Whistleblowing with a French Twist

Approximately 600 French and Foreign companies in France have declared to the CNIL that they have implemented whistleblowing programs in accordance with the rules specified by the CNIL (CNIL: Press release of March 8, 2007.) The CNIL's position and requirements have been further clarified in the light of a recent report on whistleblowing and ethical charters by Paul-Henri Antonmatt'i (Montpellier University) and Philippe Vivien (Human Resources Manager at Areva).

The report was commissioned by the French Minister of State for Employment and Professional Insertion, Gerard Larcher. It aimed to encourage the analysis and clarification of this grey area of French law and to reduce the judicial uncertainty arising both from the paucity of case law and also the novel nature of this area of law.

French Response

France has clearly begun to respond to the current global importance accorded to corporate responsibility and governance and the obligations imposed on all American companies by the Sarbannes-Oxley Act (SOX), instigated in the aftermath of the ENRON collapse. Currently, all US listed companies and their subsidiaries must certify their accounts with the American stock market authorities and implement alert procedures for accountancy malfunctions or abnormalities. However, by complying with their obligations under the American legislation, United States companies have experienced difficulties in France as highlighted by some recent high-profile cases. An understanding of France's current position on whistleblowing is crucial before attempting to implement such a scheme.

Having initially treated whistleblowing with great suspicion, the CNIL's unfavourable stance has softened in response to both case law and following a period of discussion and consideration of the whistleblowing obligations incumbent upon American companies. The CNIL remains responsible for the in-depth analysis and approval of Companies' proposed whistleblowing schemes and on Dec. 28, 2005,
it issued advice and guidelines for the content of such schemes. Nevertheless, the CNIL's advice has, thus far, been confined to the domain of the protection and transmission of data which is collected and controlled by computer. Although the guidelines do not provide conclusive nor concrete responses to a number of unanswered questions, they are an useful indicator of the CNIL's position and provide a dependable basis for assessing clients' whistleblowing needs.

The Antonmatt'i-Vivien report suggests a different approach to the current position from an employment law perspective. As the basis of their report, Antonmatt'i and Vivien analyzed a number of ethical charters: 16 charters were assessed from companies of the CAC 40 Index, four charters from the SBF 250 Index and a further four charters from subsidiaries of American groups. Although the report has no legal clout, it was commissioned with a view to encourage legislative modifications to this area of law and will therefore be of value to U.S. companies looking to implement a whistleblowing scheme. The report contains a comprehensive summary of the current legal position and provides some suggestions for the scope, nature and implementation of whistleblowing programmes.

Scope of a Whistleblowing Provision in France

In order to attain full legal compliance, the report proposes that a whistleblowing provision cover the following:

• Actions contrary to legislation or regulations, collective bargaining agreements or collective agreements applicable to the company, or ethical or deontological rules, which seriously harm the running of the company;
• Actions intended to harm the rights of persons and individual liberties, which would not be justified by the nature of the task to be accomplished, which are not proportionate to the aim;
• Actions intended to harm the physical and mental health of employees.

Despite providing substantial information regarding the drafting content of the whistleblowing provision, the level of detail in which the above provisions are deemed to be 'covered' is not specified. Nevertheless, there are fundamental principles of French Law that permit companies to anticipate the detail and obligations in order to create a legally compliant whistleblowing program.

Whistleblowing: The Fundamental Principles

The Obligation to Blow the Whistle

Both French case law and the recent report underline an essential characteristic of a whistleblowing scheme in France: The whistleblowing procedure can make the disclosure possible, but cannot, under any circumstances, render it obligatory. This remains in direct contrast to the Sarbanes Oxley Act s 406(b), which requires, 'the immediate disclosure, by means of the filing of a form, dissemination by the internet or by any other electronic means, by any issuer or any change in or waiver of the code of ethics of the issuer.' This position should be contrasted with that of the CNIL: 'The use of whistleblowing provisions by the personnel cannot be made obligatory.' The French position was also reiterated by the French Minister of State for Employment in a public letter where he claimed, 'Making whistleblowing obligatory is, in reality, transferring the employer's responsibility to ensure the respect of internal rules to the employees. We can also consider that a whistleblowing obligation would be contrary to article L. 120-2 (rights of persons and individual and collective liberties) of the French Labour Code as a constraint which is not proportionate to the objective to be sought.' Clearly, the act of informing the company of malpractice can be encouraged but may not be made obligatory. This remains a fundamental and entrenched position in French law and in direct opposition to SOX.

In Bona Fide

A recurrent theme in the Antonmatt'i-Vivien report is the bona fide use of the provision; it cannot, in any circumstances be used 'to settle old scores.' Stemming from this principle is the aim to avoid anonymity. Although the report acknowledges the 'possibility of anonymity in certain conditions,' in order to protect this indispensable principle, the general consensus is that anonymous whistleblowing is to be avoided at all costs. This position was again reiterated by the CNIL: 'anonymous informing should not be encouraged,' (CNIL: Press release of March 9, 2007).

