In this ESG Matters, we highlight two legal developments in the area of social business operations which are relevant for many Dutch companies. Our spotlight keeps you up to date you with the latest key developments in ESG governance, disclosure and litigation.

Companies are looking for guidance on how to achieve a safer working culture. The legislative proposal for the mandatory appointment of a confidential advisor regarding transgressive behaviour, currently debated in the Dutch Senate, provides such guidance. As does the Whistleblower Protection Act, which entered into force on 18 February 2023. The importance of these topics is reflected in the Corporate Sustainability Reporting Directive (CSRD), which will require in-scope organisations to report on their policies against violence and harassment in the workplace and their protection of whistleblowers.

Mandatory appointment of a trusted advisor
The Dutch legislator considers the appointment of a trusted advisor an effective measure against violence and harassment in the workplace. Therefore, the proposed legislation on the trusted advisor legally requires such an appointment. The role of the trusted advisor includes: (i) supporting employees; (ii) identifying bottlenecks in existing policies; and (iii) providing information and advice in the event of (alleged) transgressive behaviour. 

The trusted advisor can either be an internal or external person. The default option seems to be an internal advisor. However, we see several advantages to appointing an external trusted advisor. Firstly, this ensures a certain distance from the organisation. This may lower the threshold for employees to come forward, as they may perceive the advisor as more independent. In addition, an external trusted advisor will often have more knowledge and cross-organisational experience. An often-heard argument in favour of an internal trusted advisor is that such a person is familiar with the company’s culture. However, this can also carry the risk that the trusted advisor may not be entirely objective and may take some reports less seriously, for example if the reported behaviour is part of the company culture. In practice, we often see companies having both an internal and an external trusted advisor, which we recommend.

If an internal trusted advisor has been or will be appointed, they cannot be disadvantaged in relation to their position in the organisation. In particular, the proposal contains a prohibition on retaliation, such as dismissal or demotion. Compared to the Whistleblower Protection Act, the protection under the proposal on the mandatory appointment of trusted advisors is limited to the trusted advisor, and does not include the person making a report.

Whistleblower Protection Act
The Dutch Whistleblower Protection Act requires more types of employers to establish an internal reporting procedure for suspected wrongdoings. This obligation applies to each employer who generally has at least 50 employees. In addition, all employers covered by the Dutch Prevention of Money Laundering and Terrorist Financing Act (Wwft) and all organisations active in the fields of (i) financial services, products and markets; (ii) civil aviation; (iii) maritime labour and port state control; and (iv) offshore oil and gas activities, regardless of the number of employees, are required to establish a whistleblower policy. In addition, each individual group company with at least 50 employees is required to establish its own internal reporting channel. The Act also provides greater protection for whistleblowers. It does not require a trusted advisor.

The Act also aims to create a safer working environment. The Act allows individuals to report suspected wrongdoing as soon as there is a suspicion of wrongdoing. As such, a reporting channel can be used as an early warning system. However, it is important to note that the Act requires that the misconduct be of public interest. For this reason, reports due to transgressive behaviour are often deemed not to qualify as a ‘wrongdoing’ under the Act. With this approach, a company risks treating a report on transgressive behaviour as an individual matter when it may actually be indicative of a larger problem, such as an unsafe working environment. Furthermore, whistleblowers who report such behaviour are not protected against retaliation under the Act.

Improving the workplace safety culture
In light of social injustices in the workplace, the legislator is providing guidance for creating a safer working environment. The hard and fast rules of the proposed legislation and the Act should increase the safety of the working environment, which in turn should increase the willingness to report. The CSRD’s reporting requirements on these topics can also raise internal and external awareness. Moreover, organisations are increasingly recognising that creating a safer working environment can have a positive impact on the business, including employee productivity. For further reading, some critical remarks and practical recommendations, we refer to the recent article by Maartje Govaert and Inger van Dijkman in Tijdschrift Ondernemingsrecht (in Dutch).

What this means for you:

  • The applicability of clear policies on social safety and undesirable behaviour is essential. Therefore, ensure that policies on the position of the trusted advisor, whistleblower protection and on reporting to the trusted advisor and under the whistleblower policy are in place and comply with statutory requirements. 
  • Communicate the content of these policies appropriately and regularly to the workforce and other stakeholders, e.g. by setting up training courses or discussion groups in order to create (more) awareness regarding a safe working environment.
  • Consider anticipating on the legislative proposal, e.g. by determining whether the appointment of an internal or external trusted advisor is appropriate.

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