The new rules will set EU-wide standards to ensure whistle-blowers do not face retaliation as a consequence of their actions, such as being dismissed from their job or facing legal action.
The Commission also said organisations would have to set up safe channels for reporting, both within an organisation and to public authorities.
The rules will also protect those who report wrongdoings to the media.
Whistle-blowers have played a central role in a number of recent scandals, such as dieselgate and more recently, the Cambridge Analytica revelations.
LuxLeaks whistle-blower Antoine Deltour was handed a six-month suspended sentence by a Luxembourg court, which was overturned in January this year.
However, his colleague Raphaël Halet, who helped raise the alarm on Luxembourg's shady tax dealings, saw his conviction - a €1000 fine - upheld.
Commission First Vice-President Frans Timmermans said, “Many recent scandals may never have come to light if insiders hadn’t had the courage to speak out. But those who did took enormous risks.
“If we better protect whistle-blowers, we can better detect and prevent harm to the public interest such as fraud, corruption, corporate tax avoidance or damage to people's health and the environment. There should be no punishment for doing the right thing.”
Věra Jourová, European Commissioner for justice, consumers and gender equality added, “The new rules will be a game changer. In the globalised world where the temptation to maximise profit sometimes at the expense of the law is real, we need to support people who are ready to take the risk to uncover serious violations of EU law. We owe it to the honest people of Europe.”
The Commission noted that its proposal includes safeguards to discourage malicious or false reporting.
Parliament’s rapporteur on the protection of whistle-blowers, Virginie Rozière, said, “Last year, the European Parliament backed the creation of strong protections for whistle-blowers. We are glad to see that large parts of our report have been taken on board in the proposal from the Commission.
“We are pleased that these proposals will cover a large scope of EU policy areas, from environmental and consumer protection to personal data and the defending the EU’s financial interests.
“However, a big issue remains that breaches of employment law are not part of the scope. The strong protections for whistle-blowers against any form of retaliation are a positive step forward, as is the creation of legal and financial assistance to support whistle-blowers.”
Jean-Marie Cavada, a Vice-Chair of Parliament’s legal affairs committee, commented, “Whistle-blowers act in the public interest, compensate for the lack of institutional powers when necessary, and seek to protect citizens. It is about time the EU ends the current legal patchwork and comes up with EU-wide rules to protect them. Scandals revealed by whistle-blowers do often not only affect one country alone, but the whole Union.
“Recent revelations such as the Panama Papers or LuxLeaks made it even clearer that it is our duty to guarantee whistle-blowers are protected from court proceedings, which could prevent them sharing valuable information with the public.”
Greens/EFA group transparency spokesperson Julia Reda said, “When people are moved to blow the whistle, it is often in response to a breach of public trust or actions that break from the spirit of the law, if not the letter. It's good to see the Commission recognise this in their proposals.”
However, she cautioned, “There is still work to be done. It is disappointing not to see workers’ rights included in the Commission's plans. This is too important an area to remain unprotected. If additional legislation is needed to make this possible then the Commission needs to start laying the ground work for that now.”