A self-proclaimed ‘single, strengthened whistleblower protection regime [that] covers the corporate… sector’ has been passed by Federal Parliament in February 2019. The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Cth) will amend the Corporations Act 2001 (Cth) to vastly expand the whistleblower protections presently contained in Part 9.4AAA of the Act.
The changes, soon to be law1, represent a substantial change to Australia’s current piecemeal whistleblower protections. Following recent royal commissions, the new regime seeks to promote a more ethical corporate culture by encouraging whistleblowing. The laws will provide greater protection for whistleblowers. Businesses will have significant obligations to constructively deal with, and not ignore, disclosures.
The laws are broad and there are some complexities. Businesses need to prepare for the new laws. Processes and policies will need to be developed and enhanced. Education and training of key staff, especially those authorised to receive disclosures, will be critical.
In this bulletin, the first in our series, we provide an overview of this new regime. In coming bulletins, we will delve into some of the detail.
Disclosures can still made to the relevant authorities (like the Australian Securities and Investment Commission and the Australian Prudential Regulation Authority), and to an auditor, officer, senior manager or other authorised person (authorised by the company to receive disclosures). Here are some of the key changes worth knowing:
More people can now make a disclosure
Previously, only a person who is a company officer, employee, contractor or supplier could make a disclosure. Now, the list of ‘eligible whistleblowers’ has been expanded to include:
- former company officers, employees, contractors and suppliers; and
- relatives and dependants of officers, employees, contractors and suppliers.
Anonymous disclosures are allowed
Under the current regime, whistleblowers are not protected unless they provide their name when making a disclosure. However, other Australian legislation (such as the Public Interest Disclosures Act 2013 (Cth)) permits anonymous disclosure.
The new laws will now protect anonymous disclosures, bringing it into line with these other jurisdictions. The management of anonymous disclosures will require careful consideration, including as to how best to investigate such a disclosure.
There is more that can now be disclosed
Without a doubt, the biggest change involves what is a disclosable matter.
Current whistleblowing protections are limited to circumstances where the discloser has ‘reasonable grounds’ to suspect that the company, an officer or an employee has contravened the Corporations Act. The new protections, however, apply to the disclosure of information which the discloser has ‘reasonable grounds’ to suspect ‘concerns misconduct, or an improper state of affairs or circumstances’ in relation to the company or a related body corporate.
This includes, but is not limited to, when the discloser has reasonable grounds to suspect that a company, or an officer or employee has:
- committed an offence against, or contravention of, a range of legislation like the Act;
- engaged in conduct that constitutes an offence against any law of the Commonwealth where the offence is punishable by imprisonment of 12 months or more;
- engaged in conduct that represents a danger or the public or financial system.
As is apparent, the new laws open the whistleblower protections to a large range of disclosures. Though, as we will discuss in upcoming bulletins, the protections do not apply to ‘personal work-related grievances’, which will remain the realm of the Fair Work Act 2009 (Cth).
Removing the ‘good faith’ requirement when making a disclosure
The current protections only apply if a discloser is acting in ‘good faith’. This requirement has been removed from the Bill, meaning that the motivation behind a discloser’s actions are irrelevant.
Inaction may permit disclosures to members of Parliament or the media
The Bill creates the new category of a ‘public interest disclosure’ and an ‘emergency disclosure’, both of which may be made to a member of Parliament and/or the media.
A ‘public interest disclosure’ may be made 90 days after the original disclosure where the discloser has reasonable grounds to believe that their original disclosure is not being acted on. Where the discloser has reasonable grounds to believe that a further disclosure is in the public interest, they must then give notice of their intent to go public before telling a member of Parliament and/or the media.
An ‘emergency disclosure’ is one in which the discloser ‘has reasonable grounds to believe that the information concerns a substantial and imminent danger the health or safety of one or more persons, or to the natural environment’. To be protected, the discloser must notify the company of their intent to make an emergency disclosure before telling a member of Parliament and/or the media.
Greater protection to whistleblowers
The Bill provides whistleblowers with confidentiality, broader immunity and protection against victimisation.
It is an offence to disclose the identity of a discloser, including information that is likely to lead to the identification of the discloser, without their consent. A whistleblower cannot be subject to any civil, criminal or administrative liability (including disciplinary) for making a protected disclosure.
A whistleblower cannot be subjected to any detriment or a threat of detriment because they made, or are believed to have made, a protected disclosure. Like the FW Act, the new laws:
- expand liability to those involved in a contravention;
- shift the evidential burden of proof to the defendant in circumstances where confidentiality has been breached; and
- the discloser cannot be ordered to pay costs incurred by the other party, except in limited circumstances.
These protections carry high penalties if they are breached (discussed below). At the same time, the Bill also provides for a variety of compensatory orders, including exemplary damages and reinstatement.
Significant penalties for non-compliance
The Bill definitely packs a punch when it comes to penalties. Civil penalty provisions apply to breaching the confidentiality of a whistleblower and victimisation and currently carry maximum fines of $200,000 for individuals and $1 million for a body corporate. However, these are set to increase under the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 which also passed last month.
Under the new laws, the civil penalties will increase to:
- for individuals: $1.05 million, or three times the benefit derived, or detriment avoided;
- for corporations: up to $10.5 million, or three times the benefit derived, or detriment avoided, or 10% of the body corporate’s annual turnover (although it is capped).
Large companies must have a whistleblower policy
Public companies and large proprietary companies must implement (and make available) a whistleblower policy which outlines, amongst other things:
- the protections available to whistleblowers;
- to whom qualified disclosures may be made to and how they may be made;
- the support available for whistleblowers; and
- how the company will investigate disclosures and ensure fair treatment of employees.
This policy must be in place by the first 1 January, 1 April, 1 July or 1 October which occurs three months after Royal Assent is given (we will keep you updated on this). Failure to have a policy can result in a $12,600 fine.
Over the coming weeks we are going to be releasing a series of bulletins that look at the Bill in more depth and highlight some of the potential issues business will need to navigate in the new regime. We will be examining:
- what qualifies for protection and disclosable matters;
- dealing with and investigating a whistleblower’s disclosure, including navigating the confidentiality requirements and taking action; and
- how to draft an effective whistleblower policy.
Can’t wait for these updates? Feel free to call us for a chat now about how to be prepared for the new regime.
1 The laws are yet to receive Royal Assent and come into force
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.