Germany’s corporate whistleblowers stuck in legal nowhere land

When Brigitte Heinisch filed a criminal complaint against her employer in late 2004, she did not just flag allegedly dire conditions at a care home for the elderly in Berlin. In the legal saga that followed, she also exposed the precarious status of whistleblowers in Europe’s biggest economy.

Heinisch, then 43, was fired within weeks. In a multiyear series of court cases, German judges upheld that decision, arguing Heinisch had violated the “duty of allegiance” that she was required to show her employer under German law.

After the country’s constitutional court declined even to look at the case, Heinisch turned to the European Court of Human Rights. In a landmark decision in 2011, the Luxembourg judges quashed the German verdicts, ruling the dismissal was a violation of Heinisch’s freedom of expression.

Yet in the decade since, little if anything has improved.

Whistleblowers in Germany still find themselves in a legal nowhere land defined by the vagaries of case law and the decisions of individual judges. “Whistleblowers are protecting the long-term success of companies and the integrity of government actions, but often put their professional life on the line,” said Fabio De Masi, a former MP turned white-collar crime specialist.

“No other democratic country offers as little protection to whistleblowers as Germany does,” said Hartmut Bäumer, head of Transparency International in Germany and a former employment judge.

Facing a treaty infringement procedure by the EU for delayed implementation of its 2019 whistleblower directive, justice minister Marco Buschmann last month presented a first draft of whistleblower protection legislation that he hopes to get through parliament later this year.

While Annegret Falter, chair of the Berlin-based lobby group Whistleblower Network, called the draft an “important step into the right direction”, it still falls short of what activists deem necessary and lags far behind US rules, which offer whistleblowers financial incentives. Non-profit organisation Transparency International called it a “fiasco”.

According to the draft, which has been seen by the Financial Times, all companies with 50 or more employees would be obliged to have an internal contact point for whistleblowers while the government would set up its own contact points for employees who want to report potential misconduct. Under the new rules, whistleblowers can decide which contact point they prefer and will in some cases be granted legal immunity if they report problems to the media.

The penalising of whistleblowers will also be formally outlawed. More importantly, the burden of proof will be reversed: employers will have to demonstrate that actions taken against a whistleblower do not constitute retaliation.

“This will become highly relevant in real life,” said Simone Kämpfer, a partner at Freshfields Bruckhaus Deringer, who is in charge of the law firm’s white-collar defence group in Germany. “Even changing the internal tasks of an employee can be seen as retaliation.”

Companies that penalise whistleblowers can expect fines of up to €1mn under the proposed new rules, she added.

The reforms — which have the support of the governing coalition but are not likely to be signed into law until later this year — mark an attempt to break with some of the country’s long-held views about work.

According to Bäumer, Germany’s approach to labour relations is informed by a paternalistic and collectivist culture where employers and employees are seen as members of the same community, with workers having a legal obligation of loyalty to their employers. In that context, reporting misconduct to external bodies can be seen as a betrayal.

The country’s dark 20th-century history has also shaped public views of whistleblowers. Nazi and later east German authorities actively encouraged citizens to report “insubordinate” behaviour. Whistleblowers who flag problems in good faith can be seen as snitches and telltales. “Better whistleblower protection really requires overcoming some German cultural traditions,” said Bäumer.

Desiree Fixler, former head of sustainability at asset manager DWS, who accused her employer of overstating its green credentials and was fired in 2021, said: “Today, the German system — the regulators, corporate boards and the courts — is set up largely to protect the status quo, the corporate elite.” She added that her employment tribunal in Frankfurt was “farcical”.

“The judge walked in and announced a verdict without hearing the case — no testimony, no witnesses, no fair trial.” Her lesson from that was that “you have to internationalise the matter, evidence-based, with the press or with other government authorities, like the US”, she said. “The German system will try and silence you otherwise”.

For now, the power lies with employers if corruption, fraud or any other kind of misconduct is reported. “Almost all whistleblowers who became known lost their job and faced a catastrophe — even if their concerns were totally merited,” said Bäumer.

While the draft whistleblower protection law should address some of the most glaring gaps, activists are far from satisfied. A major concern is that public sector employees will still face major hurdles.

As Falter pointed out, it would remain illegal to report misconduct either linked to the work of intelligence agencies or related to classified public documents. “The government is protecting itself against those whistleblowers who are most important for society,” she said.

Another serious shortcoming is that there would be no obligation to investigate anonymous whistleblower complaints, Transparency International has warned. And whistleblowers who flag misconduct that is not criminal would also not be protected.

The new law, furthermore, stops short of offering whistleblowers financial rewards, an approach that has uncovered widespread misconduct in the US. Last year, a former Deutsche Bank employee was paid almost $200mn as a reward for flagging the rigging of the Libor benchmark interest rate.

Yet campaigners in Germany are not calling for their country to follow the US in this regard. “Incentives for whistleblowers can create the risk of denunciation,” said Falter, adding that rewards for reporting individuals “are at odds with decency”. Transparency International’s Bäumer also argued against financial incentives, calling instead for a fund financed by industry to compensate whistleblowers who lose their jobs.

Heinisch — who, in a settlement with her employer, eventually received €90,000 in severance pay — told the FT she did not believe the new law would make a big difference. “The German system is just abject,” she said. “I would not advise anyone to become a whistleblower in Germany.”