Law on the Protection of Business Secrets, whistleblowing, and malicious internal offenders.

 The fine line between whistleblowing and disclosing secrets as well as prevention options.

Law on the Protection of Business Secrets, whistleblowing, and malicious internal offenders.

Threats to companies – especially to sensitive and valuable information – frequently originate from within the company itself. However, disclosing business secrets is not always punishable: Whistleblowing is one example.

Malicious internal offenders: different motivations

Malicious internal offenders disclosing business secrets is a major challenge. A study by the University of the German Armed Forces has shown that one single type of malicious internal offenders does not actually exist. Rather, disclosing secrets in the broader sense is the result of differing motivations.

In this context, the types of disclosure include

  • transferring data to the competition,
  • industrial espionage,
  • blackmail and
  • whistleblowing.

One common reason why employees disclose secrets is anger at their employer company.

Is disclosure of secrets a criminal offense?

From a labor law perspective, disclosing trade secrets generally constitutes grounds for termination without notice.

Depending on the specific situation, the unauthorized disclosure of confidential information belonging to the company has also been prosecutable as a betrayal of secrets since 2019. This applies even if the employment contract does not include an explicit confidentiality obligation (Section 23 of the Law on the Protection of Business Secrets (GeschGehG)).

However, one may only face prosecution when disclosing business or trade secrets in their work context to third parties without authorization for the following reasons:

  • for their own benefit,
  • to benefit third parties,
  • for competitive purposes or
  • to harm the company

Malicious internal offenders and whistleblowing

If this is true, how is whistleblowing possible without punishment? Section 5 of the Law on the Protection of Business Secrets states that disclosing business secrets is not prosecutable when done to protect a legitimate interest. This is defined as

“the disclosure of an unlawful act or professional or other misconduct if the […] disclosure is suitable to protect the general public interest”.

Therefore, Section 5 of the Law on the Protection of Business Secrets may form the basis for whistleblowing activities. At the same time, it also may protect journalists, for example, against prosecution if they inform the public about corruption or data misuse, etc. and “disclose” business secrets when doing so.

The Whistleblower Protection Act covers the rest

The Law on the Protection of Business Secrets effectively preempted the Whistleblower Protection Act (HinSchG): Whistleblowing as the “disclosure of secrets in the public interest” has no longer been punishable since 2019.
Conversely, whistleblowing remained a sanctionable offense under labor law: It was not until 2023 that the German Whistleblower Protection Act provided complete protection to whistleblowers who actually act in the public interest.

Nevertheless, whistleblowing also has legal limits: If disclosing criminal acts or wrongdoing does not serve the public interest, whistleblowing remains a punishable disclosure of secrets.

Prevention against malicious internal offenders?

What can companies do about genuinely malicious internal offenders who are not acting in the public interest? Prevention to the best extent possible is the best solution. The objective is to prevent the disclosure of secrets and also to avoid all other damage which malicious internal offenders may cause (such as sabotage).

On the one hand, technical and organizational preventive measures can be taken – especially to prevent sabotage.
On the other hand, (inter)personal measures may be even more important as a means of preventing secrets from being disclosed. These measures include fostering a culture of open discussion and communication as well as promoting a good working atmosphere. Ultimately, a good working atmosphere with satisfied employees reduces the risk of acts of revenge by malicious internal offenders who disclose or sabotage business secrets to further their own interests. In view of this, company managers need to keep an eye on the atmosphere in the workplace with this in mind.

In addition, equal and appropriate pay also reduces the risk of corruption. This is another aspect that needs to be considered to protect the company against malicious internal offenders.

What can we do for you?

Do you have questions about malicious internal offenders, the disclosure of secrets or other issues in this context? Do not hesitate to contact us!

Summary of the key facts:

  • Malicious internal offenders can cause extensive damage to companies by disclosing business secrets, for example.
  • The fundamental difference between the prosecutable disclosure of business secrets and whistleblowing that may be exempt from punishment lies in the public interest in the disclosure.
  • Technical, organizational, and interpersonal preventive measures can minimize damage caused by the disclosure of business secrets, sabotage, and suchlike.