Effective protection through the prohibition of reprisals and the reversal of the burden of proof under the HinSchG? – On the ruling of the Lower Saxony Regional Labor Court (LAG) of November 11, 2024

An essential component of the Whistleblower Protection Act (HinSchG) is the protection of whistleblowers against reprisals, such as dismissal or warnings. In order not to deter whistleblowers from reporting, the HinSchG also provides for a reversal of the burden of proof in this context: If a whistleblower suffers a disadvantage in connection with their professional activities and claims that this disadvantage is the result of a report or disclosure made in accordance with the HinSchG, it is presumed that this disadvantage is also a reprisal for this report or disclosure.

On November 11, 2024, the Lower Saxony Regional Labor Court (LAG) ruled on the requirements for protection against reprisals and the reversal of the burden of proof under the HinSchG (Ref. 7 SLa 306/24), that these protective mechanisms in favor of whistleblowers only apply if the whistleblower himself can sufficiently substantiate and, if necessary, prove that the violation he reported falls within the material scope of the HinSchG:

Protection against reprisals under the HinSchG

Section 36 HinSchG provides that an essential component of the protection afforded to whistleblowers is protection against reprisals under labor law, i.e., against unjustified discriminatory acts or omissions. Such reprisals, such as termination of employment, premature termination of a contract for work or a freelance contract, a warning to an employee, disciplinary measures, damage (including damage to reputation) or the infliction of financial losses on the whistleblower, are expressly prohibited. This prohibition also applies to threats and attempts to do so, regardless of who takes such action.

Legal transactions, as well as sanctions under labor law, such as termination and warnings, that violate the prohibition of reprisals are also null and void within the meaning of Section 134 of the German Civil Code (BGB).

If, contrary to this prohibition, reprisals are nevertheless taken, this constitutes an administrative offense that can be punished with substantial fines both against the persons responsible and against the employer itself, i. e., for example, the company.

Furthermore, in such a case, the whistleblower may assert claims for damages in accordance with Section 37 HinSchG.

Reversal of the burden of proof in favor of whistleblowers

In order to ensure protection against reprisals, Section 36 (2) HinSchG also provides for a reversal of the burden of proof in favor of whistleblowers in labor and civil proceedings (but not in proceedings for administrative fines due to the presumption of innocence!): Where the reversal of the burden of proof under the HinSchG applies, a causal link between the report or disclosure and the reprisal, as well as the unjustified disadvantage, is presumed. If a whistleblower suffers discrimination in connection with their professional activities and claims that this discrimination was a result of a report or disclosure under the HinSchG, there is a legal presumption that this discrimination is a reprisal for this report or disclosure. In this case, the employer who has disadvantaged the whistleblower must prove that the disadvantage was based on sufficiently justified grounds or that it was not based on the report or disclosure.

According to the explanatory memorandum to the HinSchG, the reason for this reversal of the burden of proof is that whistleblowers should not be deterred from reporting or disclosing a violation by the difficulty of proving their case in court. In the opinion of the legislature, a disadvantaged person – in contrast to the discriminating employer – is often unable to prove the causal link between the report or disclosure and the discrimination. Therefore, the reversal of the burden of proof in the HinSchG in favor of whistleblowers is appropriate and in the public interest.

The Lower Saxony Regional Labor Court (LAG) now had to deal with the question of the requirements for protection against reprisals and the reversal of the burden of proof, or rather with the question of whether and under what conditions whistleblowers can invoke this protection:

Judgment of the Lower Saxony Regional Labor Court of November 11, 2024 (Ref. 7 SLa 306/24)

The background to the legal dispute before the Regional Labor Court was the question of the validity of the employer's dismissal of the head of the legal department (plaintiff) during his probationary period. In particular, the parties differed in their views on whether the dismissal at issue violated the prohibition of reprisals laid down in Section 36 of the Whistleblower Protection Act (HinSchG) and was therefore void.

The legal dispute was based on the following facts:

The defendant company had set up an internal reporting office and a reporting system through which, in accordance with the applicable Code of Conduct, "concerns of any kind" could be reported to the superior, the compliance officer, or (anonymously) via the digital reporting system. According to the Code of Conduct, whistleblowers were to be expressly protected from disadvantages and retaliatory measures as a result of their reports.

