[Issues of the revision of the Whistleblower Protection Act – Based on the interim discussion points of the Consumer Affairs Agency Study Group – Part 1]- Nozomi Sogo Law Office

2 Thorough system development and improvement of effectiveness in business operators

One of the major points of discussion is “thoroughly establishing systems at business operators and improving their effectiveness.” The sub-sections of this issue are: “(1) Responses to businesses that violate the obligation to designate workers,” “(2) Measures to improve the effectiveness of system development,” and “(3) Businesses subject to the obligation to develop systems.” There are three ways to expand the range of employees.

(1) Dealing with businesses that violate the obligation to designate workers

The Whistleblower Protection Act imposes an obligation on business operators (with an obligation to make efforts for businesses with 300 or fewer employees) to designate employees. In addition to the powers under the current law to collect reports, provide guidance/advice, make recommendations, and make public announcements in the event of non-compliance, shouldn’t the right to give orders and the right to on-site inspection be provided, and if corrections are not made, criminal penalties should be imposed? The argument is shown.
Regarding this issue, although the obligation to designate workers is clearly stated in the law as an important element that plays a central role in establishing a business system, the Consumer Affairs Agency conducts a fact-finding survey of private businesses.[1]Among unlisted businesses subject to obligations, 11% of respondents said they were aware of their obligations but did not fulfill them, and criminal penalties are imposed for violations of confidentiality by individual workers. On the other hand, there are many opinions that support strengthening the authority to take administrative measures, based on the awareness that there is an imbalance in the lack of penalties for violations of the obligation of business operators to designate workers.
Additionally, the following opinions are added regarding the issue:

• As a side effect of the penalty provisions, violations of the obligation to designate workers will become subject to reporting under the Whistleblower Protection Act, which can be expected to improve the effectiveness of law enforcement.
• By establishing penalty provisions for business operators, it is possible to not only prevent scandals and disadvantageous treatment, but also support the voluntary efforts of business operators.
• Ideas are needed to support the voluntary efforts of businesses that are making efforts to improve their self-cleaning capabilities, or to support the establishment of systems for businesses that do not have sufficient self-cleaning capabilities.

(2) Measures to improve the effectiveness of system development

Education and dissemination of the Whistleblower Protection Act and the system for workers, executives, and retirees of businesses is still stipulated in the legal guidelines as part of the system maintenance obligation.
However, the Consumer Affairs Agency’s fact-finding survey of private businesses and surveys of workers[2]In addition to the fact that the whistle-blowing system and system were not thoroughly disseminated in the above-mentioned cases, a recently published report by a third-party committee on corporate scandals revealed that there was a lack of thorough dissemination by business operators. We observed situations that were contributing to the failure of the whistle-blowing system.[3]。
In light of this situation, this mid-term summary of issues requires businesses to provide their employees with “protection requirements depending on the recipient of the report,” “prohibition of disadvantageous treatment due to reporting in the public interest,” and “obligations of businesses to develop systems.” , it is argued that it is necessary to make it a legal obligation to disseminate the outline of laws such as “obligation of confidentiality for workers,” and to ensure that it is enforced.
This issue will be discussed as a further issue regarding the specific content of the obligation to disseminate information at the 5th review meeting (held on October 2, 2024) after the publication of the interim summary of issues.

• “Scope of matters that should be made known”: Facts that are accepted as public interest reports within the business, contact details and methods of whistleblowing, confidentiality obligations of employees, scope of designated employees, measures to prevent disadvantageous treatment and search for whistleblowers. etc. to be made known.
• “Dissemination method”: Specific methods of dissemination such as posting posters, issuing documents, sending emails, posting on website, etc.
• “Notification recipients”: In addition to current workers, dispatched workers, and executives, will there be an obligation to notify retirees, business partner workers, freelancers, freelancers at business partners, etc.?
• “Support by the Consumer Affairs Agency when a notification obligation is introduced”: Creation of a template by the Consumer Affairs Agency, etc.

have been raised and are under discussion.
Regarding this issue, following the EU Directive, establishing follow-up procedures for whistle-blowing, demonstrating to whistle-blowers that appropriate responses are being taken, and ensuring psychological safety will improve effectiveness. Opinions have also been expressed that it is important from the perspective of

(3) Expanding the scope of businesses subject to system development obligations


In a survey conducted by the Consumer Affairs Agency, nearly half of businesses with 300 or fewer employees that have not introduced a whistle-blowing system answered that the reason for doing so is “it’s just an obligation to make efforts.” In light of this, it has been argued that the scope of businesses subject to the obligation to maintain a system should be expanded to businesses that regularly employ 300 or fewer workers.
Specifically, in line with the Act on Promotion of Measures to Support the Development of the Next Generation, which requires employers with 101 or more full-time employees to formulate a “General Employer Action Plan,” we will expand the scope of the system development obligation to: It has been proposed that the system be extended to businesses that regularly employ more than 100 workers.
Regarding this point,

• It is difficult for small and medium-sized businesses to accumulate know-how for responding to public interest reports.
• Especially in the case of small businesses, the identity of the whistleblower may be revealed even if confidentiality is complied with, making it impractical to establish an effective system.
• There are few private services that support the introduction of whistleblowing hotlines, making it difficult for small and medium-sized businesses to respond.

Such opinions are expressed.
In addition, in view of the burden placed on small and medium-sized businesses to set up whistle-blowing hotlines, some have suggested that, for example, bar associations and other organizations should consider establishing a hotline platform.

above

[1] 1st review meeting material 4-2

[2] 1st review material 4-1

[3] 1st review material 4-4