COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Directive of the European Parliament and of the Council on the protection of persons reporting on breaches of Union law
Date: 2018-04-23
Institutions: Directorate-General for Justice and Consumers, European Commission
Subjects: disclosure of information, infringement of EU law, right to information, whistleblowing

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.4.2018  SWD(2018) 117 final  COMMISSION STAFF WORKING DOCUMENT  EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT  Accompanying the document Proposal for a Directive of the European Parliament and of the Council on the protection of persons reporting on breaches of Union law   {COM(2018) 218 final} - {SWD(2018) 116 final}  
 
 
Executive Summary Sheet 

Impact  assessment  on  a  proposal  for  a  Directive  of  the  European  Parliament  and  of  the  Council  establishing 
common minimum standards for the protection of persons reporting on breaches in specific areas of EU law  

A. Need for action 

Why? What is the problem being addressed?  
The lack of effective whistleblower protection within the EU impairs the effective enforcement of EU law. While 
EU  and  national  monitoring  mechanisms  and  enforcement  bodies  are  being  reinforced  through  specific  EU 
action  (i.e.  creation  of  EU  agencies,  support  of  national  judicial  systems,  etc.),  the  effective  detection, 
investigation and prosecution of breaches of EU law remains a challenge. In certain areas, breaches of EU law 
that  can  harm  the  public  interest  are  difficult  to  unmask  since  evidence  is  difficult  to  collect.  Reports  by 
whistleblowers with insider access to such evidence can be crucial in those cases. Consequently, ensuring that 
whistleblowers feel safe to report breaches can feed enforcement action and enhance its effectiveness. In recent 
years, the EU legislator has acknowledged the need for whistleblower protection as a part of the enforcement of 
EU law and has introduced some elements of protection and reporting channels in a few sector-specific Union 
acts. However, protection is still very limited and sectorial and does not cover all the key areas where insufficient 
whistleblower protection leads to under-reporting of breaches of EU law that may result in serious harm to the 
public interest. Similarly, most Member States offer protection only in a piecemeal way and the level of protection 
varies.  The  lack  of  sufficient  and  consistent  protection  at  EU  and  national  level  results  in  underreporting  by 
whistleblowers  which  in  turn  translates  into  ‘missed  opportunities’  in  detecting  and  preventing  breaches  of  EU 
law and weakens the effectiveness of its enforcement.  

What is this initiative expected to achieve?  
The general objective is to address underreporting of breaches of EU law leading to serious harm to the public 
interest in areas where strong whistleblower protection can significantly contribute to expose, prevent and deter 
such harm. 
The  specific  objectives  are  to:  (i)  Strengthen  the  protection  of  whistleblowers  and  avoid  retaliation  against 
them;  (ii)  provide  legal  clarity  and  certainty;  and  (iii) support  awareness-raising  and  fight  against  socio-cultural 
factors leading to underreporting. 

What is the added value of action at EU level (subsidiarity) 
EU action to introduce whistleblower protection is needed in those areas where i) there is a need to strengthen  
enforcement, ii) underreporting by whistleblowers is a key factor affecting enforcement, and iii) breaches of EU 
law may cause serious harm to the public interest. Based on these criteria, whistleblower protection is needed to 
reinforce  the  enforcement  of  rules  on:  (i)  public  procurement;  (ii)  financial  services,  prevention  of  money 
laundering  and  terrorist  financing;  (iii)  product  safety;  (iv)  transport  safety;  (v)  environmental  protection;  (vi) 
nuclear safety; (vii) food and feed safety, animal health and welfare; (viii) public health; (ix) consumer protection; 
(x)  protection of privacy and personal data and security of network and  information systems. It also applies  to 
breaches relating to Union competition rules, breaches harming the EU’s financial interests and, in view of their 
negative  impact  on  the  proper  functioning  of  the  internal  market,  and  to  corporate  tax  avoidance.  Providing 
insufficient  protection  for  whistleblowers  in  a  given  Member  State  can  have  negative  impacts  not  only  on  the 
functioning of EU policies in that Member State, but also spill-over impacts in other Member States and the EU 
as a whole. Unequal protection of whistleblowers across the EU undermines the level playing field needed for 
the single market to properly function and for business to operate in a healthy competitive environment. Notably 
corruption and fraud in public procurement that remain undetected increases costs for doing business, distorts 
competition  and  lowers  attractiveness  for  investment.  Undetected  aggressive  tax  planning  schemes  by 
companies that manage to avoid paying their fair share of taxes distort the level playing field between and result 
in loss of tax revenue for individual Member States and for the EU as a whole (ex. “Luxleaks”). Further spill-over 
impacts  are  cross-border  risks  resulting  from  acts  that  distort  competition,  unsafe  products,  food  and  feed 
products,  placed  on  the  single  market,  pollution  of  the  environment  or  risks  for  nuclear  safety,  public  health, 
animal health and welfare, consumer protection, protection of privacy and personal data, security of network and 
information systems and transport safety in one Member State that spill-over to other Member States, and gaps 
in the protection of whistleblowers in cross-border situations, who risk ‘falling through the cracks’. Only EU action 
can  address  the  imbalance  in  the  level  of  protection,  ensuring  a  consistent  high  level  of  protection  across  the 
EU, by providing minimum standards of harmonisation. Moreover, only EU action can align the existing rules on 
whistleblower protection in sector-specific Union acts.  