In the course of his work, the plaintiff became aware of legal violations, which he reported directly to the defendant's managing director. These included violations of sanctions law, criminal law, and internal company regulations, including what the plaintiff considered to be a violation of antitrust law.

A few weeks after the plaintiff's report, while he was still in his probationary period, the defendant terminated the plaintiff's employment relationship with notice. The company stated that the reasons for the termination were that the plaintiff had not met expectations, his work results were not sufficiently pragmatic and needs-based, and his working methods were unstructured.

In his action for unfair dismissal, the plaintiff claimed, among other things, that the dismissal was void as a reprisal for his reports pursuant to Section 36 of the German Whistleblower Protection Act (HinSchG). He argued that the reasons given for the termination were merely a pretext and that the actual reason for the termination was the legal violations he had reported. However, when he submitted the report, he had reason to believe that the information reported was true and fell within the scope of the HinSchG.

The defendant company objected that neither the material nor the personal scope of application of the HinSchG was applicable. The objective scope of application did not apply because there was no report within the meaning of the HinSchG: it was one of the plaintiff's original tasks to review the defendant's contracts and point out critical passages in them – the plaintiff did not make a report within the meaning of the HinSchG, but fulfilled his obligations under his employment contract. The personal scope of application was also not applicable because the plaintiff had not contacted the internal reporting office of the defendant company within the meaning of Section 33 (1) HinSchG, but had approached the managing director directly. The possibility of reporting to a superior did not make the latter a reporting office; nor was the managing director a suitable reporting office. Furthermore, none of the circumstances reported by the plaintiff actually constituted grounds for termination.

The Osnabrück Labor Court agreed with the defendant company and dismissed the claim. In its reasoning, the court stated that the termination was not invalid under Section 36(1) HinSchG in conjunction with Section 134 BGB, as argued by the plaintiff. The HinSchG did not apply in this case. The plaintiff's claim that he had reported violations by the defendant within the scope of the HinSchG within the meaning of Section 2 HinSchG was unsubstantiated; the plaintiff had not presented any concrete facts to support this claim. His submission was limited to merely repeating the wording of the law.

On the plaintiff's appeal in this regard, the Higher Labor Court confirmed the decision on the merits and also dismissed the plaintiff's admissible appeal as unfounded, since the HinSchG did not apply in this case:

The LAG justified its decision on the grounds that ordinary termination is not automatically void if the employee invokes the HinSchG following a whistleblower report – regardless of its content – and an adverse decision by the employer. In order for the scope of application and thus the protection of the HinSchG to apply, the information disclosed must relate to violations of at least one of the legal norms conclusively referred to in Section 2 HinSchG and, in this respect, none of the exceptions listed in Section 5 HinSchG must apply. The employee must therefore first substantiate and prove that a lawful report or disclosure within the meaning of the HinSchG has been made, that the scope of application of the HinSchG has been opened, and that a subsequent disadvantage has occurred. However, the plaintiff had not succeeded in doing so in the present case, so that neither the prohibition of reprisals nor the reversal of the burden of proof under Section 36 HinSchG applied and the termination was not void under the HinSchG.

Since the Regional Labor Court had already rejected the material scope of the HinSchG, it left open the equally disputed question of whether, in the event of a report to a superior who is not an internal reporting office but who has been designated as the contact person for reports in the internal regulations, a report within the meaning of the HinSchG can be made and fall under its protection.

However, this question had only been dealt with by the Hamm Labor Court in February 2024 (see below).

Practical note

In the decision described above, the Regional Labor Court dealt with the question that arises repeatedly in practice regarding the requirements for protection against reprisals under the HinSchG for whistleblowers:

In the aforementioned ruling, the LAG confirms the fact already pointed out in the explanatory memorandum to the HinSchG that whistleblowers can only invoke the direct protection of the HinSchG, in particular the prohibition of reprisals and the reversal of the burden of proof, if the report or disclosure in question falls within the scope of the HinSchG. The prerequisite is therefore that the whistleblower must first substantiate and, if necessary, prove that they have suffered a disadvantage after reporting or disclosing a violation under the HinSchG, i.e., within the material scope of the HinSchG. Even though the LAG refrained from ruling on the question of the personal scope of application of a decision in the present case because it did not consider the material scope of application to be open, it can be assumed that this also applies to the personal scope of application of the HinSchG.

