Whistleblower Reforms: Mandatory Requirements for Australian Companies

Found in: Blog

It is important to be aware of the changes to whistleblower legislation which came into effect on 1 July 2019. Public companies and large proprietary companies [1] (Affected Companies) will now be subject to a new whistleblower protection regime (Whistleblower Reforms) which significantly expands the protections available to whistleblowers in Australia. This new suite of laws broadens the scope of disclosures that constitute whistleblowing, who may be a whistleblower and the remedies available to whistleblowers in the event of breach by a company.

Public and large proprietary companies are now required to have in place a whistleblower policy, including certain mandatory content.

What is Whistleblowing?

Whistleblowing is the disclosure, by a qualifying person to an eligible recipient, of actual or suspected conduct by an Affected Company that falls within certain categories of qualifying disclosures.

Before the Whistleblower Reforms, the protections for whistleblowers only extended to those who had reasonable grounds to suspect that the company, or its officers or staff, had or might have breached a provision of the Corporations legislation. This formulation was criticised as being too narrow, as it required potential whistleblowers to consult various legislation, and potentially take legal advice, in order to ascertain whether a particular disclosure was covered by the protections.

By contrast, the Whistleblower Reforms expand the scope of qualifying disclosures to include those relating to:

(a)   any misconduct, or an improper state of affairs or circumstances, in relation to the Affected Company;

(b)   contravention of any law administered by ASIC and/or APRA;

(c)    conduct that represents a danger to the public or the financial system; or

(d)   an offence against any other law of the Commonwealth that is punishable by imprisonment for at least 12 months.

The ambit of ‘misconduct’, ‘improper state of affairs’ or conduct that ‘represents a danger to the public or the financial system’, is presently unclear and is likely to be the subject of judicial interpretation in the future. For instance, in the age of the ‘social licence to operate’, the category of an ‘improper state of affairs’ may well encompass a company’s culture or practice which does not accord with public values, even if they are not strictly illegal.  It may still be necessary for some whistleblowers to take advice as to whether their disclosure falls within these categories.  However, it appears clear that the policy aim of the Whistleblower Reforms is to expand the scope of protection available for whistleblowers.

Previously, a whistleblower was required to have made a disclosure in good faith, which sometimes excluded from protection persons who made a disclosure in circumstances where they had other motivations or grievances against a company. The good faith requirement has now been removed, on the basis that the motivation for making a disclosure is not relevant to the policy reasons for protecting whistleblowers.

Who can be a Whistleblower?

Prior to the Whistleblower Reforms, only current employees, company officers or contractors were eligible to become whistleblowers. Under the new laws, former officers, employees, suppliers and their relatives will be eligible to become whistleblowers.

The Whistleblowers Reform also changes the law to permit a whistleblower to make a disclosure anonymously. While this amendment is designed to protect whistleblowers by strengthening the confidentiality of their identity, it may be difficult for companies to determine if an anonymous disclosure is made by an eligible whistleblower and to assess the authenticity of the disclosure.

To whom can a disclosure be made?

‘Emergency disclosures’ may now be made to parliamentarians or journalists. The whistleblower must  follow certain procedures and have reasonable grounds to believe that there is an imminent risk of serious harm or danger to public health or safety, or to the financial system, if the information the subject of the disclosure is not acted upon immediately.

Disclosures can now be made to company officers and senior managers, auditors and actuaries of the company or related bodies. A company may also specifically designate a person to act as a recipient of qualifying disclosures.

Given the strict penalties or breach of the Whistleblower Reforms, it is advisable that any person who is eligible to receive a qualifying disclosure receive some training as to how to manage the receipt of a qualifying disclosure, including management of the whistleblower and any other person mentioned in the disclosure.

New Protections and Remedies for Whistleblowers

The Whistleblowers Reform introduces a range of new protections and remedies, which are designed to boost the confidentiality of whistleblowers’ identities and ensure that whistleblowers do not suffer detriment as a result of a qualifying disclosure. Companies will now face severe civil penalties, and potentially criminal prosecution, if they are found to have breached the confidentiality of a qualifying whistleblower’s identity or to have victimised the whistleblower or another person (for instance, a friend or colleague of the whistleblower, or a person who investigates the disclosure). Victimising conduct includes:

(a)   dismissal of an employee or injury in his or her employment;

(b)   alteration of an employee’s position to his or her detriment;

(c)   discrimination between an employee and the company’s other employees;

(d)   harassment or intimidation;

(e)   injury or harm to a person, including psychological harm; or

(f)    damage to a person’s property or reputation.

The offence will apply even if the victimiser did not intend to engage in victimising conduct. Further, victimisation does not require that a person actually made a disclosure, or that the victimiser actually knew that a disclosure had been made; it is sufficient if the victimiser held the belief or suspicion that a person proposed to make, or could make, a disclosure and that this was one reason (not necessarily the only reason) for the victimising conduct.

Whistleblowers will also be immune from civil, criminal or administrative liability arising in respect of qualifying disclosures.

Requirement for a Whistleblower Policy

From 1 January 2020, Affected Companies are required to have a policy dealing with whistleblowers. Failure to comply is a strict liability offence.

Mandatory content for whistleblower policies includes information about:

(a)   the protections available to whistleblowers;

(b)   to whom disclosures can be made;

(c)    the procedures by which disclosures can be made;

(d)   the company’s policies to investigate disclosures and protect whistleblowers;

(e)   the company’s policies to ensure the fair treatment of other employees who are the subject of a qualifying disclosure, or are otherwise mentioned in a qualifying disclosure; or

(f)     the availability of the policy to the company’s officers and employees.

It is important to consider if the Whistleblower Reforms apply to your company and if so, to have a compliant Whistleblower Policy and an internal management framework, together with appropriate training, to support the scheme.

Don’t hesitate to contact us at Grondal Bruining to discuss your specific situation on +61 8 6500 4300.

FOOTNOTES

[1] The introduction of the Whistleblowers Reform coincides with amendments doubling the threshold for what is considered to be a large proprietary company. As of 1 July 2019, a large proprietary company is one which satisfies at least two of the following criteria within a financial year:

(a)     annual consolidated revenue of $50 million or more;

(b)    consolidated gross assets of $25 million or more; or

(c)     at least 100 or more employees.

The adjustment to the threshold for a large proprietary company will inevitably result in some companies being reclassified, such that they are not caught by the Whistleblower reforms.

ABOUT GRONDAL BRUINING

Grondal Bruining is a commercial law and litigation firm committed to providing the highest quality legal services. We focus on power & utilities, oil & gas, resources and other commercial and industrial areas. 

Our team is renowned for providing outstanding benefits to clients, delivering proactive and professional advice. Grondal Bruining lawyers have been widely recognised as leaders in their fields by external ratings directories. 

Contact GRONDAL BRUINING on +61 8 6500 4300 to discuss your confidentiality agreement or non-disclosure agreement.