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Iceland: Rules for whistleblowers

Iceland has recently enacted new whistleblowing legislation which includes procedural and good faith requirements, among other things. Ingvi Snær Einarsson, Supreme Court Attorney and Partner at Reykjavik Law Firm, discusses the background of this new law and its provisions.

HRAUN / Signature collection /

Law on whistleblower protection

In May 2020 the Icelandic Parliament passed a piece of legislation on the protection of whistleblowers, Act No. 40/2020 ('the Act'). The Act will come into effect in January 2021 and applies to every worker both across the public and private sectors. A whistleblower according to the Act is an employee that in good faith discloses a crime or wrongdoing in his employer's activities. An employee within the meaning of the Act is a person who has access to information or data on the employer's activities due to his role, for example as a hired, an appointed, a contractor, a board member, a trainee, or a temporary employee, or as a volunteer.

The purpose of the Act is to put forward a comprehensive legislation on the protection of whistleblowers taking notice of the advice of international organisations and best practice in neighbouring countries. Such legislation is thought to encourage the disclosure of crimes and other wrongdoings and have a deterrent effect, eventually leading to a decrease of such activities.

Whistleblowing legislation and the right to freedom of expression

Whistleblower protection is intertwined with the right to freedom of expression as stipulated in Article 73 of the Icelandic Constitution ('the Constitution') and Article 10 of the European Convention of Human Rights ('the ECHR'). Such protection is an important tool for employees to be able to come forward and disclose information regarding issues that concern the general public. Whistleblower protection is necessary to comply with other human rights provisions, such as the respect for private and family life, cf. Article 71 of the Constitution and Article 8 of the ECHR.

Internal and external disclosure

The Act distinguishes between internal and external disclosure and stipulates that, in general, an external disclosure is not permitted unless an internal disclosure has previously been exercised. Internal disclosure means that notwithstanding the provisions of law, code of ethics, or agreements on confidentiality, an employee who has information or data on breaches of the law or other wrongdoings in his/her employer's activities may share such information and data in good faith, such as to his/her superior, to the relevant supervisory authority, or to a law enforcement authority. The recipient of the information is under the obligation to take actions that aim for the crime or the wrongdoing to be stopped. In the public sector, such disclosure is not only permitted by the public sector employee but he is obliged to take such actions.

External disclosure means that an employee who has made an internal disclosure without leading to an adequate response may, in good faith, share the information or data in question with third parties, including the media, as long as he has a legitimate reason to believe that this is conduct that could be punishable by imprisonment. The same applies if such disclosure is otherwise considered in the interests of the general public and so urgent that they must prevail against the interests of the employer or others.

Is the good faith requirement too burdensome?

When the proposed bill was under discussion in the Parliament there were some concerns that the requirements of the whistleblower to be in good faith would mean that the motives behind the disclosure would be a relevant factor. A whistleblower would thus not be protected if the disclosure of the information was driven by personal animosity or expectations of personal gain. Therefore some suggested that a reference to the whistleblower being in good faith should be deleted.

The above meaning was however rejected and it was emphasised that the requirement of good faith essentially implies that the employee has good reason to believe the information to be true but at the same time that he considers it in the public interest to share it and that he has no other option to prevent the unlawful conduct to which the information relates. The requirement of good faith in the Act is based on how the same requirement is interpreted in international agreements and in the legislation of most other states that have transposed provisions on the protection of whistleblowers.

What does the protection of the whistleblower include?

The Act stipulates that the disclosure of information or data does not constitute a breach of the person's duty of confidentiality or impose any criminal or tort liability on him or her, nor can it lead to administrative sanctions or other burdensome remedies according to the labour law or the Governments Employee Act. Furthermore the recipient of the information is not allowed to disclose personal data of the employee unless the employee has given his or her explicit consent.

There is also a special prohibition on any unfair treatment of the whistleblower and the employer has the burden of proof that the whistleblower has not been treated in such way. If the employer does not succeed in proving that the whistleblower has not been treated in an unfair way he is to pay damages to the whistleblower. Finally, the Act stipulates that the employee shall shall be granted free legal aid in the event of a dispute in court regarding the employee's position with regard to the above-mentioned protection.

Companies to implement rules on procedures

In companies or other workplaces where there are on average 50 or more employees on an annual basis, the employer shall, in consultation with the employees, implement rules on procedures for disclosing crimes or other reprehensible conduct. The rules shall be in writing and shall provide for the receipt, handling, and processing of notifications of suspected crimes or other reprehensible conduct in the employer's activities. The rules shall be accessible to all employees and may in no way limit their rights under the Act.

The Administration of Occupational Safety and Health ('AOSH') is responsible for monitoring that employers have implemented the above rules on procedures and may instruct employers to do so if such rules have been neglected. In cases where such instructions are neglected, the AOSH can impose daily fines on the respective employer.

Ingvi Snær Einarsson Supreme Court Attorney and Partner
[email protected]
Reykjavik Law Firm, Iceland