Are you ready for the new whistleblowing regime?
Proposed amendments to Australia’s current whistleblower regime, as contained in the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Whistleblower Amendments), have recently passed through the Senate and will go to the House of Representatives in February 2019. If passed as they are expected to, the Corporations Act 2001 (Cth) (Corporations Act) and the Taxation Administration Act 1953 (Cth) will be amended to consolidate and enhance existing whistleblower protections for the corporate and financial sector. At this stage, it’s expected that these changes will take effect from 1 July 2019.
What is the existing whistleblower regime?
Generally speaking, a whistleblower is an insider within a company, who reports misconduct, or illegal or dishonest activity that has occurred within that company.
Under the current whistleblower regime set out in the Corporations Act, for a person (the Discloser) to be protected as a whistleblower:
that person must be a current officer, employee or contractor of the company and they must disclose their name;
the disclosure must made to an officer or senior manager of the Company, ASIC or the company’s auditor;
the Discloser must have reasonable grounds to suspect that the information they are disclosing indicates that the company, or an officer or employee of the company, may have breached the Corporations Act or the ASIC Act; and
the disclosure must be made in good faith.
Where these conditions are met, the Discloser is granted certain protections, including statutory immunity from civil or criminal liability for making the disclosure, unenforceability of contractual rights against the Discloser for making the disclosure, protection from victimization (including compensation for damage or loss) and non-disclosure of the Discloser’s identity or their information (subject to very limited exceptions).
What are the changes?
If the Whistleblower Amendments are passed, the existing whistleblower regime will be amended to include the following changes:
extending the group of persons who qualify as a Discloser to include (among others) former employees, officers and contractors, and their relatives or dependents;
broadening the types of corporate misconduct that Disclosers can make protected disclosures about, including corporate corruption, bribery, fraud, money laundering and terrorist financing;
public and large proprietary companies will be required to adopt an internal whistleblower policy, with penalties applying for non-compliance;
allowing anonymous disclosures and providing procedures for ‘emergency’ disclosure to journalists and parliament;
replacing the existing ‘good faith’ test with a requirement that the Discloser has objectively reasonable grounds to believe that the wrongdoing occurred;
expanding the categories of recipients to whom protected disclosures may be made to include internal managers and lawyers (if disclosed for the purposes of obtaining legal advice about the whistleblower regime); and
introducing a broader range of immunities, protections and compensation available to a Discloser.
The Existing Whistleblower Regime and the Whistleblower Amendments do not require a company to act on, investigate or respond to a whistleblowing claim. However, as the Whistleblower Amendments require certain companies to adopt a whistleblower policy which addresses how protected disclosures will be handled and investigated, it will be important for those companies to consider and implement compliant whistleblower procedures which are appropriate for its business.
If you work with a public or large proprietary company, the company will be required to comply with the Whistleblower Amendments if they are passed. Assuming that the Whistleblower Amendments are passed when the House of Representatives resumes in February 2019, the company should prioritise addressing the following key matters for compliance with the Whistleblower Amendments:
1. the company must ensure that it has adopted a whistleblower policy that is compliant with the Whistleblower Amendments and ensure that it is accessible to all employees within 6 months of the effective date of the Whistleblower Amendments. The whistleblower policy must address:
a. the protections and support available to Disclosers;
b. to whom, and how, protected disclosures may be made;
c. how anonymous disclosures may be made;
d. how protected disclosures will be investigated;
e. how the company will ensure fair treatment of employees who are mentioned in protected disclosures or to whom the protected disclosures relate; and
f. how the policy is made available to officers and employees.
If a compliant whistleblower policy is not adopted by this date, the company may be fined $12,600; and
2. the company must establish a procedure which enables anonymous disclosures to be made. Whilst the format for anonymous reporting is not mandated, the company should consider the logistical issues associated with anonymous reporting, including anonymized reporting methods, administrative handling and the facilitation of two-way anonymized communication channels.
Please contact us if you would like assistance with the adoption of a compliant whistleblower policy or establishment of an anonymous reporting facility.
Insight by Carlie Hodges and Fiona Rose