The Importance of Hierarchy, the Administration and the Judiciary

When contemplating the implementation of a whistleblowing programme in France, the importance of contact and dialogue with an employee's superiors should not be overlooked or underestimated. A whistleblowing provision should not, under any circumstances, replace or hinder an employee's use of traditional and hierarchical lines of reporting. As the Antonmatt'i-Vivien report outlines, these lines of reporting are either to hierarchical superiors, to the employees' representatives, to the Labour Inspector or even to the Public Prosecutor. A recent case (Union d'partmentale CGT du Rh'ne; Syndicat CGT Bayer Cropscience/Saint Pierre and the Syndicat Bayer Cropscience France, 19 September 2006) reaffirmed the importance of this traditional means of reporting. The scheme required employees to initially notify the employer of their colleagues' perceived wrongdoings at work, before having recourse to the French authorities and judicial system. This is contrary to the principles of criminal and civil procedure in France. The court therefore held that the parts of the Program, which give priority to the employer over the French authorities should be declared invalid and deleted accordingly.

Contents of the Whistleblowing Agreement

Having defined the scope of the whistleblowing procedure, the detail must also be provided. Favouring heavily defined and delineated agreements, the CNIL stated that it was 'not opposed in principle to such programmes, as long as the rights of a person who has been denounced are guaranteed with regard to computer laws and freedoms.' The report and the CNIL's press release also suggest that the following should be included in any agreement which implements a whistleblowing scheme (CNIL: Press release of March 9, 2007):

• the actions which can be reported by whistleblowing;
• the persons likely to use the provision;
• the persons whose actions may be reported;
• the means of collecting and processing the reported actions;
• the name or the position of the persons responsible for the collecting and processing of reported information;
• the means of informing the person(s) who form the object of the whistleblowing; and
• the anonymous character and/or confidentiality of the whistleblowing.

The apparently complicated nature of implementing a whistleblowing procedure is clearly an issue for American companies. The Antonmatt'i-Vivien report gave a useful indication of the proposed method for implementation.

Next month: details and implementation.

Myrtille Lapuelle and Tristan Fuller are members of the employment law team of international law firm Eversheds. Based in Paris (France), they advise both French and international clients on various employment issues including restructurings, individual & collective work relationships, mobility, compliance, audits, and other HR matters such as litigation before the labor courts. They may be reached

A long accepted and familiar concept in Anglo-Saxon countries, whistleblowing, for cultural and historical reasons, has proven to be a rather unwelcome legal obligation. France's total opposition to whistleblowing has softened over time and has been accompanied by a greater understanding and appreciation of its implications. Nevertheless, strong pervasive principles of French law continue to govern this domain.

Differences in the Law

In the United States, whistleblowing is incorporated into the legislation. But in France, there are no codified provisions contained in the French Labour Code. Therefore, the current legal position must be approached with care. Companies wishing to implement whistleblowing schemes in France must respect the general labor law principles contained in the French Labour Code as well as the current position of the CNIL (the French Data Protection Authority).

Approximately 600 French and Foreign companies in France have declared to the CNIL that they have implemented whistleblowing programs in accordance with the rules specified by the CNIL (CNIL: Press release of March 8, 2007.) The CNIL's position and requirements have been further clarified in the light of a recent report on whistleblowing and ethical charters by Paul-Henri Antonmatt'i (Montpellier University) and Philippe Vivien (Human Resources Manager at Areva).

The report was commissioned by the French Minister of State for Employment and Professional Insertion, Gerard Larcher. It aimed to encourage the analysis and clarification of this grey area of French law and to reduce the judicial uncertainty arising both from the paucity of case law and also the novel nature of this area of law.

French Response

France has clearly begun to respond to the current global importance accorded to corporate responsibility and governance and the obligations imposed on all American companies by the Sarbannes-Oxley Act (SOX), instigated in the aftermath of the ENRON collapse. Currently, all US listed companies and their subsidiaries must certify their accounts with the American stock market authorities and implement alert procedures for accountancy malfunctions or abnormalities. However, by complying with their obligations under the American legislation, United States companies have experienced difficulties in France as highlighted by some recent high-profile cases. An understanding of France's current position on whistleblowing is crucial before attempting to implement such a scheme.

Having initially treated whistleblowing with great suspicion, the CNIL's unfavourable stance has softened in response to both case law and following a period of discussion and consideration of the whistleblowing obligations incumbent upon American companies. The CNIL remains responsible for the in-depth analysis and approval of Companies' proposed whistleblowing schemes and on Dec. 28, 2005,
it issued advice and guidelines for the content of such schemes. Nevertheless, the CNIL's advice has, thus far, been confined to the domain of the protection and transmission of data which is collected and controlled by computer. Although the guidelines do not provide conclusive nor concrete responses to a number of unanswered questions, they are an useful indicator of the CNIL's position and provide a dependable basis for assessing clients' whistleblowing needs.

