The law for the protection of whistleblowers was introduced in 2006 as a means of shielding people who report wrongdoing by the companies and organizations they belong to from possible reprisals by their employers such as dismissals and demotions. Since its introduction more than a decade ago, however, critics have charged that the legislation lacks the teeth to shield whistleblowers from unfair treatment since it fails to provide legal punishment to the employers that take reprisals against them.

A report released last month by an experts’ panel at the Consumer Affairs Agency weighing an amendment to the law, however, does not appear to do much to improve the system while shelving most of the contested proposals, such as imposing criminal penalties on employers that treat whistleblowers unfairly. The issue needs to be further scrutinized to see whether the current system or its planned amendment effectively serve the legislation’s purpose.

The law was introduced in the wake of a string of scandals at major firms — such as beef mislabeling by the now-defunct Snow Brand Foods Co., as well coverups by Tokyo Electric Power Co. of troubles at its nuclear power plants and by Mitsubishi Motors of its vehicle defects — that came to light thanks to whistleblowers. The case of an employee at Tonami Transportation Co., who was demoted to doing insignificant tasks for some 30 years after alerting the media to the trucking industry’s bid-rigging practice in the mid-1970s — until he won a damages suit against the firm in 2005, is said to have triggered the calls for legislation to protect whistleblowers.

Under the law, only current employees of companies or organizations are subject to protection against reprisals by their employers. Workers who uncover wrongdoing at their companies are supposed to first alert their employers. Higher hurdles are set for people who wish to report wrongdoing to third parties. Those who try to alert administrative institutions are required to have “substantial reasons to believe that the wrongdoing is just about to take place,” while those seeking to expose wrongdoing to the media must clear additional conditions, such as that they face an imminent risk of dismissal. The law says that dismissals of whistleblowers under such conditions are invalid, but provides no punishment for employers that violate the law.

Even after the law was introduced, many workers who alerted their employers of suspected wrongdoing by their colleagues and superiors have reportedly found themselves demoted or otherwise treated unfairly. People who were punished for whistleblowing can take their cases to labor dispute proceedings or file lawsuits, but a court ruling that their dismissal or demotion was illegal would usually only result in them regaining their job.

An employee of Olympus Corp. was transferred from a long-held job in 2007 after he blew the whistle on wrongdoing by his superior. A subsequent court order requiring the company to pay ¥2.2 million in damages for “abuse of its authority” over personnel affairs did not result in him regaining his previous position, and it was only after he filed and won another lawsuit that Olympus settled with the worker. The former plaintiff says legal punishment of employers that take reprisals against workers who report wrongdoing is crucial to provide effective protection for the whistleblowers.

The amendment proposed by the experts panel at the Consumer Affairs Agency calls for expanding the law’s coverage to former workers of companies in question as well as to their board members, in addition to their current employees. However, it shelved “for further discussion as needed” the proposal for introducing criminal punishment for employers that unfairly treat whistleblowers in violation of the law. Instead, the panel called for issuing recommendations to such firms to correct their practices and disclosing the names of companies that refuse to comply. Also passed over was a call for imposing a legally punishable confidentiality requirement on company officials in charge of in-house procedures to act on whistleblower alerts, so as to prevent leaks that could result in the identification of the whistleblowers and possibly expose them to reprisals.

In the panel’s discussion, business-sector representatives are said to have strongly resisted the introduction of severe measures against employers that punish their workers for whistleblowing. Based on the report, the Consumer Affairs Agency will reportedly work on a relevant bill to amend the law. The agency needs to take a hard look at whether the proposed amendment is sufficient enough to give teeth to the law so that it can effectively serve its purpose — protecting people who blow the whistle on wrongdoing by businesses and other organizations for the sake of the public interest.

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