Advisors’ Guide: Ethical Dilemmas in Whistleblowing

The European Union introduced the EU Whistleblowing Directive to create robust protection for people who report breaches of EU law that they uncover in their employed capacity. As it was implemented across the union, many countries expanded the scope to include contraventions of national law as well.

In-scope companies and organisations must create internal reporting channels to accept whistleblowing reports, as well as establishing an investigation process to analyse them in a confidential manner. They must also protect reporting persons from retaliation as a result of their report, providing support and guidance to the whistleblowers.

As this can be a complex process for organisations, many seek the help of advisory firms to either screen reports and identify those that meet the definition of whistleblowing or to run their whole whistleblowing management procedure.

And, although questions of ethics are entwined within the reporting and investigation of misconduct at an organisational level, advisors must focus on their key functions of ensuring compliance, handling reports in a fair manner and ensuring systemic integrity. But these investigations do not occur in a vacuum and an advisor may find themselves having to manage the expectations and concerns of their clients regarding ethical matters.

This article explores the common ethical dilemmas with whistleblowing and how advisors can help clients strike the right balance to achieve a fair and compliant process.

1. Why advisors need a clear approach to whistleblowing ethics

The advisor’s role in the whistleblower reporting process is to ensure that the process is correct, fair and in line with the obligations of the local iteration of the EU Whistleblowing Directive. This means:

Ensuring that the case meets the definition of whistleblowing under the law

Maintaining adherence to deadlines for acknowledging receipt of the report and the outcome of the investigation

Carrying out a comprehensive and impartial investigation

Keeping the details confidential and only allowing authorised stakeholders access to case details

Advising the company on its next steps, resolving the matter in a satisfactory and correct manner, whilst preventing any retaliatory behaviour towards the reporting person.

Although company stakeholders may be emotionally invested in these cases, the advisor must be dispassionate to ensure they meet the requirements of the law and this is why they need a clear approach to handling cases.

These strong policies mitigate legal risks in the process. Without them, both the advisor and client could find themselves in breach of the law, at risk of legal action from parties related to the investigation and suffering reputational damage.

2. Common ethical dilemmas in whistleblowing cases

Organisations can face these typical ethical dilemmas related to whistleblowing cases:

Dilemma	Explanation
Confidentiality vs. transparency	By investigating the whistleblower’s reports, there is a balance to strike between being transparent about the process and keeping the whistleblower’s identity confidential. This might be a difficult line to tread for the client, meaning they need an advisor to maintain strict compliance with the confidentiality requirement of the law.
Retaliation vs accountability	The client’s organisation could face some serious internal struggles over the consequences of wrongdoing occurring in their workplace. Although the emphasis should land on those carrying out misconduct and the systems in place that allowed it to happen, the focus of the blame lands on the whistleblower who brought it to greater attention. An advisor’s role is to prevent retaliation and to channel the organisation’s efforts into holding accountable those who engaged in misconduct or who have the power to adjust procedures to prevent wrongdoing in the future.
Anonymous vs named reports	Allowing anonymous reporting reassures whistleblowers by providing an extra layer of protection and ensuring their identities remain confidential. However, the organisation may worry that anonymity could undermine the credibility of the reports. To lend more weight to the evidence, it is recommended to use a specialist whistleblowing reporting tool where reporting persons can remain anonymous but maintain contact with investigators through the online portal.
Conflicts of interest in investigations	An area where advisors can make a significant impact is by ensuring impartiality in whistleblowing investigations. Within the client’s business, it is difficult to find someone without any personal link at all to the whistleblower or accused persons. This could cause conflicts of interest.

3. The advisor’s role in creating and implementing whistleblowing policies

By drafting and reviewing the client’s policies and procedures, you can guide them towards a compliant workflow that sets the client up for adherence to the law and an effective whistleblowing process. This helps the client understand exactly what its responsibilities and obligations are, and how to implement them effectively and within the scope of the law.

You should guide your clients towards reporting channels that meet the requirements of the law. They should be secure, allow for confidential reporting and investigation, as well as maintaining the integrity of the data you collect and store. Being able to engage whistleblowers throughout the process is useful, as it helps you collect more information and evidence. An online whistleblowing platform will usually provide the required functionality and security.

An advisor should inform the client of what is deemed to be retaliation against whistleblowers so that they can form a policy to protect reporting persons accordingly. The directive suggests actions that could be construed as retaliation, including:

Suspension, termination of contract or dismissal

Demotion or preventing a promotion

A change of duties

Pay cuts

Withholding of training

Imposing penalties

Imposing disciplinary measures

Cancelling contracts for goods or services

Negative references or appraisals

Harm to the reputation of the whistleblower, especially on social media

Coercion, intimidation, harassment, ostracism.

