French Court adopts narrow interpretation of CNIL's whistleblowing rules

22 November 2007

Ariane Mole

The first level Civil Court of Nanterre published a decision on 19 October 2007 regarding Dassault Systems' whistleblowing scheme. This decision is significant because of the narrow interpretation adopted by the Court of the CNIL's rules on whistleblowing and the justification for action lines.

French Trade Unions filed a complaint before Nanterre's first level civil court against Dassault Systems after Dassault Systems implemented a Code of Business Conduct together with a whistleblowing alert line.

The Court adopted a strict interpretation of the CNIL's rules on whistleblowing. It ruled in its decision of 19 October 2007 that informing employees that they can report serious violations of the Code of Business Conduct when the vital interest of the company or the physical or moral integrity of a person are at risk is too wide, and that it is illegal to invite employees to report facts that do not relate to accounting and auditing matters, even where the vital interest of the company or the physical or mental health of employees are at stake.

It stated that the permitted reasons for implementing a whistleblowing alert line by an employer must be strictly construed in order to avoid encouraging slanderous denunciation and underlined that such an alert line is likely to seriously harm the employees of a company.

According to the Court's interpretation, the CNIL in its rules limited the use of alert lines to accounting and auditing matters. However, in its Unique Authorisation the CNIL stated that facts that do not fall within the authorised purposes of the alert line (i.e. facts that do not relate to accounting and auditing matters) can nevertheless be transmitted (instead of being deleted as not falling into the authorised scope) to the relevant persons where the vital interest of the company or the physical or mental integrity of employees are at stake.

The court however ruled that Dassault Systems was in breach of the Unique Authorisation as it stated that these purposes fell within the scope of the alert line, encouraging employees to report where the vital interest of the company or the physical or mental health of employees are at stake.

The Court ordered the cancellation of the Code of Business Conduct and ordered that the data collected through the alert process be destroyed.

In its FAQ published on its website, the CNIL sets out an information notice template on whistleblowing systems which says: "The system is open to employees who wish to inform the organisation about facts susceptible to breach applicable rules in the financial, account auditing and corruption prevention areas. This system is an alternative way of reporting genuine concerns which would not be adequately dealt with by other existing reporting channels such as line management or personnel representatives. If the vital interest of the company is threatened in other areas or if the physical or mental integrity of employee(s) is at stake, reports on such serious facts may be redirected to appropriate individuals within the company. No other type of reports can be made using this system"(Sic).

This guidance from the CNIL suggests that the vital interests of a company or the physical or mental integrity of employees can be mentioned in codes of conduct or alert line policies. However if reports on these matters are reported through the alert line, they should be redirected to appropriate individuals within the company, so that these matters are handled by different people to those dealing with the accounting and financial matters.

According to the decision of the civil court of Nanterre on 19 October 2007, codes of conduct or alert line policies should not invite employees to report where the vital interest of the company or the physical or mental health of employees are at stake, since such reports do not fall within the scope of the alert line.

This recent decision illustrates the fact that the implementation of alert lines is a very sensitive matter in France especially for trade unions and work councils who are hostile to alert lines.

Even though this is only a first instance decision that may be subject to appeal, companies must still be very cautious in implementing codes of conduct. In our opinion, in order to avoid the courts revoking their codes of conduct and policies, companies should either:

  • refrain from mentioning that employees can make a report where the vital interest of the company or the physical or mental health of employees are stake, and should only state that alert lines can be used to report accounting and auditing matters; or
  • use only the wording recommended by the CNIL, in its FAQ (quoted above);

to avoid sanctions in case of litigation.

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