On 1 July 2019, a new national whistleblower protection regime came into effect. The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) (Whistleblower Act) makes substantive amendments to the Corporations Act 2001 (Cth) and the Tax Administration Act 1953 (Cth) to provide significantly greater protections for whistleblowers in the corporate, financial, tax and credit sectors.
The vast majority of companies, including foreign and constitutional corporations, super funds and insurers will be affected and, as a result, companies would be well advised to ensure that the manner in which they deal with whistleblowing is fully compliant with the Whistleblower Act regime.
Key changes brought in by the Whistleblower Act
By way of a summary of the key protections and changes brought in by the new regime:
- Wider protections for potential whistleblowers as the definition has been expanded to include current and former employees, officers, contractors, their spouses and dependents and anonymous disclosers.
- Protection is provided where the disclosure is made to an 'eligible recipient', a wide category which includes officers, actuaries, senior managers, company auditors and any other person authorised by the company.
- A disclosure does not need to relate to criminal activity in order to enliven the protections of the new regime. Whistleblower reports that allege misconduct, an improper state of affairs or circumstances about any matter covered by financial sector law are also protected. The new scope does not, however, include work-related disclosure of a personal nature such as conflicts, promotions, disciplinary actions or transfers.
- There are new additional civil penalties for victimising a whistleblower and for breaching confidentiality.
- A whistleblower need not act in good faith so long as there are objectively reasonable grounds to suspect misconduct.
- Whistleblowers are provided with easier access to compensation and other remedies if they suffer loss. Once a whistleblower establishes they have suffered detriment, there is a reverse onus of proof placed on the company.
- In certain circumstances, 'emergency' or 'public interest' disclosures made to journalists and parliamentarians will also be protected.
- All public companies, large proprietary companies and corporate trustees of registrable superannuation entities must implement a whistleblower policy under s.1317AI of the Corporations Act 2001 (Cth).
What you need to do
Introduce a whistleblower policy
The Whistleblower Act requires that public companies, large proprietary companies and registrable superannuation entities must have a compliant whistleblower policy in place before 1 January 2020. Failure to do so may expose these companies and entities to penalties of up to $12,600.00 (equivalent to 60 penalty units). It’s therefore an appropriate time, in the lead up to the new year, to review and revise companies’ existing whistleblower procedures.
To ensure compliance, the policy must state:
- What protections are available to whistleblowers;
- The process to be followed where a whistleblower disclosure is made;
- How the company will ensure fair treatment of employees involved in whistleblower disclosures; and
- Where the policy can be found.
Once policies are in place, the attention for affected companies must then turn to compliance. Importantly, protected disclosures are just that, protections against victimisation and other detrimental treatment of whistleblowers, with compensation available and provisions imposing confidentiality to protect the whistleblower from being identified. The potential financial penalties are significant:
- for individuals, up to $1.05 million (5,000 penalty units); and
- for companies, $10.5 million (50,000 penalty units), or 10% of the annual turnover (up to $525 million or 5 million penalty units).
In extreme cases, breach of confidentiality or victimisation against a whistleblower may also attract imprisonment.
Involve your employees in the changes
To minimise potential breaches of the Whistleblower Act, we recommend providing sufficient education and training to all employees regarding their rights and responsibilities when faced with a potential disclosure or when deciding whether to disclose certain conduct.
Potential 'eligible recipients' should be provided with training that explains how they should respond to a potential disclosure and stresses the importance of confidentiality.
For all employees, companies should implement training programs and seminars that go through the key changes in the legislation, outline the whistleblower process and explains protections to potential whistleblowers.