Ethicality is a core component within any workplace. Whether it is the employers or the employees, there is a certain amount of trust and moral understanding that is to be expected from everyone within a professional sphere.
However, when certain members within a team do break ethical boundaries, whistleblowers play a crucial role in bringing these actions to light. From the highest executive member of a company to an entry-level employee, a whistleblower can be anyone who takes up the responsibility of reporting wrongdoing.
Whistleblower complaints in Indian companies rose 8% in FY24 to 1,074, as per the data collated for the Bombay Stock Exchange (BSE)-50 companies. The number highlights how much employees in India have come to value ethical behaviour in the workplace.
Being a whistleblower, though, often carries personal and professional risks that can hamper people from voicing their concerns. The lack of safe reporting channels can jeopardise the careers of those who do speak up or can, indirectly, encourage the existing malpractices.
Being a Whistleblower is Not Easy
The ethical voice within compels most within the workplace to say something against the wrongdoings within the workplace, even if it might not be affecting us directly. However, that voice is often tempered by the harsh realities that being a whistleblower comes with a variety of risks that can spell the end of one’s professional life if things go awry.
Fear of Retaliation
Prospective whistleblowers often reconsider their decision to speak up due to fear of losing their jobs, facing harassment in the workplace, or damaging their reputations.
The fear that an employer may just decide to cut ties with the employee who might bring negative attention to them is not unfounded, and hence can stop many. Moreover, even with legal protections in place, some employees might feel that their superiors will use other methods to showcase their displeasure.
Many employees also fear that they may lose out on growth opportunities because of being a whistleblower. Furthermore, some employees might get targeted with passive-aggressive behaviours that can discourage them and others from speaking up.
Losing Workplace Bonds
It is not just management that prospective whistleblowers feel wary of. Despite the ethical rights or wrongs, the fact remains that people are afraid of losing the trust of others if they are outed as a whistleblower.
Their own team members and colleagues may stop sharing things with them because they might fear that the whistleblower might target them next, even if the situation may be completely different.
This can lead to a disconnect from one’s workplace, declining cohesion within the team, and increased tensions. Ultimately, being a known whistleblower might not seem worth it to some.
Lack of Awareness
There are many employees who may wish to speak up, but are not aware of how they can do so. Many workplaces offer the option of being an anonymous whistleblower, but it is not used due to a lack of awareness.
This can be especially harmful for those who do wish to speak up but do not want to suffer from having their identity revealed. Even if one might be willing to take said risk, they might not know just whom they should speak to, or how.
Implementation Gaps
Any policy is only as effective as its implementation. Even when whistleblowing policies exist, HR enforcement can be inconsistent. Unless what is one paper is indeed implemented within a company’s structure, the existence of whistleblowing mechanisms cannot really be termed as a good thing.
In fact, the lack of proper implementation of a whistleblowing policy can do more harm than good. An employee might be trying to share their concerns in good faith as an anonymous user, but if the mechanism does not ensure proper safeguards, it might have severe negative repercussions for them.
What HR Can Do
HR’s role when it comes to whistleblowing is two-fold. They not only need to make sure that proper procedures are followed, but should also be prompt in offering their support to the employees.
Ensure Confidentiality, Protection, and Non-Retaliation
From a purely administrative point of view, HR should make sure that confidentiality is maintained at every level of the process. It should make sure that adequate protection is offered not just to the whistleblower but also to the defendant until a verdict is reached and the investigations are over.
Innocent until proven guilty: This is indeed the motto that HR and everyone else should keep in mind. However, that does not mean that proper precautions are not implemented as needed. Dealing with whistleblowing complaints is a delicate task and requires, above all, immense sensitivity and empathy.
Offer Counselling and Support
Providing proper mental and administrative support to the parties involved in the process is imperative for HR professionals. For whistleblowers, HR should be prompt in explaining how the process works, offer counselling to deal with the stress of taking up such a responsibility, and ensure that they know that doing the right thing does not equate to being punished.
On the flip side, being on the receiving end of a whistleblowing complaint can also be stressful. Whether or not a person has indulged in unethical behaviour should be determined by an investigation, and until that is completed, HR has the professional and moral responsibility to provide them with the support that they would offer to any employee in distress.
What HR Should Look For
Whistleblower complaints can also be a source of knowledge that HR professionals should not ignore easily.
Once is an accident, twice is a coincidence, three times is a pattern: This is a motto that one cannot forget, especially when dealing with repetitive complaints.
What it Says About Employees
If multiple complaints have been lodged against a single individual, then it becomes obvious that perhaps the person might not be the right fit within the team. If many juniors end up complaining about the same senior for similar reasons, it only adds to the evidence of their unethical behaviour.
While each complaint should receive its due consideration and one investigation should not be affected by another, an emerging pattern is something that HR should be consciously aware of.
Repeated complaints about a single employee are certainly a cause of concern and should be investigated thoroughly but fairly. The complaints might either be genuine or malicious in nature, and both of these ideas should be given equal consideration before making any judgments.
What it Says About the Company
Consider this: You have received multiple whistleblowing complaints regarding the same issuebut pertaining to different employees. May three employees have talked about three different harassment cases. Maybe there have been multiple reports of fraudulent transactions. In such cases, HR needs to take a strong look at the culture of the company.
What does it say about a company’s culture if certain forms of unethical behaviour are becoming a pattern in the workplace? In such cases, HR and the leadership need to reassess the values that they stand for and restructure how certain processes are conducted and how things are communicated.
When it’s one employee, you may consider them a bad apple. But if all you get are bad apples, perhaps it’s time to look at the roots and find what’s actually causing the rot. Look at the anonymised data in hand to strengthen ethics training and compliance programs.
Legal and Policy Framework in India
Recognising the importance of whistleblowers and their role in fostering an honest and ethical workplace, Indian legislation provides multiple safeguards and directives to ensure that individuals feel secure in reporting wrongdoing within the workplace.
Whistle Blowers Protection Act, 2014
The Whistle Blowers Protection Act, 2014, establishes a mechanism to receive complaints relating to disclosure on any allegation of corruption or willful misuse of power or willful misuse of discretion against any public servant and to inquire or cause an inquiry into such disclosure and to provide adequate safeguards against victimisation of the person making such complaint and for matters connected therewith and incidental thereto.
Ultimately, this act was created with the aim of decreasing corruption amongst public servants and to provide necessary safeguards to whistleblowers without the fear of repercussions. Some of its key features include:
- Protection for whistleblowers, i.e. persons making a public interest disclosure related to an act of corruption, misuse of power, or criminal offence by a public servant.
- Ability for any public servant or any other person, including a non-governmental organisation, to make such a disclosure to the Central or State Vigilance Commission.
- Mandating the inclusion of the identity of the complainant.
- Barring the Vigilance Commission from disclosing the identity of the complainant except to the head of the department if deemed necessary. The Act penalises any person who has disclosed the identity of the complainant.
- Penalties for knowingly making false complaints.
Despite the far-reaching capabilities of this act, it should be noted that the Whistleblowers Protection Act, 2014, does not apply to private companies.
Companies Act, 2013
For private companies in India, the Companies Act, 2013, establishes some mandates regarding “vigil mechanisms” in companies.
“Every listed company or such class or classes of companies, as may be prescribed, shall establish a vigil mechanism for directors and employees to report genuine concerns in such manner as may be prescribed.” – Section 177(9) of the Companies Act, 2013.
While the details of how this vigil mechanism should work, the presence of one is mandatory for every listed company. HR itself plays a crucial role in establishing the procedure for the same, which prevents the rights of all involved.
SEBI LODR, 2015
The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, or SEBI LODR, 2015, also established guidelines for listed companies to set up vigil mechanisms to safeguard the interests of the involved parties.
As per Regulation 22, titled Vigil Mechanism / Whistleblower Policy, listed companies are mandated to formulate a vigil mechanism or whistleblower policy for directors and employees to report genuine concerns. The mechanism must provide adequate safeguards against victimisation of the involved parties while also giving direct access to the chairperson of the audit committee in appropriate or exceptional cases.
Similarly, Regulation 4(2)(d) includes that “The listed entity shall devise an effective vigil mechanism/whistle blower policy enabling stakeholders, including individual employees and their representative bodies, to freely communicate their concerns about illegal or unethical practices.
Ultimately, SEBI LODR, 2015, not only directs companies to establish transparent procedures and effective vigil mechanisms but also emphasises that the privacy and safety of all parties should be maintained in all circumstances.
Internal HR Policies
For private companies in India, whistleblowing is conducted and supervised by the company’s policies and HR personnel. Such policies must include anti-retaliation clauses, confidentiality, and follow-up procedures.
What HR Must Do Next
Whistleblowing policies, like any good policy, should evolve and adapt constantly. From legal alignment to ethical considerations, whistleblowing procedures should always strive to become better so as to improve the workplace and safeguard the interests of all involved.
Strengthen Whistleblower Policies
Make sure that the whistleblower policies in your company align with the Companies Act as well as the regulations highlighted by the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The policies must include clear procedures, anti-retaliation measures, and communication protocols. Above all, they should be easily understood and accessible to make sure that employees and stakeholders are able to use them effectively.
Foster Ethical Culture
HR must conduct training and workshops to emphasise to the employees the value of ethical practices. This can not only discourage unethical minds but also tells employees that, when faced with whistleblower complaints, the company will always prioritise doing the right thing.
A company’s leadership plays a monumental role in creating an ethical culture. What the leaders do and say highlights the values that the company cherishes and wants to encourage.
