The question of monetary compensation for whistleblowing
The idea of monetary compensation may appear counterintuitive at first, but research from Dyck et al. (2010) found that it does not seem to lead to an excessive number of frivolous lawsuits. They suggest that compensation should be directly linked to the size of the fraud uncovered. This approach has worked in the United States, probably because it lowers the high personal cost associated with whistleblowing.
One reason for the EU Directive on Whistleblowing (2019) is to redress the inherent power imbalance between organisations and individuals, since the former have a much higher coercive capacity. However monetary compensation is not a part of the Directive. It remains to be seen if this will change with further legislation, but companies can decide for themselves whether they would like to encourage whistleblowing in this way, and also why it's valuable for the company to protect them.
This issue likely stems from the fact that many countries in the European Union (and beyond) still harbour negative views toward whistleblowing, let alone the idea of compensating individuals for it. In many cases whistleblowing is seen as more of a tool for airing false grievances and/or pressuring individuals. At the same time, whistleblowing comes at great personal cost to those raising the alarm, as many such individuals end up leaving their positions due to negative impacts on their personal well-being and work life, even if no retaliation has occurred per se.
To incentivize organisations to include monetary compensations schemes to their whistleblowing solutions, the conversation around the practice needs to change. Until whistleblowing is seen as a beneficial practice, it is likely that a number of states and organisations in the EU will continue to sideline this issue. Thus, it is important to keep having conversations around this and other controversial topics related to whistleblowing.
Further reading:
Dyck A, Morse A, Zingales L (2010) ‘Who blows the whistle on corporate fraud?’ The Journal of Finance 65(6):2213–2253
