Switzerland is currently not a particularly hospitable country for whistleblowers. The anti-retaliation protections provided to potential whistleblowers are relatively sparse – individuals fired from their jobs can, at best, hope to receive up to the equivalent of six months of their salary rather than reinstatement – and there are few legislative incentives in place to encourage individuals to report corruption or other forms of corporate wrongdoing. Moreover, not only are the country’s laws rather harsh when it comes to encouraging and protecting whistleblowers in the private sector, commentators have noted the “brutally hard line” that the Swiss government has taken in a number of high-profile whistleblower prosecutions.
Unfortunately, a proposed law which has passed the country’s Council of States and will be considered by its National Council, initially billed as an attempt to address ambiguities within the current whistleblower system, appears likely, if enacted, to make an already hostile climate for whistleblowers even worse.
Two components of this bill have caused commentators to view it with skepticism. First, whistleblowers must report any complaints internally before raising their concerns with the relevant authorities (a requirement waived in only a few circumstances, including when there is a risk to “life, health [or] safety” or an employer lacks a “suitable reporting system” and the employee has a “valid reason” to believe reporting internally would not result in any improvements to the situation). Following this internal report, whistleblowers are barred from communicating their concerns to outsiders if their employer possesses an adequate internal reporting system. Second, individuals may not alert the media to instances of corruption unless, after informing governmental authorities of their concerns, officials fail to provide them with a status update regarding the procedures initiated in response to their report within two weeks.
At first glance, these measures may not appear particularly problematic. After all, readers of this blog may well remember that the question of whether or not whistleblowers should be required to register their complaints internally (and the relative merits of this practice) was hotly contested after the passage of the Dodd-Frank Act in 2010. Many of the advantages which commentators have attributed to the adoption of an internal reporting mechanism in the US during the course of this debate could well be thought to apply to Switzerland. For example, proponents of this bill could argue that such measures would play a crucial role in strengthening companies’ compliance systems by preventing whistleblowers from circumventing existing internal reporting procedures and going straight to governmental authorities. Indeed, these benefits may be even more pronounced in the system created by the proposed Swiss bill, as companies have a significant incentive to adopt not simply some manner of internal compliance system but a relatively robust one at that as an effective reporting system ensures that employees will not be permitted to disclose suspected wrongdoing to the relevant authorities (unless one of the few conditions which permit employees to bypass internal reporting altogether, such as an emergency situation in which there is a risk to “life, health, safety or the environment” applies).
Moreover, the bill’s proponents might point out that Switzerland has long been considered one of the least corrupt countries in the world (falling within the top ten of Transparency International’s Corruption Perception Index for the past three years) and, as such, there may be good reason to believe that most Swiss companies are willing and able to address allegations of corruption without the involvement of public officials. Switzerland’s traditional success in combating corruption might also be invoked to explain why the proposed bill would bar whistleblowers from going to the media unless it can be shown that the Swiss government has failed to investigate their claim. After all, in a country whose anticorruption enforcement efforts are perceived as successful, it might seem to make sense that, as long as the government is investigating a whistleblower’s allegations, this individual should not be permitted to inform the public of what could, in the end, prove to be a meritless claim.
Yet in spite of some of these potential justifications, this whistleblower bill would likely do more harm than good, for three main reasons:
- First, this provision is likely to deter potential whistleblowers from coming forward to report wrongdoing. Several commentators have noted that the proposed law currently provides no additional protections to whistleblowers from retaliation by their employers (while one source has suggested that it may increase the damages a terminated employee could receive from six-months to one years-worth of their salary). As such, this new bill has created a system whereby, in the vast majority of cases, whistleblowers attempting to draw attention to corporate wrongdoing will be forced to report this conduct internally with no guarantee that their company will not fire them for their temerity (with some financial recompense for their trouble). While this bill has arguably created an incentive for companies with adequate reporting mechanisms not to retaliate against their employees by permitting whistleblowers who have suffered retaliation to report the company’s potentially corrupt actions to governmental authorities, this is cold comfort to whistleblowers who will still, at the end of the day, be out of a job. This problem is only exacerbated in light of the lack of significant incentives to induce employees to report wrongdoing and take the risk that they may be fired for raising a red flag internally. Moreover, the institutional deterrents to whistleblowers created by this proposed law are likely to both reinforce and heighten what many commentators perceive to be a corporate culture in Switzerland (particularly within financial institutions) which already actively discourages whistleblowers.
- Second, the decision to allow companies deemed to have adequate internal reporting systems to essentially foreclose their employees’ ability to report potential wrongdoing to governmental authorities in all but the most dire of circumstances seems problematic, at best. It is not difficult to imagine that such a system could easily be abused, as it does not necessarily follow that a corporation which has adopted an adequate procedure to process whistleblower reports will implement appropriate changes in response to these concerns.
- Third, as others have noted, this proposed law would severely limit whistleblowers’ ability to alert the public to significant instances of corruption – even matters that threaten “life, health and safety” – so long as the government simply informs them that they are looking into their complaint. It is true that there may be good reason to believe that the Swiss government “gets it right” more often than not when it comes to allegations of corruption. However, as has been discussed previously on this blog, prosecutorial discretion may at times be improperly employed to shield defendants accused of corruption. While this is a complicated problem, external public pressure is often essential to prompt states to take their commitments to enforce anticorruption norms more seriously. This, in turn, requires that there be some mechanism by which the public can be made aware of these kinds of claims.
Thus it seems likely that this bill, if passed, would discourage employees from coming forward to report instances of corruption in the workplace and would also make it nearly impossible for whistleblowers to bring such issues to the public’s attention. This problem is all the more pressing in light of the fact that whistleblowers have played an important role in exposing corruption in Switzerland, for example by revealing “suspicious business dealings” by the State Secretariat for Economic Affairs. It thus appears likely that the proposed whistleblower legislation in Switzerland will do more harm than good and, as such, the anticorruption community should strongly encourage the Swiss legislature not to adopt this highly restrictive law.