By specifically implementing steps to prevent these outcomes, the client encourages reluctant whistleblowers to come forward, safe in the knowledge they will not be punished for their report.

Advisors are best placed to meet the legal requirement for an impartial investigation team “to ensure independence and absence of conflict of interest.” For many clients, particularly SMEs, it can be difficult to find an investigator who does not have some connection to the parties involved in the report, including the reporter and the accused. They might also be too close to the matter because it involves procedures that they oversee. Bringing an external party to run investigations eliminates this risk.

One of the reasons behind the directive was to encourage whistleblowers to report internally in the first place to help solve issues before they spread. However, if the whistleblower is not satisfied with the outcome of the investigation, they can escalate it to a nominated external party, such as an external counsel, trade union representative or auditor. The next step is to make a public disclosure to the media. An advisor overseeing the process can help the whistleblower escalate the complaint in a manner that provides a fair hearing for them, but which also encourages them away from making public statements that might damage the client’s business.

Although the reporting channels are in place to ensure stakeholders can alert organisations to misconduct that has occurred, an important part of the advisor’s role is to help the client avoid such issues in the first place. This involves measures such as providing training with both management and employees to help instil a culture of compliance. It could include working with the client to draw up a code of conduct and ethics and other policies that show an embrace of compliance and an uncompromising approach to contraventions.

As an advisor running a client’s whistleblowing case management programme, you should document the processes undertaken and maintain thorough records. This shows that you have carried out the correct procedure, but also acts as helpful evidence to show where the client’s processes could be improved to avoid non-compliant behaviour.

4. Challenges advisors face in managing whistleblowing ethics

Employees and management may not fully understand the necessary whistleblowing procedures in place. With mounting compliance requirements on companies, it is difficult for them to keep up with all their obligations. This requires their advisor to present the key elements of the law and carry out training and education on the importance of implementing compliant channels.

Senior executives may view whistleblowing as a threat rather than an opportunity to learn and develop. It is understandable that leaders would prefer not to have to spend time investigating wrongdoing, but this attitude makes it difficult to enforce policies. You must espouse the benefits of a fair and transparent reporting procedure.

Varying case complexities can lead to inconsistent handling of reports. Clients may want a ‘quick win’ in some cases, but you must persuade them to carry out each investigation in the same, fair and impartial manner so as not to risk bias or legal issues.

Large organisations operating in multiple jurisdictions may struggle to align policies with different regulatory frameworks. The EU Whistleblowing Directive is implemented differently in different member states, showing the importance of understanding the law in each country in which the client operates and the rules for whistleblowing within company groups.

Employees may fear retaliation despite the legal protections put in place by the directive. This requires your client to implement continuous reinforcement of its commitment to a safe reporting culture. Work with them to show the compliance culture works from the top down and that they prize reporting as a way to improve their working practices.

Not all reports will be genuine and some could be purposefully malicious. As an advisor screening these reports, you need to be aware of this without compromising on your impartial approach to managing investigations. Ensuring due process while filtering out unfounded claims without discouraging genuine whistleblowing is a challenge.

Investigations must be prompt, yet comprehensive, to avoid mishandling critical information. You must be able to report back within three months, which can be challenging, but is essential to tackle issues and maintain confidence in the process.

5. Striking the right balance: Ethical and legal considerations

As an advisor, it is your primary purpose to ensure that your clients’ systems function in a lawful manner. Your duty is to maintain compliance and implement that into your work for that client. The advisor is not there to make ethical decisions or to enter grey areas in that regard.

However, you can help your clients create a more ethical environment through policies and procedures that promote adherence to compliance, displaying the company’s commitment to doing the right thing.

You can also advise on topics for training sessions that encourage ethical behaviour within the workforce, leading to greater awareness and implementation in decision-making.

6. Conclusion

Advisors play a critical role in ensuring compliant, fair and transparent whistleblowing processes for their clients. Where this intersects with ethics is at a systematic, rather than a personal, level. As an advisor, you help the client with the mechanics of running an ethical and compliant business, but the client is better placed to tackle ethical matters within its operations. By helping them create strong policies, develop robust training programmes and ensure compliance with laws such as those relating to whistleblowing, you help them build trust and safeguard corporate integrity.

IntegrityLog Advisor is an online whistleblowing reporting platform designed to streamline case management for advisors. Key features include: