What is Whistleblowing? Facts & Concerns Every Company Should Know

Yulia Landbo

Yulia Landbo

Last updated: Nov 24, 2023 6 min read

With increased advocacy for safe whistleblowing and conversation about the importance of building a transparent working environment, whistleblowing has been steadily growing in relevance.

Today we see interest among many companies in implementing a whistleblowing channel to be compliant, but also to create an open culture in their companies. Companies would prefer to have employees expose wrongdoings within organizations rather than find out about these violations themselves much later and suffer the consequences.

However, what exactly is whistleblowing, and how can one report wrongdoings?

Throughout this article, we will discuss whistleblowing as a concept, the types of whistleblowers, the benefits of whistleblowing for companies, challenges for employers, and measures to mitigate them.

By delving into the topic, we aim to shed light on the significance of whistleblowing for transparency and accountability, as well as highlight measures created to foster the culture and ensure whistleblowers' protection.

What is Whistleblowing?

Whistleblowing refers to the act of an individual or a group of individuals exposing information about illegal or unethical activities within an organization or a government agency. These activities could include fraud, corruption, safety violations, discrimination, harassment, or any other form of wrongdoing that could harm the public interest.

Whistleblowing can have significant benefits for society, as it can expose and prevent wrongdoing, hold companies accountable, and promote transparency and accountability.

Who is a Whistleblower?

Who are whistleblowers, and what is their role in the whistleblowing process?

Whistleblowers are insiders who have learned about wrongdoings or severe violations in the organization's operations. Once people decide to report the observed violations, they are considered to be whistleblowers, the ones who blew a whistle. 

Though it is mainly employees that are often perceived to act as whistleblowers, in reality, anyone who owns information about violations can be a whistleblower: employees, former employees, contractors, job applicants, or others with knowledge of wrongdoing.

Typical cases of whistleblower reports

The list of violations that fall under whistleblowing cases is rather extensive. The most common cases are fraud, corruption, safety violations, discrimination, harassment, or any other form of wrongdoing that could harm the public interest.

Misconduct from any area is a subject for whistleblowing protection, without any exceptions. Thus, for example, all the following areas are covered by whistleblowing protection:

It is expected, and all Whistleblowing legislations, the EU Whistleblowing Directive among the first, insist that companies from these spheres implement whistleblowing systems to facilitate transparency and accountability in their companies. 

Different types of whistleblowing: how whistleblowers can report?

There are several reporting channels employees or third parties can use when reporting violations. 

Internal reporting channel

Companies provide internal channels to enable employees and partners to submit information to trusted compliance managers within the company. This way, the information stays within companies and allows them to take action before the issue becomes public. Companies should encourage employees to use internal channels over external or public for their own interest. 

Internal reporting can often be done via a digital whistleblowing system, phone line, email line, in-direct meeting, or a whistleblowing service via an ombudsperson or hired by the company lawyer.

External reporting channel

External reporting is a case of reporting violations outside the organization to law enforcement or government agencies established by the country's authority.

External reporting can be similarly submitted via a digital platform, phone line, email line, in-direct meeting, or lawyer, depending on what the authorities provide. External channels are recommended to use when internal whistleblowing proves to be ineffective. In practice, people also use external reporting in the absence of internal channels. 

Public reporting channel

Public reporting is a process of reporting wrongdoings through media, or other public channels, for example, social media. Public whistleblowing is generally considered a last resort and is mainly used when internal and external reporting channels have been utilized, but haven’t given a result.

Benefits of implementing a whistleblowing channel

1. Early detection of problems

Companies need to listen to their employees' observations to identify problems in advance and prevent them from growing into bigger issues. The best way to collect feedback is to have a whistleblowing policy in place and actively encourage employees to share their observations. 

2. Improved company compliance

With a whistleblowing policy in place and a safe procedure for employees to report violations at the workplace, companies strengthen their statuses of being fully compliant and adherent to all relevant laws.

3. Reduced legal and financial risks

By encouraging employees to report wrongdoings, companies ensure that they have more control over all actions within the company and can react fast to prevent significant problems. Solving issues fast reduces risks of financial loss, penalties, and heavier lawsuits.

4. Increased transparency & improved culture

Whistleblowing channels can help companies to create a culture of integrity and ethics by encouraging employees to report concerns without fear of retaliation. 

When companies encourage employees to bring up wrongdoings to light, they demonstrate their commitment to ethics in business. This attitude, in turn, inevitably fosters employees' trust and increases transparency. In the long run, employees feel more confident to discuss things that do not contribute to the environment and come up with suggestions for improvements. 

What are companies’ main concerns in implementing a whistleblowing hotline?

For many, whistleblowing is still a new practice. As with everything new, companies can have various concerns when implementing a whistleblowing hotline, especially if they need to implement it in the short term. Here are some of the most common concerns:

Fear of false reports

Companies may worry that the whistleblowing hotline can be misused to make false or irrelevant reports, which could lead to unwarranted investigations and a waste of time. Employers often fear that instead of taking the whistleblowing line seriously, some employees can use it for gossip and backbiting or getting back to colleagues for personal reasons. 

Is there a cause for concern?

As a starting point, the EU Whistleblowing Directive, or national whistleblowing protection acts, elaborates on what is a whistleblowing case, what is not, and what falls under whistleblowing protection.

