Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I thank Deputies Farrell and Buckley for raising this issue and for their amendments. This is something I have considered carefully and discussed with the officials at length. Before setting out the reasons I do not propose to accept the amendments, I want to make it clear that the obligation on some employers to have internal channels and procedures is an administrative requirement separate from the right of workers to report wrongdoing to their employer. Therefore, there is no diminution here of the rights of people to make a protected disclosure.

Section 6(1) of the Protected Disclosures Act provides that a worker is protected if they report a relevant wrongdoing to their employer. This applies irrespective of the size of the organisation they work for and the Bill does not change this. Therefore, regardless of whether their employer has a formal reporting channel or not, all workers, public and private, remain entitled to all of the protections of the legislation. That is a fundamental point worth remembering. Workers will also have access to supports such as the Transparency International Ireland Speak Up Helpline to help them in understanding how to make a report.

Implementing the requirements as regards internal reporting channels will create a compliance burden for industry. The European Commission’s impact assessment of the directive estimates that the initial set-up costs for a typical small to medium enterprise as being €1,374 in the first year with an ongoing annual cost of €1,054 in subsequent years. That was based on estimates made in 2017 and with inflation the true cost may now be higher. This is an issue that I have probed myself to try to understand the costs that are involved in setting up these channels and maintaining them.

Implementing the requirements is not a simple matter of printing a generic policy document and posting it on a wall in an office. The directive and the Bill are clear that internal channels must be designed, established and operated in a secure manner that protects the confidentiality of the reporting person and the information they have reported. In practical terms, this will require firms to appoint and train dedicated staff to operate these channels. It will require the deployment of dedicated, separate and secure channels such as mail boxes, encrypted emails or webforms and dedicated phone lines and voice messaging systems. All of these will impose costs on organisations. Blanket imposition of the requirement to have internal channels to all employers would therefore be disproportionate, particularly given the impact of the pandemic and Brexit on the SME sector in Ireland as well as the pressures they are facing from very high inflation, and unworkable in many situations, particularly for micro enterprises.

It is hard to see what benefit there is in imposing these elaborate requirements on very small local retailers such as the local sweet shop or on a plumber and his apprentice. It could also create a compliance burden for some voluntary or member-led organisations with a small cohort of employees, particularly in the areas of sport, such as GAA clubs, golf clubs, rugby clubs and heritage and the arts.

Furthermore, article 8.7 of the directive provides that member states can only lower the threshold of 50 employees if they carry out a risk assessment and notify the European Commission accordingly. The directive sets the floor at 50. It is open to the member state to go below that but it would require the carrying out of a risk assessment. This has not been done and, therefore, I cannot accept this amendment.

Section 8, by way of the insertion of a new subsection, provides for a regulation-making power to lower or remove the threshold for certain firms or categories of firms subject to a risk assessment and a public consultation. Therefore, there is an enabling provision within the Bill that would empower the Minister to bring in a regulation that lowers the threshold. I accept that there are some sectors involved in certain high-risk activities, as the Deputies have raised, which could benefit from being subject to this requirement. Indeed, the directive and the Bill already provide that the threshold does not apply in the areas of financial services, aviation safety and oil and gas safety, for example, and, of course, there has never been a threshold in the public sector. It only applies in the private sector.

A number of submissions from regulators during the public consultation on the general scheme of the Bill identified other areas where there may be benefits in lowering or abolishing the threshold. For example, ComReg suggested that operators of premium rate phone lines should be put within the scope of this requirement. A number of suggestions were also made at the pre-legislative scrutiny hearings regarding certain accountancy firms and some technology firms. We recognise there may be some merit in that and that is why we have provided the enabling provision in the Bill that is before the committee today.