Updated Requirements for Japanese Organizations following the June 2022 amendment to the Whistleblower Protection Act

Updated Requirements for Japanese Organizations following the June 2022 amendment to the Whistleblower Protection Act

Japan, renowned for its loyalty-based corporate culture, has seen a shift in the discourse around whistleblowing and speaking up. The amended Whistleblowers Protection Act (WPA) in effect since June 2022 brings forth fresh obligations for Japanese organizations. This article explores the key aspects of the new WPA, its impact on businesses, and best practices for implementing a compliant whistleblowing system.

WPA Requirements: Overview of Mandatory Obligations

  1. Internal Reporting Channels:
    • Japanese organizations must establish a system to record whistleblowers’ reports and employee concerns, addressing the previous lack of internal reporting channels.
    • Mandatory for businesses with over 300 employees and highly recommended for those with 300 employees or fewer.
    • Organizations can no longer rely solely on a uniform whistleblowing system; subsidiaries must align with WPA guidelines.
  2. Extension of Scope:
    • WPA protection now extends to retired employees within one year after retirement and officers (directors, executive officers, accounting advisers, company auditors, and liquidators).
    • Expanded scope of reportable concerns includes administrative violations, in addition to crimes.
    • Whistleblowers can now report to administrative agencies, not just employers, and are permitted to report publicly in cases of serious violations or damage.
  3. Confidentiality and Retaliation:
    • Organizations and individuals handling reports must maintain confidentiality under the penalty of a criminal fine.
    • Retaliation against whistleblowers, including pay reduction, contract dispatch, or demotion, is strictly prohibited.
  4. Education and Training:
    • WPA mandates informing and educating all stakeholders about reporting options.
    • Training for those handling reports includes understanding confidentiality duties and roles.

Japanese Subsidiaries and Centralized Whistleblowing System: Key Considerations

  1. Local Person Responsible:
    • A local person in Japan must be designated to handle incoming reports, ensuring impartiality and adherence to confidentiality duties.
  2. Utilize the Local Whistleblowing Channel:
    • Leverage the Japanese WPA to reinforce whistleblowing measures, promoting a speak-up culture and identifying risks earlier.
    • Internal reporting channels are viewed as tools for good corporate governance.

Best Practices for Implementation

  1. Data Security:
    • Prioritize data security with local hosting solutions, encrypted data, and certifications like ISO27001 and SOC I & II.
  2. Anonymity and Confidentiality:
    • While not mandatory, provide anonymous reporting channels to ease fears of retaliation and encourage reporting.
  3. Multilingual Platform:
    • Consider language diversity in a global organization; ensure effective communication between whistleblowers, report handlers, and administrators.
  4. Simplify Reporting Experience:
    • Create an attractive and user-friendly reporting system, utilizing tools like mobile apps and dynamic reporting forms.
  5. Compliance with Japanese Requirements:
    • Ensure existing whistleblowing systems comply with the Amended WPA, or establish a system if none is in place.

In Conclusion, given the evolving legal landscape, staying ahead of compliance with tools that adapt to organizational needs is crucial for businesses operating in Japan.