31 Oct 2023
Whistleblowing is a concept generally motivated by a commitment to public interest and good faith whereby an individual (known as the whistleblower), without authorisation, reveals classified or private organisational information that is related to misconduct or wrongdoing (example: fraud or indiscipline). Such an action is executed as either:
External whistleblowing:
External whistleblowing occurs when whistleblowers disclose/report misconduct or wrongdoings to individuals outside the organisation such as the police, media or higher government officials; or
Internal whistleblowing:
Internal whistleblowing occurs when whistleblowers disclose/report misconduct or wrongdoings to senior officials of an organisation such as Head of Human Resource or CEO.
Considering the challenging nature of whistleblowing and the potential of exposure, many whistleblowers are subject to retaliation by organisational forces thereby leading to increased fear and suppression among individuals. Therefore, in order to ensure fairness, transparency and justice and to eliminate the prevalence of wrongdoing, many jurisdictions have attempted to enact legislations to protect and safeguard the interests of the whistleblowers and to therefore encourage individuals to voice out against such forces with confidence.
Evaluating its position in UAE, whistleblowing is still a developing concept. In current day scenario, the disclosure culture is very limited due to fear of consequences such as employee suspension/termination or harassment, organisation’s reputational damage and related outcomes, etc. Therefore, UAE’s legal framework has attempted to combat any such discouragement against whistleblowing and to strengthen factors that encourage individuals to come forward in their assertions.
In 2016, the Dubai government implemented Dubai law number 4 of 2016 (The Financial Crimes Law), offering protection from workplace mistreatment of discrimination to reporters of financial crimes. Accordingly, such reporters are not held liable for breach of any obligations and are declared protected against any disciplinary or legal action unless such disclosure is made in bad faith and is therefore found out to be false.
Furthermore, Federal decree law number 31 of 2021 (the UAE Penal Code) has, under its purview, placed an obligation on all individuals to report criminal conduct. Similar obligation has also been extended to companies. For example, in instances where a protected reporting has been made by an employee to the company, an obligation to further report such disclosure to relevant authorities has been placed on the company.
The UAE Labour Law
Article 47 of the UAE labour law governing arbitrary employment termination is another framework that provides protection to whistleblowers. The provision forbids the employer from terminating an employee for:
- filing a complaint to Ministry of Human Resources and Emiratisation or
- filing a lawsuit against the employer;
and thereby declares such termination as illegal. The courts have been rendered authority to grant a compensation to such employees amounting for up to three (3) months of total salary.
The DIFC Operating Law
The Dubai International Financial Centre (‘DIFC’) has enacted the DIFC Operating Law that provides protective measures to whistleblowers and is applicable to all individuals conducting or operating business affairs in the DIFC. DIFC propagates for protection to any individual making a disclosure of information to the DIFC Registrar of Companies, company director or auditor or officials of the entity. As a mandate of such disclosure, it is required that the disclosure is based upon reasonable suspicion against the DIFC entity and must be made in good faith.
The application and seriousness of applicability of whistleblowing protections under the DIFC operating Law is clearly illustrated in the judgment issued by the DIFC Court of Appeal in the case of Bassam Khalifa v S.W.I.F.T (Dubai) Limited. The judgement affirms the strength of such applicability by casting emphasis on powers being conferred upon the Court of First Instance’s to grant relief for breach of whistleblowing protections under Article 40 of the DIFC Operating Law. Accordingly, employees/ ex-employees are empowered to seek compensation before the courts.
The Operating Law declares that all individuals making disclosures in good faith and in adherence to the law shall not be subjected to:
- Subject to any legal or contractual liability;
- Subject to any other contractual, civil or other remedy or suffer any adverse consequence; and/or
- Dismissed from employment or otherwise subject to a detriment by the employer or any related person.
Accordingly, Article 64 of the DIFC Operating Law sets out that any act in contravention of the above may result in a fine of USD 30,000.
Furthermore, Article 40 empowers the DIFC Courts to issue orders for the recovery of damages or compensation or declare such other orders as it deems fit where a ‘person intentionally, recklessly or negligently commits a breach of any requirement, duty, prohibition, responsibility or obligation which is imposed by or under this Law or Legislation administered by the Registrar, the person is liable to compensate any other person for any loss or damage caused to that other person as a result of such conduct, and is otherwise liable to restore such other person to the position they were in prior to such conduct.’
Additionally, the Dubai Financial Services Authority (‘DFSA’), which is a DIFC regulatory body has placed a mandate upon all DFSA regulated entities to ensure enhanced legal protection for persons who report misconduct internally or externally by adoption of measures that would protect the identity of the whistleblower and to safeguard such individual against any detriment.
ADGM Guiding Principles on Whistleblowing
Enacted in 2022, ADGM has enacted the ADGM principles focussing on outlining guiding principles for all ADGM entities to formulate and maintain whistleblowing frameworks. ADGM emphasises on transparency, market integrity and accountability and to ensure opportunities to speak up with fair and protected treatment. The Guiding principles define whistleblowing as ‘the reporting of suspected wrongdoing to someone in authority’ and a whistleblower as ‘the person who makes the report; that person might be part of the relevant organisation (such as an employee) or an external third party’.
ADGM principles actively promote protection to whistleblowers who report such occurrences or causes of action in good faith. The policy of non-retaliation is pressed upon in utmost strictness and at its highest level in all entities for credibility. Entities are instructed to refrain from acts, including but not limited to withholding of promotions or training; harassment; loss of status or benefits; a negative change in role duties; changes to hours of work; physical harm; or threatening any of the foregoing.
It is essential where protected disclosures are made, ADGM entities ensure that appropriately skilled and independent professionals assess and manage such whistleblowing reports. Accordingly, appropriate internal channels to raise issues should be designed and communicated to individuals (such as staff and third parties). Similarly, external channels for raising concerns should also be adequately identified and communicated to the staff.