External Oversight
True accountability can often be found thanks to impartial parties. HR can coordinate with compliance and legal teams to ensure impartial investigations when faced with whistleblower complaints.
The inclusion of external parties assures both the whistleblower and the defendant that the investigation is being conducted by an unbiased party and will not involve those with whom they work daily.
Notable Corporate Whistleblower Cases in India
Whistleblowing within the corporate sphere is on the rise in India, with many notable cases having emerged recently.
99acres | Info Edge Case
Info Edge, the parent company of entities like Naukri, Shiksha, and Jeevsathi, received a whistleblower complaint that alleged policy violations by the employees of 99acres, the company’s real estate venture.
In a BSE filing on September 11, 2015, Info Edge stated that the matter was taken up by its Audit Committee and Board of Directors. They, in turn, appointed a specialist law firm to conduct an independent and comprehensive investigation into the allegations.
Info Edge also stated that, at the time of filing, there was no material impact on its financial statements. The complaint, it said, will be handled in line with its whistleblower policy, available on its website.
“Info Edge (India) Limited (“Organization”) believes in the conduct of its affairs in a fair, accountable and transparent manner and is committed to creating a culture of ‘Right Doing’ that encourages highest standards of professionalism, ethics, integrity and objectivity in individual conduct.” – Info Edge Whistleblower Policy Statement.
The decision to hire a specialist law firm to conduct the investigation highlighted Info Edge’s commitment to transparency in such situations. While the matter is still under investigation, the transparency showcased by the company is indeed a precedent to be followed.
Infosys 2019 Case
In 2019, Infosys captured the headlines when two anonymous whistleblower complaints accused the company’s Chief Executive Officer (CEO), Salil Parekh, of indulging in unethical practices. Both complaints were presented to the Audit Committee on October 10, 2019.
In the first complaint, dated September 20, 2019, the anonymous complainers alleged that the company’s top executives, including Parekh and CFO Nilanjan Ry, were inflating profits and hiding losses. It also claimed that the executives were pressuring employees to make the financial results of the company look better than they actually were.
To address this complaint, Infosys formulated an independent investigation panel comprising law firms and auditors. The company was adamant that, should the executives be found responsible for any wrongdoing, then appropriate measures would be taken.
An undated whistleblower complaint also pointed fingers at Parekh,
“Being an employee and a shareholder, I think it is my duty to bring the misdeeds of the current CEO, Salil Parikh, to your attention with the hope that you will execute your responsibilities in the true spirit of Infosys and in favour of the employees and shareholders who have so much of faith in the company.” – Undated Whistleblower Letter.
The complaint stated that though Parekh was hired as the CEO with the understanding that he would be based in Bengaluru, he continued to operate from Mumbai. The complainant stated that the cost of Parekh’s travelling to Bengaluru twice a month from Mumbai was being borne by the company, when that should not be the case.
“Four business class tickets per month, plus home-to-airport drop in Mumbai, airport pick-up in Bengaluru and the same during the return journey. If the CEO has not relocated to Bengaluru, all the expenses need to be recovered from the CEO’s salary,” the complainant highlighted.
Both complaints were investigated by the independent panel, which found that the complaints had no merit.
“The Audit Committee took the anonymous whistleblower complaints very seriously and commissioned a thorough investigation with the assistance of independent legal counsel. The Audit Committee determined that there was no evidence of any financial impropriety or executive misconduct.” – Infosys’ Audit Committee Chairperson, D. Sundaram.
The actions taken by Infosys highlighted the company’s firm commitment to its ethical standards. Given the involvement of its highest-level executives, it opted for an independent panel, recusing both Parekh and Sundaram from the investigation. Such a step ensured that all the involved parties were given a fair chance during the process.
The Infosys case also highlights the right things that the company did when it comes to handling whistleblowing complaints. Despite the severity of the issues, Infosys maintained and respected the anonymity of the complainants. They held themselves and their leaders accountable, even if the complainant had not shared their identity.
At the same time, they also made sure that the people accused were given a fair chance. The company chose an independent investigation to get to the bottom of the matter and respected the verdict that was reached. Moreover, Infosys’ decision not to let the investigation hamper the work and responsibilities of the defendants highlighted their firm stance behind “innocent until proven guilty.”
In the End…
Whistleblowing is a necessity when it comes to creating ethical workplaces. It helps boost accountability in any team and allows employees to speak up without fearing negative repercussions.
A good whistleblowing policy discourages the idea that only a person above you in hierarchy can hold one accountable. Doing the right thing, in such situations, can pose a moral conundrum, but it doesn’t necessarily have to be hard to follow through once the decision has been made.
Indian organisations must strengthen policy, culture, and enforcement to make whistleblowing effective and safe. Smaller companies especially need to conduct awareness campaigns that educate their employees on the company’s whistleblowing mechanism. This is an initiative that HR needs to play an active role in by ensuring employee protection, fair investigations, and building trust.
