Employees who blow the whistle on corporate tax avoidance or cheating on product standards would be entitled to special legal status under a draft EU law.

The European commission will next week propose legislation that intends to protect whistleblowers. Recent scandals have exposed the limited help available for people seeking to expose corporate behaviour in the public interest.

Next month, Antoine Deltour, a former PricewaterhouseCoopers employee who received a six-month suspended sentence for helping to reveal tax avoidance on an industrial scale, faces another court appearance. This is despite his conviction being overturned on appeal.

Proponents of an EU whistleblower law argue it could have led to earlier exposure of the VW emissions scandal. Systematic cheating on clean-air tests at Europe’s largest car manufacturer was uncovered by the US Environmental Protection Agency.



According to the draft commission directive seen by the Guardian, whistleblowers are not protected from retaliation. “Where potential whistleblowers do not feel safe to come forward … this translates into underreporting and therefore missed opportunities for preventing and detecting breaches of union law which can cause serious harm to the public interest.”



The law would give whistleblowers protected status, including the right to legal aid and possible financial support. Companies would be banned from firing or demoting whistleblowers and face “dissuasive” penalties for seeking to block employees seeking to uncover wrongdoing.



EU member states would be responsible for deciding on details, such as the type of sanctions, in domestic legislation.

Sven Giegold, a German Green MEP, who has been campaigning for such a law, said the draft directive was “a breakthrough for the protection of whistleblowers in Europe”. But he added: “[It] still needs some improvement in order to make sure that whistleblowers in the public interests are truly protected in all circumstances.”

If such a law had existed earlier, the VW scandal would have been exposed much sooner he said. “We have no protection in Germany and such a law would have made it much more likely that people reported assaults on the public interest.”

The draft law will be revised by EU governments and the European parliament, a process that usually takes 18-24 months. Although the law will only come into force until after the UK leaves the EU, the British government may find it forms part of core EU standards that must be respected to secure a far-reaching trade deal.

“As this refers to single market legislation I am confident that the UK has a strong interest to have regulatory convergence and Europe has [this interest],” Giegold said. “Even if Brexit actually comes – I guess there will be similar rules in the UK.”