Deregulatory Trust: Unraveling Corporate Autonomy in Whistleblower Policies

[By Neeraj Kumar] The author is a student of WBNUJS, Kolkata.   Introduction  The idea of blowing the whistle has its meaning on a spectrum, ranging from  hero to snitch to martyr to traitor. Assuming, it is noble to attempt save lives and livelihood, the illegal consequences must be eliminated. However, this comes with a need to balance interests within employment law. The same has always been stringent regarding maintenance of confidentiality of information obtained in the course of employment through duty of fidelity or express obligation in the employment contract. Over time, this obligation has developed a defense of public interest in jurisdictions such as United Kingdom (‘UK’), commonly referred to as ‘protected disclosures’ so as to create the required balance.  Whistleblowing is defined as the reporting by employees or former employees of illegal, irregular, dangerous or unethical practices by employers. The first Indian but ineffective attempt of the legislature narrowly defines it as any person to report an act of corruption, willful misuse of power or discretion, or a criminal offence by a public servant. Despite the already limited scope of this definition in the Whistleblower Protection Act, 2014 (‘the Act’), the same could not come into force due to national security concerns like sensitive military data leaks, and legislature sought to amend and expand the exceptions.   The history of whistleblower regulations and the initial efforts by the US prompted a remark that don’t put your head up, because it will get blown off. Foreign jurisdictions have sought to avoid this ethical fatality by navigating technicalities to achieve their goals. However, India lags behind despite several setbacks. One infamous instance is the murder of whistleblower Satyendra Dubey in the NHAI scam case. This murder, among others, brought the foreign debates of anonymity and protection from retaliation.   In light of this, this article analyses the current regime of whistleblower protection in India. The article then attempts to further the present regime in the Private Sector followed by a succinct discussion on plausibility of labour law to further and streamline the protection or employer retaliation.   Inroads in the corporate sector   After tacit public outcry, in conjunction with that of the Supreme Court ‘(SC)’ in the Satyendra Dubey case and several committees, the government established the Central Vigilance Commission ‘(CVC)’ to act upon complaints. This body exhibited numerous imperfections in its core structure and functioning, including an extremely narrow jurisdiction limited to PSUs and Central officials. However, these attempts failed to safeguard and thus promote whistleblowing, primarily due to opposition by large corporates in India.   Nevertheless, several attempts have been made to expand the scope of Whistleblower regime, i.e., the CVC, Companies Act, 2013 and the SEBI LODR, 2015. However, the scope of these stretches only to listed companies.   Even with regard to listed companies, this practice is mostly self-driven and has given leeway to companies to exclude vital features of any whistleblower policy. For instance, organizations like CPRI, Bangalore only allow permanent employees to raise complaints; thus, excluding most of their workforce.   Inclusion of Private Sector   It is argued that the private sector be included in whistleblower protection regime since unethical practices are beyond the listing agreement or public sector. As early as in 2007, the ARC recommendations boldly proposed inclusion of private sector in whistleblower protection regime. One bold move, borne out of lack of action to preclude banking related scams, was the issuance of a circular by RBI titled “Protected Disclosures Scheme for private and foreign banks operating India”. The same was formulated in effect of CVC as the authority to receive complaints. This was the first instance of coverage of any private sector organization even before the SEBI LODR brought listed companies within its ambit.  What then primarily guides the whistleblower regime in Indian corporate sector is LODR, 2015 read with Section 177 of the Companies Act. Initially, it was suggestive in nature, however, an amendment later on mandated the vigil mechanism to be set up by all the listed companies. The clause requires the mechanism to be effective but there exists no streamlined authority/body to ensure the same, thus allowing the companies to shape their whistleblower policies as it suits their interests. However, there is nothing to keep checks and balances on these internal policies except a requirement to report details of any disclosures in annual corporate governance report of the company.   Even internationally, G20 Anti-Corruption action plan, while citing the 2009 OECD recommendations, calls for ensuring protections in private sector. In its analysis of protections in G20 countries, it highlights the different paths taken for same end goal. For instance, as specified in the action plan, Canada does not make any distinction at all, covering both the sectors.1 Additionally, Germany has specifically used its labour law regime to further whistleblowing and crafted good faith as a protection from dismissal. With this, let us delve into interaction of Indian Labour law with the whistleblowing and retaliation associated with it.    Indian Labour Law: Navigating the Limits  The inadequacy evident in the preceding sections, prompts considerating whether the labor law regime provides any form of protection—albeit limited to livelihood if not life.  The current regime does not inherently safeguard whistleblowers. However, at its core, labor law is grounded in the protection of workers against unfair treatment. Otto Kahn Freund articulates that the primary goal of labor law is to rectify the inherent inequality of bargaining power within the employment relationship. This power imbalance permits employers to dictate the terms of employment contracts, offering jobs on a “take it or leave it” basis. Such an imbalance is a contractual flaw that overlooks the socio-economic realities of societal relations. Hugh Collins further asserts that acknowledging wealth inequalities necessitates sociological intervention in the traditional freedom of contract.  With this objective in mind, labor law legislations globally aim to shield workers from ‘victimization’ and ‘unfair dismissal.’ In India, the validity of dismissal is explored under Schedule V of the Industrial Disputes Act, 1947 (ID Act). Clauses 5(a) and (b) of the

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