Should you reward a whistleblower?

Guest post by Błażej Wągiel attorney-at-law and owner law firm IPSO Legal, Poland.
Should you reward a whistleblower? A few words on incentive systems for internal reporting.

The third edition of the Polish draft law on the protection of whistleblowers introduced an obligation to include an incentive system within the internal reporting procedure. In other words, a reward system for whistleblowers.

The incentive system should encourage the whistleblower to send his or her report via internal reporting channels. As a result, violations or misconduct will be managed within the organisation and not reported externally or disclosed to the public. An important note: Each organisation can individually decide on what form of incentives to use.

Is financial compensation the only effective encouragement?

Do you think that financial compensation to the whistleblower is the most effective way to encourage reporting of misconduct? Nothing could be more wrong! If the whistleblower has concerns regarding retaliation, for example, or that an internal entity will consider the case, then such rewards will not be attractive to him/her.

It goes without saying that establishing a working system of incentives is beneficial for the organisation. An external whistleblower report about wrongdoings (to the media or state authorities) can have serious negative consequences for both the organisation and the whistleblower themselves.

Unfortunately, the twofold attitude towards whistleblowers may result in the fact that they may face „subtle“ retaliatory actions, even when provided with appropriate legal protection. Examples of such behaviour include avoidance by colleagues, increased work control, or alienation.

So, the big question is – how should an organisation encourage internal reporting to exclude external reporting and avoid potential harm?

Before deciding what will be included as an incentive within the internal reporting procedure, it is important to consider what guidelines to follow for the system to be effective.

 Cooperation with a whistleblower pays off

First of all, it makes financial sense to report irregularities. Obviously, theft or waste in the workplace affects the costs of running a business. These costs can be reduced if employees report that something is wrong.

Secondly, a whistleblowing culture can counteract negative phenomena in the workplace. If employees know their colleagues can report their behavior, they will be less likely to take the risk of committing it. Essentially, encouraging whistleblowing can be the best way to stop unethical behavior.

Conscious staff

For a whistleblower protection system to be effective, staff must be provided with adequate training in whistleblowing. When training your staff, you should focus on the essentials:

1. What behavior is covered by the whistleblowing policy (for illustrative purposes, use specific examples to avoid misunderstandings)
   
2. How should irregularities be reported
   
3. What protection is provided for the whistleblower
   
4. What the notification procedure looks like

These elements should ensure everyone knows what to do in the event of a breach.

Counteract retaliation

If you want employees to disclose any misconduct they may witness, you must also reassure them that they will not be held liable. You can do this by fostering a culture of open communication. However, this takes time, and it is therefore a good idea to provide your staff with an anonymous reporting tool. This type of communication can make a huge difference for a whistleblower who is willing to provide further details but is concerned about retaliation.

Or maybe we just reward the whistleblower by paying them?

Of course, such a solution can be included in the internal notification procedure. However, this raises some practical questions:

• Will all reports be rewarded or only the more important ones?
  
• If only some reports are awarded, how can you distinguish one from the other?
  
• How much important information does the whistleblower need to disclose in order to receive the award?
  
• What if a disgruntled whistleblower that was not awarded, decides that next time they will not report the misconduct or worse, make a public disclosure?
  
• And finally: can the organisation afford to turn a deaf ear to minor submissions?

The decision to reward whistleblowers assures them that their actions are appreciated and may compensate for the risk of retaliation. On the other hand, such an incentive scheme may increase the number of unconfirmed submissions.

Therefore, if you decide on this measure, you should carefully define the rules for granting the reward. It is important to stipulate that a reward will be paid to the whistleblower only after an investigation verifies the report and considers it credible.

Fun fact: Qui tam

The United States has a specific solution whereby whistleblowers can obtain significant financial benefits from the information they report. The False Claims Act (FCA) allows any individual (or group of individuals) to bring a so-called „qui tam“ lawsuit on behalf of the federal government. In such cases, they accuse the perpetrator of fraud against the federal government.

The qui tam lawsuit allows the federal government to recover money lost because of the defendant organisation’s fraud, and the whistleblower is financially rewarded if the case is won (quite advantageously, within 15-30% of the amount recovered).

The name comes from the Latin proverb “qui tam pro domino rege quam pro se ipso in hac parte sequitur”, meaning „[he] who sues in this matter for the king as well as for himself.“

Do you have questions about the new whistleblower protection obligations in Poland? Contact us at office@ipsolegal.pl or get in touch with author Błażej Wągiel, attorney of law at IPSO Legal – a Whistlelink partner.

Would you like to learn more about a secure whistleblowing service and safe internal reporting channels? Please book a free demo! You can also speak directly to our Territory Manager in Poland, Urszula Garbicz-Brys.