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New Rules on the Whistleblowing System

New Rules on the Whistleblowing System

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EU Directive 2019/1937 on the protection of persons who report infringements of EU law was adopted in 2019 and should have been transposed into national law by the Member States until 17 December 2021. The Directive obliges the Member States to set up a three-step notification system.

First step is the so-called internal notification channel, whereby the notifier reports the infringement within the legal entity. Second step is the so-called external notification channel, whereby the notifier communicates the infringement to the competent national authority.

Third step is the publication of the infringement. The transposition of the Directive had not progressed smoothly; only 8 Member States have transposed the Directive into national law by the deadline.

In view of this, on 28 February 2023 a bill was submitted to the Hungarian Parliament with the aim of establishing the Hungarian rules in line with the provisions of the Directive (bill no. T/3089.) The bill requires employers with 50 or more employees to operate an internal abuse reporting (or whistleblowing) system. Employers with 50-249 employees may jointly establish an internal abuse reporting system. As a general rule, all public sector entities must set up an internal abuse reporting system (municipalities with less than 10 000 inhabitants and municipal bodies or public bodies with less than 50 employees are exempted).

The bill lays down the guarantee rules for the functioning of the internal whistleblowing system, the main issues related to the making, receiving and handling of whistleblowing reports, including the rules for monitoring the functioning of the internal whistleblowing system. In order to ensure external control, the operation of the whistleblowing system will be subject to the supervision of the Commissioner for Fundamental Rights.

By Eszter Ila-Horvath, Attorney at Law, KCG Partners Law Firm

KCG Partners at a Glance

KCG Partners is a Hungarian business law firm providing a comprehensive range of legal services to international and local clients seeking local knowledge and global perspective. The firm comprises business-minded lawyers with sector-specific expertise, creating value for clients by applying a problem-solving approach and delivering innovative solutions.

The firm has a wealth of knowledge in corporate law, M&A, projects and construction, energy, real estate, tax, employment, litigation, privacy and forensics, securitization, estate planning and capital markets.

To address clients’ regional and international concerns, the firm maintains active working relationships with other outstanding independent law firms in Central and Eastern Europe, whilst senior counsel Mr. Blaise Pásztory brings over 40 years’ of US capital market and fund management experience.

KCG Partners Law Firm is the result of the teamwork of passionate and talented lawyers guided by the same principles and sharing the same values: 

  • Our most valuable asset is our people. They are the engine of our business and the key to our success.
  • We push boundaries by looking for innovative solutions that can empower our clients to achieve greater results.
  • We place our experience, commitment and professionalism to your service.
  • We are driven by our vision to shape and lead the Hungarian legal market and become a first choice law firm in our practice areas.

Firm's website: http://www.kcgpartners.com