Introduction
Conflicting priorities
Impending labour law sanctions
Criminal offences
Preventive measures


Introduction

Termination of Edward Snowden's employment without notice for severe breach of his employer's code of ethics, an arrest warrant on suspicion of espionage and dissemination of government property, plus the search for asylum with an uncertain outcome – this is the preliminary legal record of Snowden's disclosure of the US surveillance programme Prism.

The Snowden case lines up with a series of spectacular incidents of whistleblowing, including Wikileaks and Bradley Manning. Although whistleblowers in Germany rarely become as well known, the whistleblowing phenomenon is increasingly relevant in German companies.

Conflicting priorities

In Germany, employees find themselves caught between the conflicting priorities of reporting obligations and breach of secrecy. The employment relationship gives rise to the employee's obligation to report to superiors or another internal body - at least in severe cases such as suspicion of a criminal offence - thus averting damage from the employer.

Impending labour law sanctions

However, there is a fine line between breaching duties and violating the law as a result of whistleblowing. If an employee informs a third party (eg, the public prosecutor's office) about his or her suspicion without having made an attempt at internal remedy, this may constitute a breach of duty of consideration and loyalty under the employment agreement. The consequence may be termination of employment, without notice, on grounds of conduct. In Germany too, Edward Snowden may have lost his job.

Whether he would also have committed a criminal offence under German law could certainly be argued at length. But no conclusions can be drawn, as there are too many unknown facts and circumstances.

At all events, apart from labour law-related sanctions, publishing or disseminating confidential information can constitute various criminal offences.

Criminal offences

Under Section 17 of the Act Against Unfair Competition there is a risk of betrayal of business and trade secrets. This provision comprises its own constituent fact in terms of employee betrayal of secrets. Under employment contracts, employees are generally obliged to keep internal transactions and facts a secret. This applies even if employees make public criminal incidents in the company - such incidents are not a priori deprived of protection under the provision. The company may also have a competition law interest in unlawful internal transactions. It is irrelevant to whom the secrets are passed - the press, investigating authorities, external third parties or even colleagues or other third parties in the same company. From a subjective perspective, in addition to intent one of the motives mentioned in the act must also be shown to exist, including:

  • competition;
  • personal gain;
  • benefit to a third party; or
  • intention to cause damage.

However, it will often be possible to confirm the motive of personal gain – encompassing both tangible and intangible advantages – or of causing damage.

Criminal liability owing to violation of private secrets (Section 203 of the Criminal Code) comes into consideration if the whistleblower is a physician, lawyer, auditor or tax accountant, or if his or her assistant breaches the special confidentiality duty incumbent on him or her by disclosing a business or trade secret that was confided to or became otherwise known to him or her in a professional capacity. Thus, this criminal offence can also encompass the publication or reporting of violations of laws or breaches of rules.

Ultimately, before a complaint or external report, the whistleblower should review carefully whether the facts are complete, correct and reliable, because if a whistleblower makes improper and anonymous reports he or she may be guilty of making false accusations according to Section 164 of the Criminal Code. Realisation of this criminal offence requires that the allegation is wrong objectively, and thus untrue, and that the complaint or circulation of the allegations has been made against better knowledge. Under certain circumstances, this may also cover statements to colleagues.

In the event of improper whistleblowing, criminal liability for insult, defamation or libel will come into consideration, according to Sections 185 and the following of the Criminal Code.

Conversely, in the event of failure to report within the company, circumstances resulting in criminal liability for omission are conceivable.

Preventive measures

Deliberate forwarding of internal business matters cannot be prevented. To protect employees, but also to halt the publication of information harmful to the company, companies are recommended to establish an internal whistleblower system. A telephone or email hotline permitting anonymous reports has also proven itself in practice. In this way, premature publication of internal nuisances can usually be reduced considerably.

This kind of system is completed by measures to protect whistleblowers. Although the German legislature has recently rejected any existing bills for an act on the protection of whistleblowers, a general prohibition on disadvantaging employees exercising their rights in a permissible way (prohibition on disciplinary measures) (Section 612a of the Civil Code) is already applicable. Employing protection seriously increases the chances of solving internal difficulties.

For further information on this topic please contact Julia Glaser at CMS Hasche Sigle by telephone (+49 221 77 16 296), fax (+49 221 77 16 334) or email (julia.glaser@cms-hs.com).

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.