Whistleblower Retaliation: Burden of Proof

Whistleblower retaliation and the burden of proof: the short answer

Whistleblower retaliation is prohibited under the Whistleblower Protection Act (Hinweisgeberschutzgesetz, HinSchG), and the statute makes it much easier for employees to establish a claim. Under § 36(2) HinSchG, if a whistleblower suffers a detriment in connection with his or her professional activity and asserts that the detriment followed a report or disclosure under the Act, it is presumed that the detriment is retaliation for the report. The employer, or whoever imposed the detriment, must then prove that the measure was based on sufficiently justified grounds or was not based on the report. In practice, this reverses the usual burden of proof in employment disputes.

For HR departments, the presumption means that any adverse decision affecting an employee who has made a report, from a negative appraisal to a dismissal, must be supported by contemporaneous documentation showing legitimate reasons that are independent of the report. Without such documentation, employers risk damages claims, reinstatement of dismissed employees and fines.

Who is protected and when

The protection against whistleblower retaliation applies under § 33(1) HinSchG if three conditions are met. First, the person made an internal report to a reporting channel under § 17, an external report to a competent authority under § 28, or a public disclosure under the conditions of § 32. Second, at the time of the report, the person had reasonable grounds to believe that the information reported was true. Third, the information concerns violations within the scope of the Act, or the person had reasonable grounds to believe so.

The scope in § 2 HinSchG covers criminal offences, many administrative offences that protect life, health or employee rights, and violations of a wide range of federal, state and EU rules, including in areas such as financial services, product safety, environmental protection, data protection and public procurement.

Protected persons include employees, trainees, temporary workers, self-employed contractors, shareholders, members of management and supervisory bodies, and job applicants, as well as persons who support the whistleblower and third parties connected to them, such as colleagues or relatives. The protection applies regardless of whether the report was made internally first; whistleblowers may choose between internal and external reporting channels. Persons who knowingly or with gross negligence report false information are not protected and are liable for resulting damage (§ 38 HinSchG).

What counts as retaliation

Retaliation (Repressalie) is any act or omission in connection with professional activity that is a reaction to a report or disclosure and causes or may cause unjustified detriment to the whistleblower (§ 3(6) HinSchG). Retaliation is prohibited, and so are threats and attempts to retaliate (§ 36(1) HinSchG). Typical examples include:

• dismissal, non-renewal of a fixed-term contract or refusal to convert it into a permanent one;
• demotion, transfer, change of duties or working hours, or withholding of promotion;
• negative performance appraisals, withholding of bonuses or training;
• disciplinary warnings, exclusion from projects, bullying or isolation;
• damage to reputation, including on social media, and blacklisting within an industry;
• early termination of a supply or service contract with a self-employed whistleblower.

The presumption in § 36(2) is linked to a detriment in the professional context. It does not require that the measure follows immediately after the report, but timing is often a significant factor in practice: the closer an adverse measure is to the report, the harder it is to rebut the presumption.

How the burden of proof works in practice

The whistleblower must first establish the conditions of the presumption: a report or disclosure within the meaning of the Act, a detriment in connection with professional activity, and the assertion that the detriment resulted from the report. Whether the report was protected, in particular whether the person had reasonable grounds to believe the information was true and within scope, remains for the whistleblower to show. Once these points are established, the person who imposed the detriment must prove one of two things: that the measure was based on sufficiently justified grounds, or that it was not based on the report.

In German labour courts, this interacts with ordinary dismissal protection. Where the KSchG applies, the employer already bears the burden of proving a socially justified reason for dismissal. The HinSchG adds a further hurdle: even a dismissal that would otherwise be justified must not be motivated by the report, and the employer must be able to show this. Where the KSchG does not apply, for example in small businesses or during the first six months, § 36(2) HinSchG can be decisive, because the employer must then prove that a dismissal without statutory justification was not a reaction to the report.

Case law on § 36 HinSchG is still developing. Questions that labour courts are addressing include how precisely the employee must describe the report and its protected nature, how much time may elapse before the presumption loses force in practice, and which documentation suffices to rebut it. Employers should expect courts to examine the employer's reasoning closely where an adverse measure follows a report.