The Antonmatt'i-Vivien report suggests a different approach to the current position from an employment law perspective. As the basis of their report, Antonmatt'i and Vivien analyzed a number of ethical charters: 16 charters were assessed from companies of the CAC 40 Index, four charters from the SBF 250 Index and a further four charters from subsidiaries of American groups. Although the report has no legal clout, it was commissioned with a view to encourage legislative modifications to this area of law and will therefore be of value to U.S. companies looking to implement a whistleblowing scheme. The report contains a comprehensive summary of the current legal position and provides some suggestions for the scope, nature and implementation of whistleblowing programmes.

Scope of a Whistleblowing Provision in France

In order to attain full legal compliance, the report proposes that a whistleblowing provision cover the following:

• Actions contrary to legislation or regulations, collective bargaining agreements or collective agreements applicable to the company, or ethical or deontological rules, which seriously harm the running of the company;
• Actions intended to harm the rights of persons and individual liberties, which would not be justified by the nature of the task to be accomplished, which are not proportionate to the aim;
• Actions intended to harm the physical and mental health of employees.

Despite providing substantial information regarding the drafting content of the whistleblowing provision, the level of detail in which the above provisions are deemed to be 'covered' is not specified. Nevertheless, there are fundamental principles of French Law that permit companies to anticipate the detail and obligations in order to create a legally compliant whistleblowing program.

Whistleblowing: The Fundamental Principles

The Obligation to Blow the Whistle

Both French case law and the recent report underline an essential characteristic of a whistleblowing scheme in France: The whistleblowing procedure can make the disclosure possible, but cannot, under any circumstances, render it obligatory. This remains in direct contrast to the Sarbanes Oxley Act s 406(b), which requires, 'the immediate disclosure, by means of the filing of a form, dissemination by the internet or by any other electronic means, by any issuer or any change in or waiver of the code of ethics of the issuer.' This position should be contrasted with that of the CNIL: 'The use of whistleblowing provisions by the personnel cannot be made obligatory.' The French position was also reiterated by the French Minister of State for Employment in a public letter where he claimed, 'Making whistleblowing obligatory is, in reality, transferring the employer's responsibility to ensure the respect of internal rules to the employees. We can also consider that a whistleblowing obligation would be contrary to article L. 120-2 (rights of persons and individual and collective liberties) of the French Labour Code as a constraint which is not proportionate to the objective to be sought.' Clearly, the act of informing the company of malpractice can be encouraged but may not be made obligatory. This remains a fundamental and entrenched position in French law and in direct opposition to SOX.

In Bona Fide

A recurrent theme in the Antonmatt'i-Vivien report is the bona fide use of the provision; it cannot, in any circumstances be used 'to settle old scores.' Stemming from this principle is the aim to avoid anonymity. Although the report acknowledges the 'possibility of anonymity in certain conditions,' in order to protect this indispensable principle, the general consensus is that anonymous whistleblowing is to be avoided at all costs. This position was again reiterated by the CNIL: 'anonymous informing should not be encouraged,' (CNIL: Press release of March 9, 2007).

The Importance of Hierarchy, the Administration and the Judiciary

When contemplating the implementation of a whistleblowing programme in France, the importance of contact and dialogue with an employee's superiors should not be overlooked or underestimated. A whistleblowing provision should not, under any circumstances, replace or hinder an employee's use of traditional and hierarchical lines of reporting. As the Antonmatt'i-Vivien report outlines, these lines of reporting are either to hierarchical superiors, to the employees' representatives, to the Labour Inspector or even to the Public Prosecutor. A recent case (Union d'partmentale CGT du Rh'ne; Syndicat CGT Bayer Cropscience/Saint Pierre and the Syndicat Bayer Cropscience France, 19 September 2006) reaffirmed the importance of this traditional means of reporting. The scheme required employees to initially notify the employer of their colleagues' perceived wrongdoings at work, before having recourse to the French authorities and judicial system. This is contrary to the principles of criminal and civil procedure in France. The court therefore held that the parts of the Program, which give priority to the employer over the French authorities should be declared invalid and deleted accordingly.

Contents of the Whistleblowing Agreement

Having defined the scope of the whistleblowing procedure, the detail must also be provided. Favouring heavily defined and delineated agreements, the CNIL stated that it was 'not opposed in principle to such programmes, as long as the rights of a person who has been denounced are guaranteed with regard to computer laws and freedoms.' The report and the CNIL's press release also suggest that the following should be included in any agreement which implements a whistleblowing scheme (CNIL: Press release of March 9, 2007):

• the actions which can be reported by whistleblowing;
• the persons likely to use the provision;
• the persons whose actions may be reported;
• the means of collecting and processing the reported actions;
• the name or the position of the persons responsible for the collecting and processing of reported information;
• the means of informing the person(s) who form the object of the whistleblowing; and
• the anonymous character and/or confidentiality of the whistleblowing.

The apparently complicated nature of implementing a whistleblowing procedure is clearly an issue for American companies. The Antonmatt'i-Vivien report gave a useful indication of the proposed method for implementation.

Next month: details and implementation.

Myrtille Lapuelle and Tristan Fuller are members of the employment law team of international law firm Eversheds. Based in Paris (France), they advise both French and international clients on various employment issues including restructurings, individual & collective work relationships, mobility, compliance, audits, and other HR matters such as litigation before the labor courts. They may be reached