French Supreme Court invalidates whistle-blowing code

Dassault’s Code of Business Conduct had two aspects: It (i) required employees to obtain an approval from their employer prior to using any information (not just confidential information but all information used for “internal purposes”) that employees could have knowledge of in the course of their employment and (ii) put in place a whistle-blowing policy whereby employees could – but had no obligation to – report any breach of the Code of Business Conduct, in accounting, financing, and anti-corruption matters. However, the policy also contemplated the possibility for employees to report any breach of the Code of Business Conduct in other matters (e.g. intellectual property rights, confidentiality, discrimination, harassment) to the extent the breach threatened Dassault Group’s vital interests or an individual’s physical or psychological integrity.

The Court ruled that requiring employees to obtain the prior approval of their employer before using any and all internal information infringed employees’ freedom of speech, which may be limited only in a proportionate manner. The prohibition was too broad, and therefore the proportionality test was not satisfied.

As far as the whistle-blowing policy is concerned, the Court ruled that the policy could not cover matters other than accounting, financing, and anti-corruption. In France, whistle blowing policies need to be approved by the French data privacy authority (“the CNIL”) because their enforcement may lead to sanctions of employees. In 2005, the CNIL published a blanket authorization which generally authorizes whistle blowing policies in France for Sarbanes-Oxley requirements compliance purposes, but this authorization is limited to pure accounting, financing and anti-corruption matters. If the whistle-blowing policy exceeds the scope of the blanket authorization, it needs to be authorized on an individual basis. Otherwise, the whole policy will be deemed invalid, as confirmed by the Supreme Court’s decision.

Most international groups are reviewing the French versions of their Codes of Conduct to ensure that they comply with this new ruling.

Authored by Sarah Jacquier and Winston Maxwell