Sweden: New Law Strengthens Hand of Whistleblowers

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By Marcus Hoy

July 22—New legislation due to take effect Jan. 1, 2017, will prohibit any form of retaliation against employees who report serious wrongdoing and require employers to adopt internal whistleblowing procedures. While the law does not allow for noncompliant companies to be fined, it opens the door for employees to sue for damages if they believe they have been subject to illegal retaliation.

Sweden does not currently have a specific workplace whistleblowing law, Jenny Welander Wadstrom, head of employment at the Roschier legal firm, told Bloomberg BNA July 20, relying instead on a variety of legislation, including employment law, data privacy law and companies' statutory reporting obligations. She urged noncompliant companies to begin preparing for the new law.

‘Serious Breaches'

Under the new rules, affected companies must ensure that mechanisms are in place to allow employees to report serious workplace breaches internally or through a trade union without fear of retribution. Employers will be prohibited from subjecting employees to “negative repercussions” when employees report serious and legitimate workplace breaches known as “protected disclosures.” Employment contracts that contravene the law will be deemed invalid.

“Serious breaches” committed by employers that employees may report with impunity from retaliation include:

  •  violations of individuals' freedoms and rights as guaranteed by the Swedish constitution and the European Convention on Human Rights (e.g., systematic racial abuse directed towards employees or customers);
  •  noncompliance with laws and other regulations that apply to the employer's business (e.g., dumping of toxic material in violation of environmental regulations or the processing of personal data in violation of privacy law);
  •  payment and receipt of bribes;
  •  irregularities that may result in a risk to the life and health of others (e.g., in transport or food safety);
  •  serious breaches of consumer protection regulations;
  •  breaches of regulations intended to ensure working markets (e.g., provision of information to customers by banks and other financial institutions); and
  •  breaches of internal regulations and policies, depending on the circumstances.

As a general rule, employees will initially be required to report any suspected breach directly to their employer. If the report is legitimate and the employer does not take reasonable action as a result, the employee may then contact the relevant public authority. In such cases, employees will also be permitted to disclose information to the media. In certain exceptional cases, the employee will be permitted to report externally without first reporting internally.

While employers will not be subject to any sanctions for noncompliance, employees who believe they have been subjected to retaliation following a protected disclosure may claim damages from the employer. No transitional period is envisaged, meaning that employers may be liable for damages if such retaliation is found to have occurred after Jan. 1, 2017.

No Increase in Costs

While she did not anticipate any particular increase in bureaucracy or costs for employers, Welander Wadstrom said that companies should be prepared for the law's implementation.

“Employers should be considering the introduction of new internal reporting procedures,” she said. “If employers have not already introduced such measures, the new legislation makes the matter more pressing as employees will be able to hold employers liable.”

“Currently, the main protection for whistleblowers is the fact that an employer may not dismiss an employee or in many cases transfer an employee to a new position unless just cause exists,” Welander Wadstrom said. “That said, there are a number of actions that might be taken by an employer who considers an employee's actions to be disloyal and harmful.”

As with existing rules, whistleblowers could still potentially be held liable for damages if the disclosure breached confidentiality rules mandated by their contracts.

“It should be noted that the new law is not intended to regulate the information that an employee is entitled to report,” Welander Wadstrom said. “According to the legislator, this means that the employer may still be entitled to take legal action against the employee based on laws such as the Trade Secrets Act or contractual confidentiality. Whether or not legal action following a protected disclosure is considered to be a negative repercussion will be assessed on a case-by-case basis.”

‘Limited' Additional Protection

“In our view, the additional protection for employees is limited in relation to what already applies,” Welander Wadstrom said. “Employees are already protected from dismissal in these situations, and employees may still be held liable for any breach of contract. That said, it is clear that a number of more informal actions that an employer could take may result in liability to pay damages.

“It could be that the employee is not put up for promotion or is not allowed to participate in training or a bonus program. A particularly sensitive group is employees on temporary employment contracts, as employers do not need to demonstrate just cause when declining to renew contracts.”

“Employers would be well-advised to ensure that internal reporting procedures for reporting serious irregularities are in place and that employees are informed of their existence,” Welander Wadstrom said. “Specific procedures should be in place in order to ensure that reports are dealt with in a professional and correct manner. It should be noted that the Swedish Data Protection Authority has issued a regulation regarding how personal data handled in whistleblowing systems should be processed.”

“Employees should always start by informing their employer of any irregularities before sounding the alarm externally,” Ingrid Benzinger, an associate at the Bird & Bird legal firm, told Bloomberg BNA July 20. “If the employer then takes the necessary action, the employee has no right to report externally and will not be protected if he or she does so. Having a system in place for picking up such internal alerts will not only help avoid situations where the issue is made public, but can also help bring irregularities to the employer's attention.”

To contact the reporter on this story: Marcus Hoy in Copenhagen at correspondents@bna.com

To contact the editor responsible for this story: Rick Vollmar at rvollmar@bna.com

For More Information

The law is available in Swedish here.

For more information on Swedish HR law and regulation, see the Sweden primer.

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