1 

 
 
 
 
B. Solutions 
What  legislative  and  non-legislative  policy  options  have  been  considered?  Is  there  a  preferred 
choice or not? Why?  

  Option 1: Maintaining the status quo. 
  Option  2:  A  Commission  Recommendation  providing  guidance  to  Member  States  on  key  elements  of 

whistleblower protection complemented by flanking measures to support national authorities. 

  Option 3: A Directive introducing whistleblower protection in the area of the financial interests of the Union, 
complemented by a Communication setting a policy framework at EU level, including flanking measures to 
support national authorities; 

  Option 4: A Directive introducing whistleblower protection in certain areas of EU law. 
  Option  4  sub-option  1:  A  Directive  under  policy  option  4  complemented  by  a  Communication  setting  a 
policy  framework  at  EU  level,  including  flanking  measures  to  support  national  authorities.  This  is  the 
preferred option is option. 
Who supports which option?  
Only a few of the stakeholders consulted (national authorities) consider that a non-regulatory option would fully 
address  the  problem  definition  and  its  drivers.  Among  business  associations,  half  of  the  respondents  to  the 
Commission’s public consultation support EU binding minimum standards while the remaining would be satisfied 
with  national  standards  or  the  status  quo.  The  overwhelming  majority  of  respondents  as  well  as  civil  society, 
trade  unions  and  the  European  Parliament  (Resolution  of  October  2017)  consider  that  a  broad  EU  legislative 
framework on whistleblower protection would be the preferred option.  

C. Impacts of the preferred option 

What are the benefits of the preferred option (if any, otherwise main ones)?  
The preferred option will bring economic, societal and environmental benefits. It will help to unmask and deter 
fraud and corruption on the EU budget (current risk in loss of revenue is estimated to be between €179 and €256 
billion). In the area of public procurement, the benefit of effective whistleblower protection in the EU is estimated 
to be between € 5.8 and € 9.6 bn each year. The preferred option will also help the fight against tax avoidance. 
Profit-shifting accounts for a loss in tax revenues for Member States and the EU is estimated at about €50-70 bn. 
Also  broad  social  impacts  are  expected  to  positively  affect  people  and  businesses.  Introducing  strong 
whistleblower protection will improve the working conditions of 40 % of the EU workforce which would otherwise 
be unprotected (around 60 million workers). It will enhance the integrity and transparency of the private and the 
public sector, and contribute to fair competition in the single market. Although the benefits cannot be quantified, 
evidence shows that whistleblowers would enable preventing negligence and malpractice with severe impacts, 
i.a., on environmental protection, product, food and transport safety, consumer protection and public health. 

What are the costs of the preferred option (if any, otherwise main ones)?  
The implementation costs (i.e. compliance with the obligation to establish internal reporting channels and related 
costs) are summarised as follows: 

  For the public sector total cost amounts to 204.9 million as one-off cost and annual € 319.9 million costs.  
  For 

(medium-sized  and 

the  private  sector 

the  projected 

total  cost 

large  companies) 
(€ 542.9 million as a one-off cost and €1 016.7 million of annual costs).  
  The total costs for both the public and private sector are € 1 312.4 million.  

is  €  

How will businesses, SMEs and micro-enterprises be affected?  
The preferred option will only cover the mid-sized and large businesses and will not have significant costs – i.e. 
approx. implementation cost (one-off) amounting estimated at EUR 1,374 and average annual operational cost 
estimated at EUR 1,054.6 (this includes the costs for annual training to employees, which may not be needed). 
The  preferred  option  will  exempt  small  and  micro  businesses  from  the  obligation  to  set  up  internal  reporting 
channels  (except  for  those  in  the  area  of  financial  services  or  vulnerable  to  money  laundering  or  terrorist 
financing, and in case Member States so require following a risk assessment based on the nature of activities of 
the entities and ensuing level of risks ).  
Will there be significant impacts on national budgets and administrations?  
The expected cost increase for the expenditure on implementing the legal requirements for the preferred option 
would amount to € 34 million (around € 15 million higher than in the baseline scenario). 

2 

 
 
 
 
 
Will there be other significant impacts?  
The  option  will  promote  fundamental  rights,  in  particular  freedom  of  expression  and  fair  working  conditions, 
increase reporting requirements and deter fundamental rights breaches in the implementation of EU law.   

When will the policy be reviewed?  
The  Commission  will  submit  to  the  European  Parliament  and  the  Council  an  implementation  report  and 
evaluation report, respectively, two and six years (at the latest) after the deadline for transposition expires. 

D. Follow up 

3