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Whistleblowing Mechanism for Small Business
21 Nov 2022
There is a steep increase in whistleblower complaints in India, highlighting the urgent need for an effective whistleblower policy in every organization. With more and more grievances, whether it be small or big companies, WhistleBlowing has gained considerable interest in the global scenario. Whistleblowing is a problem that impacts the activities and the work culture of every organisation, regardless of its size. This is why any organization, although small, still needs a whistleblowing policy to protect its employees as well as its employers.
What is Whistleblowing?
Whistleblowing means when an individual files a “Complaint” or “makes a disclosure”about wrongdoing or fraud or misconduct etc within an organisation. Disclosures are mainly made by an employee or a group of employees in the same organisation.
The disclosure can be in writing or in any other way about the company based on real facts rather than imagination, such as acts on environmental damages, safety and health hazards, criminal offenses, failure to work in compliance with the legislation, or cover-up of misconduct, etc.
Legal Regime in India
The Whistleblowers Act was enacted in 2014 by the Government of India. Though, the applicability of this act is only limited to the public servants. Under this act, a mechanism was introduced for reporting corruption and wilful misuse of power against the public servant along with proper inquiry on the disclosure and providing safeguard to the whistleblower against any retaliatory act.
However, there isn't any specific law on whistleblowing for private employers in India. Although, few broad-minded MNCs and their subsidiaries have incorporated a whistleblower policy to extend their global policies, including all company employees and parties outside the company. The primary goal of instituting a whistleblower policy in an organization is to allow employees (or any other individual for that particular matter) to expose or reveal matters without fear of being victimized, discriminated against, harassed, or otherwise disadvantaged.
For more details about the legal regime in India please visit Legal Regime of whistleblowing in India
Contribution of whistleblower policy in Small Businesses
Vital role of whistle blowing in corporate governance
Whistleblowers are vital for corporate governance. A properly implemented whistleblowing policy encourages employees of small organizations/businesses that it is safe to raise complaints and that no one will be punished for using the policy. A well-designed policy would provide the employees with an ideal chain of direct communication which must be followed to ensure that the whistleblower has contacted the right individual.
Reporting of unethical, illegal and implicit practise
It was stated in the Legal Regime that private employers do not need to comply with legal requirements, and if they do not adopt any of the whistleblowing policies, they will not be guilty of breaching the law. But the private employer should adopt the whistleblower policy so that “employees” or “workers” of the company feel free to disclose the misconduct or other unofficial act within the organization.Whistleblowing plays a role in firm growth.
- In a recent case involving Pilot Gaurav Taneja, an employee of one of the major players in the aviation industry, which is AirAsia India, the question of safety issues on aircraft operated by AirAsia India was addressed. He is a whistleblower of AirAsia who highlighted these safety issues, and in retaliation for raising such concerns publicly, AirAsia fired him. Furthermore, he addressed this question in front of the Directorate General of Civil Aviation (the DGCA), as AirAsia is doing its utmost to deeply undermine the problem and make Gaurav Taneja a villain.
- In 2012, Pandhare was a bureaucrat belonging to the Irrigation Department in the Indian state of Maharashtra. He blew the whistle on the Maharashtra Irrigation Scam of 2012 that led to the resignation of Maharashtra Deputy Chief Minister Ajit Pawar.
Protection of both employees and the company
When employees know that there is an effective whistleblower policy and supporting processes in place, they feel safer and more empowered to report misconduct. This acts to strengthen employee’s trust, satisfaction and loyalty.
Changing culture for better
All smart companies are invested in building a great culture and they know that it’s good for business and understand the value of culture in attracting and retaining good people. Having best practice in systems, including a whistleblower policy and it sends a strong message that you’re a company built on sound values and zero tolerance for misconduct. An effective whistleblower policy can also help to embed a speak-up culture in your company.