For example, the EU Directive clearly states:

Reporting persons shall qualify for protection under this Directive provided that:

(a) they had reasonable grounds to believe that the information on breaches reported was true at the time of reporting and that such information fell within the scope of this Directive.

Another example is the Spanish Whistleblowing Protection mentions that whistleblowing protection does not cover people reporting interpersonal conflicts (Artículo 35., TÍTULO VII).

Therefore, personal grievances will not be processed in the same way as legit whistleblowing reports. But to avoid the situation where employees misuse a whistleblowing channel, companies need to provide clear guidelines on what a whistleblowing hotline is. They should give proper training to their staff and share good practices. These measures ensure that the whistleblowing line will be used as intended.

Risk of breach of confidentiality

Companies may worry that information reported through the hotline could be leaked or disclosed to the public, leading to reputational or financial damage.

Is there a cause for concern?

Definitely not. The implementation of the whistleblowing line aims to prevent leaks of information to the public eye. Having a secure whistleblowing system ensures that all data stays within the company and that only trusted people can access it.

On the contrary, the absence of an internal whistleblowing line can lead to things being disclosed to governmental authorities or the public. Having internal reporting allows not only to prevent a public scandal but actually detect and solve violations. 

Cost of implementation and maintenance

Companies may worry about the cost of implementing and maintaining a hotline, including setting up the system, hiring staff to monitor and respond to reports, and training employees on how to use the system.

Is there a cause for concern?

If the company didn’t have any whistleblowing system before, implementing a whistleblowing line from scratch would require some time and resources. However, in most cases, it is not that complex and doesn’t cost that much. However, everything, of course, depends on the company’s needs, size, and the solution they choose.

For example, the pricing can depend on the number of employees, giving you a complete picture of how much it can cost. Check the pricing here.

Regarding additional hires, it is often not the case. Going through the whistleblowing reports is not a full-time job, and the tasks are usually distributed among qualified employees from legal or HR departments. Also, from our experience working in the industry, we observed an average of one report for every 250 employees per year.

However, bigger companies might prefer to have a dedicated person/team or hire an external lawyer* if they forecast the need for more complex structures.

*We recommend you contact your trusted advisor. Alternatively, Whistleblower Software can connect you with a local legal expert in whistleblowing. 

Whistleblowers' main concern: to report or not?

Before making up their mind about reporting a violation, every informer scrupulously evaluates all pros and cons connected with the whistleblowing report. Most often, whistleblowers' concerns fall into three categories: fear of retaliation, confidentiality concerns, and conviction in reporting tool effectiveness. Let’s have a closer look at each of them.

Fear of retaliation

One of the most vital concerns whistleblowers may fear is that they will face retaliation from the stakeholders directly or indirectly involved in the wrongdoings. Retaliation could take the form of contract termination, demotion, refusal of promotion, negative performance review, harassment, or other psychological punishment for speaking out.

Concerns about confidentiality

Informers may be concerned that their identity will be revealed or that their information will not be kept confidential, which could result in retaliation.

It's essential to create a secure environment where their identity is protected, their reports are taken seriously, and they risk no retribution or threat of harm - only then will credible information come forward.

Concerns about the effectiveness of reporting

Not only fear of retaliation can keep informers from reporting wrongdoings. Many informers can have doubts that voicing their concerns will bring the necessary change or be taken seriously. Unless people are confident that the reporting channels are efficient, they wouldn’t risk bringing up violations to lights. They can start seeing it as a waste of time if case handlers don't provide proper feedback and informers don’t know anything about the final state of the case.

Organizations need to ensure these reports are heard and responded to foster an environment of trust, transparency, and accountability.

What do whistleblowers' concerns mean for companies?

If employees and third parties doubt the effectiveness of the reporting channel, companies risk missing crucial information and remaining in the dark, while wrongdoings escalate to a more critical degree. Implementing a whistleblowing channel just for the record is not enough. That's why it is in the best interest of the company to clearly communicate:

Legal Protection for Whistleblowers: EU Whistleblowing Directive

All concerns regarding whistleblower protection from retaliation boil down to the legal aspect of whistleblowing. To address this issue, in 2019, the European Union (EU) adopted the Whistleblowing Directive 2019/1937, which aims to provide legal protection for whistleblowers.

It lays down a minimum required level of protection for whistleblowers who report breaches of EU law in various sectors, including public procurement, financial services, product safety, public health, and environmental protection. The Directive calls for all member states to implement corresponding national legislation that will ensure immunity status for informers. 

As the top priority, the whistleblower protection mechanisms should guarantee informer confidentiality, non-retaliation, proper feedback within established timeframes, and access to justice and support.  

Check our detailed article about the EU Whistleblowing Directive.

Next 6 Steps that EU companies should take

Many companies in the EU  (Some companies in Spain/ Germany) have already gone through the whistleblowing channel implementation to help to prevent fraud and create a safe work environment. Still, many are only about to do it. Here are a few key things essential to do:

Need a secure, compliant reporting platform for your business? We have you covered. Dive in and take a tour of the whistleblowing reporting page to see how easy it is to use!


This article was developed for information purposes only. For legal advice, contact your trusted advisor. Alternatively, Whistleblower Software can connect you with a local legal expert.

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