Whistleblower protection in small and medium-sized enterprises (SMEs): challenges and solutions

Whistleblower protection in small and medium-sized enterprises (SMEs): challenges and solutions

The recent transposition of the European Directive on whistleblower protection has brought a significant change to the compliance landscape in Spain, especially for small and medium-sized enterprises (SMEs). While whistleblower protection is fundamental to fostering transparency and integrity in any organisation, SMEs face particular challenges in implementing effective whistleblowing systems.

Challenges for SMEs:

SMEs often have tighter budgets than larger companies, which makes it difficult to invest in technology, specialised staff and legal advice to implement and manage a proper whistleblowing channel.

In SMEs, reporting lines are often shorter, which can create a greater sense of risk for the whistleblower, especially if the alleged wrongdoing involves management or owners.

In some SMEs, the compliance culture may be less developed than in larger companies, which may make it difficult to understand and accept the need for a whistleblowing system.

Due to the closeness between employees in SMEs, fear of informal reprisals, such as ostracism or exclusion, can be a deterrent to whistleblowing.

Solutions adapted to SMEs:

1. Affordable technology solutions: There are wholesale channel software platforms designed specifically for SMEs, which offer essential functionalities at a reduced cost. Outsourced solutions with specialised providers can also be considered.
2. Shared complaint channels: Business associations or chambers of commerce can offer shared complaint channel services for their members, thereby reducing costs and sharing resources.
3. Training and awareness raising: It is essential to train employees on the importance of whistleblowing and how the system in place works. Confidentiality and protection against retaliation should be emphasised.
4. Appointment of a compliance officer or channel manager: Even if you do not have a full compliance department, you can appoint a suitably trained employee or hire an external consultant to manage the channel and ensure its proper functioning.
5. Clear and accessible policies: Clear policies on the whistleblowing procedure, investigation of complaints and whistleblower protection should be established. These policies should be easily accessible to all employees.

At ILP Abogados, with our expertise in M&A and compliance, we understand the specific challenges faced by SMEs. We offer personalised legal advice to help SMEs implement effective whistleblowing systems tailored to their needs

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