Whistleblowing in Latvia: What Are the Obligations for Companies?

The whistleblowing framework was introduced in Latvia in 2019 when the first Whistleblowing Law came into effect. The Whistleblowing Law establishes specific obligations for companies to promote transparency and protect individuals who report violations that may harm public interests. This article outlines the key obligations companies must fulfil to comply with Latvia’s whistleblower regulations and highlights additional considerations for effective implementation.

1. Establishment of an Internal Whistleblowing System

Companies with more than 50 employees are required to implement an internal whistleblowing system that ensures a secure and confidential reporting mechanism. This system must provide employees with a safe and confidential channel to report violations and ensure their protection. The internal system can be managed internally or outsourced to a third party. Additionally, companies operating in specific sectors, such as financial services or those involved in the prevention of money laundering and terrorism financing, are obligated to establish such systems regardless of their size.

This system should allow employees to report misconduct safely and confidentially. Key components of the system include:

• Secure and accessible reporting channels: Companies must provide a dedicated and secure mechanism for employees, contractors, and other associated individuals to submit reports. This may include an email address, online platform, hotline, or designated internal contact person.
• Anonymity and confidentiality: Companies must ensure that the identity of whistleblowers remains protected, and that information provided is handled with strict confidentiality. Whistleblower’s identity should be protected from the moment of receiving the report and continue after the case is closed.
• Clear reporting procedures: Employees should receive clear guidance on how to report misconduct and what types of violations fall under whistleblower protection. This can be reinforced through training, periodic reminders, and open discussions in company meetings.

2. Informing Employees

Companies must inform employees and relevant stakeholders about the internal whistleblowing system upon commencement of employment or a related professional relationship. This information should be easily accessible to ensure that all employees understand how to report violations. Key measures include:

• Providing clear and accessible information about the internal whistleblowing system.
• Disseminating this information through internal communication channels such as intranet portals, employee handbooks, or posters in common areas.
• Conducting training and awareness programs to educate employees about reporting procedures, available protections, and fostering a culture where ethical concerns can be raised without fear of retaliation.

3. Protection Against Retaliation

Companies must ensure that whistleblowers, their relatives, or related persons are protected from any form of retaliation due to their reporting activities. Prohibited actions include (but are not limited to) dismissal, demotion, denial of promotion or training opportunities, changes in duties or remuneration, and any form of harassment or discrimination.

To ensure compliance, companies must implement measures to prevent retaliation and establish procedures for handling complaints of victimization. Failure to uphold these protections can result in administrative penalties.

4. Compliance with Reporting and Documentation Requirements

Companies must maintain accurate records of whistleblowing reports, investigations, and outcomes while ensuring compliance with data protection rules such as the General Data Protection Regulation (GDPR) and the confidentiality of whistleblowers’ identities. Personal data of the whistleblower should be pseudonymized immediately after the report is recognized as a whistleblower’s report. Access to this information should be restricted to individuals responsible for handling the report, and unauthorized disclosure may result in criminal liability. In some cases, companies may be required to provide information on their whistleblowing procedures to relevant authorities.

5. Timely Acknowledgment and Feedback

Upon receiving a whistleblower’s report, companies are required to follow specific deadlines and procedures:

• Acknowledgment of receipt: The company must confirm the receipt of a whistleblower’s report within seven days of submission.
• Initial evaluation: Within seven days, the company must assess whether the report meets whistleblower criteria. If it qualifies, the reporting individual is granted legal protection under the Whistleblowing Law.
• Investigation process: A structured and impartial investigation should be conducted by the designated person or team within the company. Throughout the process, the whistleblower’s identity must remain protected.
• Providing feedback: The company must inform the whistleblower of the outcome of the investigation within two months after acknowledging the report. If the investigation takes longer, the whistleblower must be informed of the reasons for the delay. After completing the investigation, the company must inform the whistleblower about the findings, decisions made, and any measures taken.

6. Administrative Liability for Non-Compliance

Failure to comply with the Whistleblowing Law may result in administrative fines. Obstructing whistleblowing activities, including hindering report submission or investigation, can lead to fines ranging from EUR 35 to EUR 7000 for legal entities. For causing adverse effects to a whistleblower, their relatives or related persons, fines can range from EUR 70 to EUR 14,000 for legal entities along with potential legal consequences and compensation claims.

Conclusion

Latvia’s Whistleblowing Law mandates companies to establish a secure and transparent framework for reporting misconduct. Compliance with these obligations not only ensures legal adherence but also fosters a culture of integrity and accountability within the company. Ensuring employees feel safe to report misconduct is essential for preventing corruption, financial crimes, and other violations that could harm both businesses and the public interest.

Employers should take proactive steps to implement effective whistleblowing systems, educate their workforce, and promote an ethical workplace environment. A well-functioning whistleblowing system enhances corporate reputation, mitigates legal risks, and contributes to long-term operational integrity.