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07 September 2011
Dismissal on grounds of whistleblowing
Federal Employment Court case law
European Court of Human Rights decision
What is the situation now?
On July 21 2011 the European Court of Human Rights ruled that German case law relating to whistleblowing violated the right to freedom of expression. The decision is likely to lead to calls for the introduction of new legislation to protect whistleblowers from dismissal.
Whistleblowing is the act of reporting unethical or unlawful conduct on the part of a company which has come to the attention of an employee. If an employee reports the employer to the public prosecutor's office or competition authorities, the employer generally regards this as a serious breach of trust and frequently reacts by summary dismissal. Unlike in the United States, where whistleblowers are protected by the 2002 Sarbanes-Oxley Act, in Germany no specific legislation exists that protects whistleblowers from dismissal.
Given the severe damage that a whistleblower can do to his or her employer, existing Federal Employment Court case law does not in all cases prevent whistleblowers who bring a criminal complaint against their employer or who expose internal shortcomings from dismissal. Criminal complaints can lead to hefty fines against the company and criminal penalties against the employees concerned. Such complaints can also cause lasting damage to the company's business reputation. In such circumstances a whistleblower may then be exposed to the reproach that, rather than bringing a criminal charge, he or she should have used internal channels to bring the matter to the attention of company management. The company could then have taken steps to redress any misconduct and to collaborate proactively with the authorities, thereby mitigating the damage to the company.
In Germany, bringing a criminal complaint against one's own employer is frequently regarded as denunciation and, hence, a serious breach of trust. This highlights differences between the legal culture in Germany and that in countries such as the United States, where whistleblowers tend to be respected for their courage. However, it is also acknowledged in Germany that certain circumstances do justify whistleblowing, in which case it must be regarded as civil courage. This is the case, for example, if a complaint is ignored by the whistleblower's superiors and the reported grievances pose a potential risk to life and limb. In such cases whistleblowers should be protected by law.
The German employment courts decide whether the dismissal of a whistleblower is valid by weighing up the basic rights of the employee and the employer on the individual merits of the case. Under established case law, whistleblowing constitutes grounds for dismissal if – considering the merits of the individual case – the right of the employer to work only with those employees whom it regards as loyal (which, under the basic law, is protected by the right to occupational freedom) takes precedence over the employee's right to bring a criminal complaint, this right being protected by the principle of the rule of law and the right to freedom of expression. In the view of the Federal Employment Court, dismissal is not usually an option if there is a statutory right or even a statutory duty to bring a complaint, as would be the case with serious criminal offences (eg, arson). If an employee deliberately or frivolously brings a criminal complaint against his or her employer, a court will normally rule that dismissal is admissible. Apart from these cases, German courts apply the principle of proportionality, upholding a dismissal if they consider it to be a proportional reaction to the conduct of the employee. In so doing, they consider the whistleblower's motives in bringing the complaint and whether the whistleblower contacted an appropriate person within the company before doing so. However, the German courts take the view that it may be unreasonable to expect an employee to approach a person within the company where, for example, there is a risk to life and limb, or where the company management itself is involved in the criminal activities.
European Court of Human Rights decision
On July 21 2011 the European Court of Human Rights held that Germany had violated the rights to freedom of expression (Article 10 Convention for the Protection of Human Rights and Fundamental Freedoms) when the German courts upheld the dismissal of a geriatric nurse for whistleblowing. There had been a protracted dispute between the nurse and her employer, the operator of the nursing home in which she worked, which was majority-owned by the state of Berlin. In the course of this dispute the nurse had repeatedly drawn attention to shortcomings in staffing levels and quality of care. When this did not bear fruit, she had her lawyer file a criminal complaint with the Berlin Public Prosecutor's Office against "the responsible persons". In this complaint, the nurse argued that patients and their families were given the impression that the nursing home was providing proper care while in fact, due to staff shortage, this was not the case. She alleged that the nursing staff were instructed to keep records falsely stating that certain care had been administered. Through her lawyer, the nurse stated her legal opinion that this behaviour constituted particularly serious fraud. The nurse did not base her allegations on concrete facts, and the Berlin Public Prosecutor's Office therefore did not pursue the complaint. Not long afterwards, the nurse was dismissed without notice.
The Berlin Regional Employment Court found the criminal complaint to be a sufficiently serious breach of contract and regarded the dismissal as lawful. In the opinion of the court, the nurse was not entitled to invoke the freedom of expression because she had based her criminal complaint on facts which she had not substantiated in the criminal complaint or in the proceedings against unfair dismissal. The court held that the nurse had frivolously brought a criminal complaint which did not serve to protect legitimate interests. Her purpose in bringing the complaint, the court held, was not criminal prosecution, but rather a public and politically motivated campaign against the company which ran the nursing home. In the case at hand the employer's entrepreneurial freedom took precedence over the employee's right to bring a criminal complaint.
The nurse took the matter to the European Court of Human Rights. Like the Berlin court, the European Court of Human Rights weighed up the interests of the parties concerned in the individual case. In contrast to the Berlin court, however, the European court ruled that the decision to uphold dismissal violated the nurse's right to freedom of expression, as enshrined in Article 10 of the Convention for the Protection of Human Rights and Fundamental Freedoms. The court argued that by restricting the freedom of expression in matters of major public interest, the signatory states to the convention should exercise great restraint. The court held that, in an ageing society, deficiencies in the geriatric care provided by social institutions constitute such public interest. The fact that the criminal complaint contained few verifiable facts was not the responsibility of the nurse: it had been the duty of the public prosecutor's office to conduct investigations. The court held that the whistleblower had not been motivated by a desire to denounce her employer. On the contrary, she had acted in order to protect patients from harm – that is, her motives had been altruistic. Moreover, she had repeatedly tried to bring an end to the deficiencies in the care provided through internal channels.
This European Court of Human Rights' decision has improved the position of whistleblowers under German law. In future, German courts will have to take account of the new requirements laid down by the European court in examining whether the dismissal of a whistleblower is a proportional reaction to the criminal complaint. The decision will benefit whistleblowers who seek to expose deficiencies which are of public interest. Even polemic criminal complaints which contain few specific details may, in such matters, be regarded as a form of freedom of expression and may, as such, be admissible. This could apply to complaints regarding food safety or to high-risk financial transactions which affect a large number of investors.
Nonetheless, whistleblowers still do not enjoy absolute protection from dismissal under German law. The European Court of Human Rights shares the view that the circumstances of an individual case may be such that dismissal of a whistleblower is admissible (the proportionality principle). It acknowledges that commercial interests and the employer's business reputation merit protection. The law therefore does not grant licence to employees who wish to incriminate their employers, superiors or colleagues for petty and malicious reasons. An employee whose sole motive in bringing a complaint is to exact revenge on his or her employer or colleagues is disrupting the relationship of trust between the parties to the employment contract and can still be dismissed without notice.
For further information on this topic please contact Bjoern Gaul, Bernd Roock, Oliver Simon or Antje-Kathrin Uhl at CMS Hasche Sigle by telephone (+49 711 97 64 248), fax (+49 711 97 64 96249) or email (email@example.com, firstname.lastname@example.org, email@example.com or firstname.lastname@example.org).
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