In this newsletter we examine the current state of whistleblower protection in Italy. Recent legislative developments and case law appear to be granting whistleblowers increasing protection.
STATUTORY PROTECTION:
In November 2012 a law was passed which, among other things, granted statutory protection to whistleblowers working in the public sector. From the coming into force of the law, they cannot be dismissed, disciplined or discriminated against as a consequence of reporting unlawful conduct they may have become aware of either
to the authorities or internally.
This was just an attempt to statutorily crystallise a principle which had already been stated, and confirmed, by the case law on multiple occasions.
CASE LAW
In fact, Italian Courts had for some time been quashing any attempt by employers to argue that whistleblowing constituted a breach of the general loyalty obligation towards employers imposed on employees under Section 2105 of the Italian Civil Code.
The courts designed a test (the “Whistleblower Test”) that all employee-reporting activity should pass for it to be regarded as whistleblowing:
(i) The facts reported must be true or deemed true by the employee;
(ii) The facts must be reported in an appropriate manner: insults or exaggeration are not admitted; and
(iii) The goal pursued by the employee may either be personal (e.g. the safeguard of her own job), sectorial (e.g. the protection of job levels in a certain business unit) or general (e.g. the protection of environment).
INTERNAL CODES OF CONDUCT MATTER
In some countries the modalities in which the whistle must be blown are strictly regulated. This is not the case in Italy where the notion of whistleblowing encompasses individuals who report any unlawful conduct carried out by their employer not only to the authorities or internally, but also by any other means including, for example, releasing interviews to the media.
This may cause unfair consequences for employers, who may see alleged misconduct reported by the media even before being notified by the employee and, therefore, before having had a chance to investigate and assess the allegations. In a recent judgement, the Italian Supreme Court incidentally implied that employers
may avoid being publicly exposed by whistleblowers by including ad-hoc provisions in their internal codes of conduct whereby employees are under the obligation to blow the whistle internally prior to any formal or public reporting. In this case, should the employee not meet the requirement of prior internal reporting, she may be subject to disciplinary procedure.
This interpretation is consistent with the Italian legislation on corporate compliance, which encourages companies to adopt ad-hoc internal procedures in order to be excused from criminal liability should a crime be committed by a company’s top manager (or, in certain circumstances, even by non-managers) in the interest of the company or for the company’s advantage. In fact, such internal procedures must state the obligation for all employees to report any wrongdoings to an ad-hoc established supervisory body (the ODV).
In summary, the recent ruling of the Italian Supreme Court constitutes a further incentive for companies operating in Italy to adopt, and appropriately implement, adhoc internal procedures: this will mitigate the risk of having to deal with public exposure of alleged unlawful conduct and will excuse the company from criminal liability.
DISCRIMINATORY DISMISSAL
The dismissal of an employee for blowing the whistle is regarded as discriminatory dismissal and may give rise to a Court injunction ordering the employer to re-instate the whistleblower in her job. In addition, the employee is entitled to an indemnity equal to her salary from the date of the (unlawful) termination to the date of the actual re-instatement.
CONCLUSIONS
In Italy whistleblowers enjoy strong employment protection. They should always ensure blowing the whistle in an appropriate manner and checking if there is any provision in their employer’s internal code of conduct requiring the whistle to be blown internally first.
From an employer’s perspective, it is recommended to adopt appropriate internal codes of conduct to require employees to raise any issue internally before resorting to external reporting. Employers could also go a step further and complement the adoption of the code of conduct with a full set of ad-hoc internal procedures (to be
set up according to Legislative Decree 231 of 2001). This would allow the employer not only to deal with alleged misconduct internally prior to being publicly exposed, but also to mitigate the risk of being held criminally responsible for crimes committed by the employer’s managers in the interest or for the advantage of the employer.