The long anticipated reforms to the Australian whistleblower regime were passed by Parliament on 19 February 2019 with a view of introducing a single, strengthened whistleblower protection regime that covers the corporate, financial and credit sectors.[1]
As foreshadowed in our previous blog post, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (Cth) (Whistleblower Bill) introduces a number of amendments to the Corporations Act 2001 (Cth) (Corporations Act) and other legislation, including the Tax Administration Act 1953 (Cth) (Tax Administration Act) and the Banking Act 1959 (Cth). It is likely that these changes will come into effect on 1 July 2019 (Commencement Date).
What are the changes?
The Whistleblower Bill introduces a number of amendments to the whistleblower regime, including:
extending the group of persons who qualify as a Discloser to include (among others) associates of the company, former employees, officers and contractors, and their relatives or dependents;
removing the requirement for whistleblowers to act in ‘good faith’ in making a disclosure. The whistleblower now only has to have objectively reasonable grounds to suspect that the wrongdoing occurred;
allowing anonymous disclosures. This is a major change which we expect may be administratively difficult for companies to adequately facilitate anonymous reporting without investing in specialist resources;
broadening the types of corporate misconduct that Disclosers can make protected disclosures about, including corporate corruption, bribery, fraud, money laundering and terrorist financing;
requiring public and large proprietary companies to adopt a whistleblower policy which complies with the statutory requirements, with penalties applying for non-compliance;
providing procedures for public interest and ‘emergency’ disclosures to journalists and parliament in cases of extreme emergency;
excluding most disclosures of personal work-relate grievances from protection;
introducing a reverse onus of proof when a person seeks a court order for compensation once it has been established that they suffered detriment;
expanding the categories of recipients to whom protected disclosures may be made to include senior managers and lawyers (in certain circumstances); and
introducing a broader range of immunities, protections and compensation available to a Discloser.
Notably, the amendments introduced by the Whistleblower Bill to the Tax Administration Act will apply to disclosures made at or after the Commencement Date to matters that occur, or occurred, before, at or after the Commencement Date. Further, some parts of the Whistleblower Bill (including in respect of compensation and remedies) will apply retrospectively to disclosures that were made prior to the Commencement Date provided that the disclosures would have been protected had the Whistleblower Bill been in force at the time.
What you need to do now
The passing of the Whistleblower Bill now requires companies to review and assess their current practices and policies to ensure compliance with the new whistleblower regime. The key areas which should be reviewed and assessed for compliance as a matter of priority include:
adopting a compliant whistleblower policy prior to the Commencement Date: In the case of ASX-listed and unlisted, and large proprietary, companies, the adoption of a compliant whistleblower policy prior to the Commencement Date is critical. In light of the severe financial penalties which a company may face for a failure to adopt a compliant whistleblower policy, companies must closely consider the required content of and the process associated with the whistleblower policy that the Whistleblower Bill sets out[2]; and
implement an anonymous reporting process: Companies need to consider and implement appropriate reporting channels for disclosures to be made anonymously. Given the likelihood that anonymous disclosures may not provide sufficient detail to enable an efficient and relevant investigation, companies need to consider how they can facilitate two-way communications with an anonymous whistleblower which preserves anonymity; and
design and introduce appropriate claims handling processes: Companies need to design and implement relevant processes to ensure the whistleblower claims are dealt with appropriately and in compliance with the limited grounds for disclosure. This will include training for prospective ‘eligible recipients’ of whistleblower claims within the company to ensure they are trained to identify and appropriately deal with any whistleblower claims.
If you are unsure of your obligations or would like further information on how to best approach the reforms to the whistleblower regime, including the adoption of a compliant whistleblower policy or establishment of an anonymous reporting facility, please drop us a line at hello@cdandco.com.au or call 03 9614 2444.
The content of this article is intended to provide general guidance on the reform of the whistleblower regime and the amendments to the Corporations Act.
Insight by Carolin Darmanin
[1] See Revised Explanatory Memorandum to the Whistleblower Bill, p.3.
[2] See section 1317AI of the Corporations Act, as introduced by section 2 of the Whistleblower Bill.