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back to index backEUROtalk October,  2005

Just in Time: SOX vs. Europe

Here's a brief summary of the recent actions in France and Germany:


In May 2005, the Commission Nationale de l'Informatique et des Libertes (NCIL) denied McDonald's France and CEAC (French subsidiary of Exide Technologies) permission to implement employee complaint procedures aimed at uncovering ethical and legal misconduct.

CNIL found that neither proposal conformed to the law of Jan. 6, 1978, amended on Aug. 6, 2004, which protects personal information. Specifically, the commission found that the procedures would result in creating a system for maliciously informing on co-workers, and that allowing anonymous reports would only increase the risk of false accusations. In contrast to the Sarbanes Oxley Act, the CNIL found that the benefits of the procedures were outweighed by the possibility that innocent employees would be stigmatized. Finally, the commission stated that other methods, such as audits, ethics training, and careful monitoring of behavior, are available to achieve the objectives of the procedures.


In June of 2005, a local German labor court (Arbeitsgericht Wuppertal) invalidated parts of the Wal-Mart employee code of conduct, including the part inviting employees to report misconduct to a whistleblowers hotline. The suit against Wal-Mart was raised because Wal-Mart implemented a hotline for reporting any violation of their code of conduct without prior approval of labor representatives. The court found, among other things, that the hotline violated German labor law (Case 5BV 20/05).

What does this mean for you?

The European legal systems differ from the US system in that case law” has much less importance than statutes. Thus, these rulings should not be read as condemning all employee complaint procedures, or even all anonymous procedures.

Companies operating in France or Germany should consider ways to minimize fraudulent claims. These would include:

* Utilizing employee communications to promote face-to-face reporting and educate employees about the detailed interview used on the hotline.

* Promoting the telephone hotline over the Web form because the rigorous nature of the live interview exposes inconsistencies, leading the caller to abandon a bogus report ensuring reports are kept completely confidential.

* Using case management to monitor the prompt and thorough investigation of reports.

* Providing detailed information about the robust nature of the hotline interview and the use of a third party as safeguards against false accusations when seeking permission to implement a hotline in France or Germany.

* Discussing the purpose and role of the hotline with labor representatives prior to submitting paper work with the German authorities, because opposition from these groups is likely to hinder your hotline's effectiveness.

If you have employees in France or Germany, please discuss this legislation with your legal department to see how your organization should address this development. If you outsource your hotline administration, check with them for ways you can modify your hotline program, should your legal team recommend that you change the approach to handling calls from France and/or Germany.

Source: Great Lakes HR Now - GAI

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Other articles from the same issue (October,  2005).

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Just in Time: SOX vs. Europe
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