This means that a whistleblower who wishes to invoke the protection of the provisions of the HinSchG following a report must first substantiate and, if necessary, prove that they belong to the group of persons protected under the HinSchG, that they have reported to an internal reporting office within the meaning of the HinSchG, and that the content of the report is "reportable" within the meaning of Section 2 HinSchG.

As a result, the protection of the whistleblower in accordance with the provisions of the HinSchG is initially shifted to the whistleblower and placed in their own hands. In particular, whistleblowers who want to be sure that they will be able to invoke the protection of the HinSchG at a later date must check the intended report against the relevant legal provisions.

In principle, the proceedings underlying the LAG's ruling and the outcome thereof are likely to be a special case due to the fact that the termination was pronounced during the probationary period. This is because the whistleblower's employment relationship had not yet existed for more than six months, meaning that the Unfair Dismissal Protection Act (KSchG) and the resulting rules on the burden of proof were not applicable. According to these provisions, the employer must generally demonstrate and, if necessary, prove that the dismissal was justified in the context of the dismissal protection proceedings. In such a case, the fact that the dismissal followed a whistleblower report, which the defendant company had expressly permitted and even requested outside the material scope of the HinSchG, would certainly have had to be taken into account in this context. In this way, if the KSchG is applicable, in the event of dismissal following a report, there is a distribution of the burden of proof comparable to that standardized therein, even without the applicability of the HinSchG.

Nevertheless, the present judgment raises the question of whether such a strict distinction between reports within and outside the scope of the HinSchG with regard to protection against reprisals is actually reasonable, for example in the case of reported serious violations in which the employer nevertheless has a considerable interest in becoming aware of them (e. g., serious discrimination or a violation of antitrust law as in the present case) – especially if the employer, as in the present case, expressly permits reports also in respect of violations other than those specified in the HinSchG. It is also doubtful to what extent the legislator's stated aim of protecting whistleblowers, namely not to deter them from reporting or disclosing a violation, can actually be achieved in these circumstances, where they are burdened with the legal examination of the content of their reports. Cases such as the present one could in any event have a deterrent effect on other potential whistleblowers.

It therefore remains to be seen how case law and, in the long term, legislation will deal with this issue. As far as can be seen, the Federal Labor Court has not yet dealt with the legal issues at stake in this case concerning dismissal following a whistleblower report and the scope of application of the HinSchG.

In one of the first decisions on the personal scope of application of the HinSchG, the Hamm Labor Court had already ruled on February 16, 2024 (Ref. 2 Ca 1229/23) that "whistleblower" within the meaning of the HinSchG and can therefore only invoke the protective provisions of the HinSchG if they have made a report internally in accordance with Section 17 HinSchG – to the designated internal reporting office in accordance with the HinSchG at the respective employer – or externally in accordance with Section 28 HinSchG – to the designated external reporting offices in accordance with the HinSchG. Reports made to superiors, for example, do not fall within the scope of application or protection of the HinSchG, even if the factual scope of application of the HinSchG is open. The decision is not yet final; an appeal is currently pending before the Hamm Regional Labor Court.

In conclusion, the judgments presented show that questions of protection against reprisals and the burden of proof in connection with reporting procedures always require careful assessment on a case-by-case basis, both with regard to the applicability of the HinSchG and with regard to other labor law protection provisions. Employers must be aware in all cases that their decisions on the establishment and operation of internal reporting offices (e. g., staffing of reporting offices, communication of reportable violations) also have an impact on subsequent reporting procedures by influencing which cases fall within the material and personal scope of the HinSchG or whether they guarantee protection against reprisals in the sense of a "voluntary commitment." Against this background, employers should (once again) critically examine for whom and with whom they are setting up one or more reporting offices and whom they are designating as contact persons for reports (personal scope of application) or for which cases and report content they are opening the reporting office (factual scope of application). As the case outlined above shows, these decisions can have consequences under sanctions, labor, and civil law that go far beyond the report that was submitted and the reporting procedure that was carried out.