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1. Whistleblowing - what is whistleblower protection?

In 2019, the EU introduced the Whistleblowing Directive, which was implemented into Hungarian national law in Act XXV of 2023 on Complaints, Whistleblowing of Public Interest and Rules on Reporting Abuses (‘Panasztörvény’).

The whistleblowing system ensures that people who come into contact with a business (e.g. employees, suppliers, clients) can anonymously report incidents that harm public or breaching private interests. The purpose of whistleblower protection is to protect the whistleblower from possible adverse consequences of reporting a breach of the law to a business.

2. Who is required to have a whistleblowing system?

The following companies are required to set up and operate a whistleblowing system:

  1. Enterprises with at least 50 employees.
  2. Regardless of the number of employees, employers subject to the Money

Laundering Act must operate a whistleblowing system, such as

  • those engaged in real estate related activities,
  • auditing activities, accounting (accountants), tax consultants, chartered tax
  • consultants, tax advisers, tax consultants working as an entrusted person or as contractors, Lawyers,
  • notaries,
  • head office service providers.

3. Statutory deadline for compliance

Hungarian and foreign businesses subject to the Money Laundering Act that engage in the activities specified in point 2 above, as well as businesses employing more than 250 persons, is required to operate an appropriate whistleblowing system from the summer of 2023.
Enterprises with 50-249 employees will be subject to this obligation from 17 December 2023.

4. Who can make a report?

Reports can be made by

a) an employee employed by the employer, even if the employment relationship has terminated and even if he/she has only applied for the position and a procedure for the establishment of a legal relationship (e.g. interview) has been started,

b) self-employed person, a sole proprietorship who is or has been in a contractual relationship with the employer or who has already started the procedure for the establishment of a contractual relationship,

c) a trainee or volunteer who performs an activity for the employer, even if the legal relationship has ended or has only just begun the procedure for its establishment,

d) a person who is a shareholder in the employer and a member of the employer’s administrative, management or supervisory body, including a non-managing member, even if the employment relationship has ended,

e) a person under the supervision and control of a contractor, subcontractor, supplier or agent who has, has had or has commenced a contractual relationship with the employer.

5. What kind of breaches can be reported?

In the whistleblowing system, you can report any information obtained in the context of their employment or contractual activities that relates to an unlawful or suspected unlawful act or omission, just as other information on breaches.

The range of possible infringements is very wide, some examples are:

  • theft of goods, products, money, theft, embezzlement
  • other economic crimes (e.g. corruption)
  • bribery, accepting or offering gifts or bribes,
  • breach of ethical standards,
  • false reporting,
  • damaging the environment,
  • blacklisting, business boycott,
  • early termination of a contract or licence,
  • breach of good repute,
  • intimidation, coercion, physical or verbal abuse, aggression,
  • discrimination or undue advantage,
  • sexual abuse, harassment,
  • negative job references, violation of occupational safety and health,
  • working under the influence of alcohol, drugs or other substances,
  • breach of a trade secret.

6. Why do we recommend it for companies?

Trust in business is strengthened by the operation of a transparent whistleblowing system. Studies have shown that businesses lose around 5% of their annual turnover each year due to different breaches committed in various areas of employment. This number can be reduced by operating a whistleblowing system.
The first line of response to such breaches is in-house, protecting the business interests. In the long term the system protects the interests of the company and its owners.
The ESG Law (soon to be adopted), which will gradually extend the CSRD report to nearly 3000 Hungarian companies, will also require the establishment of a whistleblowing system, and it is advisable for these companies to start now.

7. How to prepare your business for the whistleblowing regulations?

To prepare a whistleblowing system that complies with the legal requirements, the main things you need to do are the followings:

  • Develop internal communication on the importance of whistleblowing,
  • Decide whether to set up an internal or external whistleblowing protection system,
  • select and set up the appropriate whistleblowing channel for the whistleblowing system,
  • prepare the necessary documentation and policies for its operation,
    define the scope, tasks and responsibilities of the persons who will use the system,
  • publish information on the introduction of the whistleblowing system on relevant platforms accessible to employees and external partners,
    – Provide training for employees and managers within your company.
  • Establish a communication strategy and appropriate internal and external information and notification platforms (e.g. website)

8. Budlegal’s whistleblowing system

The advantage of a whistleblowing system involving a whistleblower protection lawyer is that it ensures impartiality and the professional expertise needed to assess whistleblowing.
It ensures that whistleblowers are subject to independent expert scrutiny, that the whistleblower’s personal data is protected and that the reports are filtered by experts to ensure that the investigation is conducted professionally.
The preparation of the documentation necessary for the operation of the system and the provision of an appropriate technical background is also not your task, the whistleblower protection lawyer will keep the contact with both the whistleblower and the client.

9. Budlegal provides the following services

  • Preparing of the documents that are necessary for the operation of the whistleblowing system (data management information, investigation procedures, training material),
  • In the event of a whistleblowing complaint, feedback is sent to the whistleblower within the time limit,
  • Protecting the identity of the whistleblower in accordance with the legal requirements,
  • Filtering out the reports (compliance / admissibility),
  • Forwarding the notification to the client,
  • Examination of the notification, carrying out necessary and possible checks,
  • If it is requested by the client, professional support during the investigation of the report, preparation of legal opinion, compliance, initiation of official proceedings,
  • Monitoring legal deadlines,
  • Preparing a summary of the outcome of the investigation of the report for the client,
  • Communication with the whistleblower, providing feedback to the whistleblower once the investigation of the notification has been completed.

10. Do you have a question?

If you have any questions or need more information, please contact us.Budlegal’s whistlerblower attorneys are ready to answer your questions on 
bejelentes@bud-whistle.hu. Let’s get in touch with us in person or at TEAMS meeting!
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