisdictions to facilitate these activities”. This followed the publication in the previous year of the ‘Panama Papers’—a leak of financial records from Mossack Fonseca, a law firm that had provided advice on establishing offshore companies to a wide variety of politicians, celebrities and wealthy people.

10 Thirty-second Report HC 301–xxxi (2017–19), chapter 1 (20 June 2018).

11 Nor continue it as retained EU law under the EU Withdrawal Act 2018.

12 Letter from the Minister to the Chair of the European Scrutiny Committee (21 December 2018).

13 Our addition. This is a reference to Case C-623/18 Privacy International v Secretary of State for Foreign and Commonwealth Affairs. This is a preliminary reference from the Investigatory Powers Tribunal on 31 October 2017.

14 European Convention on Human Rights.

15 There might be political pressure from the European Parliament for the Council to start trilogue negotiations as soon as possible: the Committee on Legal Affairs of the European Parliament (the JURI Committee) agreed its negotiating mandate for trilogue negotiations, thought this has yet to be agreed in plenary. See the EU-wide protection and support for whistle-blowers Press Release of the EP of 20 November and the Report and Draft Legislative Resolution prepared for plenary.

Published: 22 January 2019