Amendment to the Whistleblower Protection Act Raises Stakes for Public Whistleblowers

On January 9, 2024, the National Assembly enacted an amendment to the Whistleblower Protection Act (“WPA”) removing the current ceiling on government compensation for public whistleblowers. The amendment takes effect on August 7, 2024.

We expect this amendment to further encourage public whistleblowing actions in Korea, which have already been on the rise in recent years. Between 2011 and 2022, the number of public whistleblower reports increased by more than tenfold from 292 to 3,266.

Compensation for Whistleblowers

The current WPA sets the ceiling of government compensation paid to public whistleblowers at KRW 3 billion (approximately USD 2.2 million), if the report results in or provides a legal basis for recovery of public funds. The amendment removes such ceiling but instead limits compensation at 30% of the amount that the public institution has or is expected to recover as a result of the whistleblower’s report. The amendment does not apply retroactively.

While the government has paid out significant sums as compensation for public whistleblowers in the past, there has been criticism that the level of compensation was not proportional to the risk taken by the whistleblower and the implicated public interest.

For instance, in 2023, a whistleblower reported a pharmaceutical company for manufacturing certain medical devices unlawfully and received KRW 85 million in compensation, which amounted to only 10% of the administrative fine imposed on the company (KRW 850 million). The highest compensation ever awarded to a whistleblower was paid in 2016, but the KRW 1.16 billion award was only a fraction of the KRW 26.3 billion recovered. Under the amended WPA, a whistleblower may potentially receive compensation which is higher than the current ceiling and which is proportionate to the amounts recovered through the whistleblower’s report.

2.	Additional Protections for Whistleblowers In addition to removing the ceiling on whistleblower compensation, the amended WPA includes various provisions that strengthen whistleblower protection.

The amended WPA expands the scope of attorneys’ fees covered for public whistleblowing which are filed by attorneys representing an anonymous whistleblower. Currently, this provision only exists in the agency rules of the Anti-Corruption & Civil Rights Commission (the “ACRC”), which provides support for attorneys’ fees for filing the initial whistleblowing report on an anonymous basis. The amended WPA moves the provision to the statute and expands coverage to all or part of the attorneys’ fee for the subsequent stages that follow the initial report. These may include the resulting investigation, administrative proceeding, litigation, applying for protective measures or compensation, and other related procedures.
The current WPA provides that the ACRC may request a company to implement disciplinary action against a person who breaches the confidentiality of the whistleblower’s report or otherwise takes an unlawful or disadvantageous action against a whistleblower. The amended WPA adds an enforcement provision which compels companies to comply with the ACRC’s request absent justifiable reason.
The amended WPA also expands the scope of “public” whistleblower by adding to the current list of statutes that trigger whistleblower protection under the WPA. The WPA currently lists 471 statutes, the violation of which may qualify as a subject of “public” whistleblowing. The amended WPA adds to the list several statutes, including the Financial Consumer Protection Act and the Disaster and Safety Communications Network Act.

Considering the importance and potential impact of the amended WPA, which impacts not only whistleblowing to public agencies but also the private sector, companies doing business in Korea are advised to ensure that their internal controls and compliance systems are up to date to reflect the amended WPA.

[Korean Version]

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