Illustration

A purchasing manager reports to the internal reporting office that a colleague accepted payments from a supplier. Three months later, her annual bonus is cut by half and she is moved from strategic sourcing to an administrative role. She asserts that both measures are whistleblower retaliation. Under § 36(2) HinSchG, the employer must now prove that the bonus cut and the transfer were based on sufficiently justified grounds or were unrelated to the report.

If the bonus follows a target system with documented results and the reorganisation affected the whole department and was decided before the report, the employer has a strong case. If the reasons were developed only after the report, or if the manager who decided knew of the report and the documentation is thin, the presumption is likely to prevail, with damages for the lost bonus and the risk of a fine.

Retaliation outside the employment relationship

Whistleblower retaliation is not limited to employers. Customers may terminate contracts with self-employed consultants who reported irregularities, suppliers may blacklist a contact who alerted authorities, and group companies may act against employees of a subsidiary. The prohibition and the presumption apply to whoever imposes the detriment in connection with the person's professional activity. Groups should therefore extend their anti-retaliation rules to procurement and contract management, not only to HR.

Consequences of whistleblower retaliation

If retaliation occurs, the person responsible must compensate the whistleblower for the resulting damage (§ 37(1) HinSchG). The claim covers financial loss, such as lost salary or bonuses. The Act does not give a right to the conclusion of an employment contract or to promotion (§ 37(2) HinSchG), but a dismissal motivated by retaliation is void, so the employment relationship continues. Agreements that restrict the rights of whistleblowers under the Act are invalid (§ 39 HinSchG).

Retaliation is also an administrative offence. Under § 40 HinSchG, retaliating against a whistleblower, obstructing a report and breaching confidentiality can be fined up to EUR 50,000. For companies, the maximum can be multiplied by ten through § 30(2) sentence 3 of the Administrative Offences Act in the cases listed, so that fines of up to EUR 500,000 are possible. Reputational damage and the involvement of external authorities often weigh more heavily than the fine itself.

HR process design to prevent and defend claims

Good HR process design both reduces the risk of retaliation and preserves the employer's ability to rebut the presumption. Key elements are:

1. Confidentiality by design: the internal reporting office must keep the whistleblower's identity confidential and share it only with persons responsible for follow-up (§ 8 HinSchG). Line managers involved in performance decisions should not learn who made a report unless strictly necessary.
2. Documented performance management: appraisals, warnings and performance improvement plans should be documented consistently for all employees, so that measures affecting a whistleblower can be shown to follow the usual pattern.
3. Four-eyes review: adverse measures against employees known to have made reports should be reviewed by a person independent of the reported matter, with a written record of the reasons.
4. Timing awareness: where a restructuring or performance process was already underway before the report, document the earlier start to show independence.
5. Training: managers must understand that retaliation includes subtle measures, such as exclusion from meetings, and that threats are prohibited too.
6. Integration with the works council: the design of the reporting channel and related processes may trigger co-determination rights, for example regarding rules of conduct and technical systems.

Our page on whistleblowing under the HinSchG explains the obligations to set up internal reporting channels, and our page on internal investigations covers the follow-up of reports. Where a dismissal is planned, our article on special dismissal protection sets out other protected groups.

Investigations involving whistleblowers

Reports often trigger internal investigations in which the whistleblower is a witness, and sometimes also implicated. The HinSchG protects the whistleblower only in respect of the report; it does not grant immunity for the person's own misconduct. Employers may therefore take measures for misconduct that the investigation uncovers, but they must be able to show that the measure is based on that misconduct and not on the report. Separating the investigation team from those who decide on employment measures, and documenting the evidential basis for any sanction, helps to rebut the presumption. Data protection rules on employee investigations apply in parallel; see our article on employee data protection.

How TRW & Co helps with whistleblower retaliation risks

We advise employers on preventing and defending claims of whistleblower retaliation. We design reporting channels and confidentiality processes, train managers and HR, and review planned measures against employees who have made reports. In disputes, we represent employers before the labour courts, assess the evidence needed to rebut the presumption in § 36(2) HinSchG and coordinate with ongoing internal investigations and authority proceedings. To discuss a specific situation, contact us. This article provides general information and is not legal advice.