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“Blowing the whistle: Protections increase for whistleblowers under new amendments”

Public companies, large proprietary companies and registrable superannuation entities who fail to set up internal whistleblower policies, before 1 January 2019, could face penalties under new legislative changes.

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Bill) is expected to be passed by the Senate and, once enacted, will create a single consolidated regime under the Corporations Act 2001 (Cth) (Corporations Act), extending protections to whistleblowers across the corporate, financial and credit sectors.  The new legislation, as proposed, will apply to disclosures made by whistleblowers on or after 1 July 2018.  Employers should be prepared for these changes and understand the implications from commercial, employment and regulatory perspectives.

The Bill will broaden the existing protections and remedies for corporate and financial sector whistleblowers under the Corporations Act.  Related changes to the Taxation Administration Act 1953 (Cth) are also proposed for disclosures made regarding tax misconduct.  Further amendments will be made for uniformity purposes to the Banking Act 1959 (Cth), Insurance Act 1973 (Cth), Life Insurance Act 1995 (Cth) and Superannuation Industry (Supervision) Act 1993 (Cth).   

Under the current Corporations Act regime, a person qualifies for whistleblower protection only if they meet certain criteria including the following:

  • they must be a current officer, employee or contractor of a company;
  • they make a disclosure to ASIC, the company’s auditor or an officer or senior manager of the company in good faith;
  • the disclosure is not made anonymously; and
  • they have reasonable grounds to suspect that the company, an officer or employee has or may have contravened the Corporations Act.

The key changes to be introduced under the Bill include:

  • extending whistleblower protections to a broader range of individuals, including former employees, officers, associates and suppliers of a company, as well as an employee’s relatives or dependents;
  • widening the category of recipients who can receive a protected disclosure from a whistleblower, including supervisors, APRA and the Australian Federal Police;
  • the introduction of the concept of “emergency disclosure” where a whistleblower can make a disclosure to third parties such as a journalist when it is perceived that there is an imminent risk of serious harm or danger to public health or safety or to the financial system (in circumstances where the whistleblower had previously made a protected disclosure);
  • allowing for anonymous disclosure.  The Court will be required to preserve and protect a whistleblower's identity, unless it is in the interests of justice to do otherwise;
  • removing the onus on the whistleblower to demonstrate that they were acting in good faith;
  • expanding the scope of matters that can be disclosed to include corporate corruption, bribery, fraud, money laundering, terrorist financing or other serious misconduct; and
  • broadening the options of redress for victimised whistleblowers such as injunctions, an apology, reinstatement of employment and access to monetary compensation, regardless of when the disclosure was made.  In addition, adverse costs orders will only be made in limited circumstances, namely where the whistleblower is found to have vexatiously initiated the proceedings or has unreasonably caused the other party to incur costs. 

For companies who fall under the scope of the new amendments, it is important that internal whistleblower policies are either updated or set up to ensure statutory compliance before 1 January 2019, failing which penalties of up to 60 penalty units (currently $12,600) will apply.  Further steps should be taken such as those outlined below:

  • Implementing a documented process for dealing with protected disclosures that ensure all disclosures are dealt with in a reasonable timeframe.
  • Ensuring all employees and officers are provided with a copy of the whistleblower policy that sets out:
    • the people to whom disclosures can be made;
    • how a disclosure can be made;
    • how the company will support and protect a whistleblower;
    • the investigation process that will apply to the disclosure; and
    • the means by which the policy will be made available to all staff.
  • Developing processes to facilitate anonymous reporting.  If a whistleblower’s identity is disclosed, even unintentionally, significant penalties can apply (up to $1 million for a company and $200,000 for an individual).
  • Providing training for all potential recipients of a disclosure particularly to supervisors and managers who will be classified as recipients of a disclosure.