An overview of the Whistle-blower Protection Act in Japan: the Whistleblower Protection Act provides protection for whistle-blowers within a company. The act took effect in April 2006, after several court cases involving internal whistle-blowers uncovered significant misconduct by businesses.
What is protection?
When a whistle-blower satisfies all requirements set forth under the act, then he or she is protected from a dismissal or any other disadvantageous treatment taken by the employer based on the fact that he or she is whistle-blowing. The act, however, does not have any administrative or criminal penalties if the employer violates it by taking a prohibited retaliatory measure against a whistle-blower.
Who can be a whistle-blower protected under the Act?
A whistle-blower must be a worker who falls within the definition of “worker” under the Labor Standards Act. A whistle-blower is not qualified if he or she is seeking a “wrongful gain,” is causing damages to others or has any other wrongful purpose as defined by the act.
Whose conduct is reportable?
A company’s conduct can be reported by a whistle-blower who is:
- An employee of the company.
- A worker dispatched to the company
- An employee of a service provider to the company
The conduct of the company itself is not only reportable. The act states that the company’s officers, its employees and other persons who are engaged in the company’s business are also reportable (such as an embezzlement by an employee of accounting division).
Is any improper conduct reportable?
The reported conduct must be:
- A criminal act under laws listed in the Act.
- Or a fact constituting grounds for an administrative disposition pursuant to laws listed in the Act (the, incompliance of which will results in a criminal penalty).
As of 15 June 2018, the act lists 467 laws as the basis of reportable conduct, which should cover almost all aspects of business activities.
Conduct is reportable after it occurred, when it is occurring or when it is about to occur.
Can whistle-blowing be reported to anyone?
The act cites three possible recipients of a report from a whistle-blower. The first is the whistle-blower’s employer, a company to which the whistle-blower is dispatched, or a company to which the whistle-blower is providing services. The second is a competent administrative organ with the authority to impose disposition or recommendation, etc., against the reported conduct. Third, it is any person to whom the whistle-blowing is considered necessary to prevent the occurrence of the reported conduct or the spread of damage caused by the reported conduct (e.g., via the press or other media).
There is no prioritized order among the three recipients, which means that a whistle-blower can go to the media without going to an employer first (but please see below).
Must reported conduct be true?
When a whistle-blowing is made to an employer, the whistle-blower is protected as long as he or she considers the reported conduct to have indeed occurred, is occurring or is about to occur. When it is made to an administrative organ, the whistle-blower must have reasonable grounds. When it is made to other recipients, there is an additional requirement for this type of disclosure, such as a risk of evidence suppression.
Country-by-country and EU whistle-blowing rules need to be taken into account in setting the best practices and policies in this growing area of risk, including what an employer must do when faced with a whistle-blower claim, such as whether an investigation is required, protections of the employee who complained of company practices and litigation issues.
Best practice requires companies to take action in advance by creating a hotline and training its employees in ethical behavior.