Ukraine modernises legislation on whistle blowers

On 17 October 2019, the Parliament of Ukraine adopted the Law No. 1010 (the “Law”), which significantly expands the rules and requirements for receiving, processing and taking action on information from whistleblowers working with Ukrainian entities and for providing whistleblowers with incentives and protection.

The Law is yet to be signed by the President of Ukraine. If signed and promulgated, it will enter into effect on 1 January 2020.

The adoption of the Law brings Ukraine’s legislation on whistleblowers closer to the standards on whistleblower protection enshrined in the recently adopted Directive of the European Parliament and Council On the Protection of Persons Who Report Breaches of Union Law, which is expected to come into force soon.

The Law obliges public law entities, state and municipal enterprises, companies with more than 50% state or municipal shareholding and companies taking part in high-value (more than ca. EUR 723,327) public procurement tenders to create and maintain confidential reporting lines, which would allow whistleblowers to report corrupt activities. The Law allows whistleblowers to remain anonymous when reporting corruption.

Processing whistleblower reports

The Law obliges the management of an entity, when receiving a whistleblower report, to conduct an initial check of the facts alleged in the report. Upon completion of these checks, the management can react to a whistleblower’s report in one of the following ways: (i) initiate an internal investigation of the whistelblower’s allegation; (ii) notify law enforcement authorities if the allegation might qualify as a crime; or (iii) dismiss the report as meritless.

Management must then inform the whistleblower of its decision (which, in practice will be possible if the report is not anonymous).

Protection of whistleblowers and their relatives

Employers are prohibited from imposing disciplinary sanctions, dismissing, forcing the whistleblower or his/her relatives to resign or threatening the whistleblower or relative with any of these measures. The Law also prohibits employers from rejecting a whistleblower or a relative from consideration for a job because they reported corruption.

The employers are also prohibited by the Law from applying seemingly lawful sanctions against the whistleblowers or their relatives if such sanctions selectively target the whistleblower or relative (e.g., in practice are not applied to other employees for the same disciplinary offences or were never applied to the whistleblower before for the same disciplinary offences).

Whistleblowers and their relatives who are unlawfully dismissed from their jobs or demoted because they reported corruption can seek in court reinstatement or compensation (based on the amount of the non-received wages).

Whistleblower’s reward

According to the Law, a whistleblower who reports a crime of large-scale corruption (i.e. bribes or damages to the state exceeding UAH 10,035,000) and assists law enforcement bodies in its investigation can obtain a reward of up to UAH 12,519,000 if the court renders a guilty verdict in the case.

Takeaways

The Law is a significant step forward in the protection of whistleblowers and gives strong incentives for reporting corruption. Although the Law's effectiveness will only be known after its application, businesses should already contemplate bringing their internal whistleblower policies in line with the new requirements.

If you have further questions on this law-now or would like more information on how it could impact your business, call or email your regular CMS contact or the following CMS local experts: Olexander Martinenko, Olga Shenk and Vladyslav Kurylko.

Legislation: Draft Law of Ukraine On Making Amendments Regarding Whistleblowers to the Law of Ukraine On Prevention of Corruption No. 1010 (version dated 16 October 2019).