Out-Law / Your Daily Need-To-Know

Australian employers: get ready for new whistleblowing laws

Out-Law Analysis | 03 Jan 2019 | 8:30 am | 3 min. read

ANALYSIS: Until now, Australian employees who 'blow the whistle' on corporate wrongdoing have been afforded only minimal protection by the federal legal system - but that could all change later this year.

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill, which is currently before parliament, sets out a tough new whistleblower regime that has serious implications for all Australian companies. If the legislation is passed as expected in February 2019, it will significantly expand on the type of individual who can be classed as a whistleblower; who can receive whistleblowing disclosures; and what can be the subject of a disclosure.

In addition, significant fines will be imposed for breaches of the legislation and whistleblowers who are subsequently victimised will be able to seek uncapped compensation.

Companies which are already familiar with the UK legal regime for whistleblowers will need to adjust their thinking to the difference in scope of the new Australian legislation, as its protections extend beyond current employees.

New legal duty to have a whistleblower policy

As drafted, the legislation will place a legal duty on public companies and on large proprietary companies to implement a whistleblower policy. The policy must be provided to officers and employees of the company within six months of the legislation coming into force.

Failure to implement a whistleblower policy may result in a penalty of up to 60 statutory 'penalty units' – currently A$63,000 (approx. €39,200) for a corporate offender. There is a clear imperative for companies to act now to check if they will be subject to this legal duty, and to ensure compliance.

What will be a 'qualifying disclosure'?

The new law will cover "qualifying disclosures". This includes the disclosure of information that the discloser has reasonable grounds to suspect:

  • concerns misconduct or an improper state of affairs in relation to a company;
  • indicates that a company has contravened laws administered by the Australian Securities and Investments Commission (ASIC) and/or the Australian Prudential Regulation Authority (APRA);
  • indicates that a company has engaged in conduct that represents a danger to the public or the financial system; or
  • indicates that a company has engaged in an offence against any other law of the Commonwealth that is punishable by imprisonment for a period of 12 months or more.

The terms "misconduct" and "improper state of affairs" are deliberately broad and are intended to capture conduct that may not be in contravention of a particular law; but may capture, for example, conduct which is unethical.

Who can make a qualifying disclosure?

The proposed Australian regime extends far beyond the workplace. Those who can make disclosures, and accordingly qualifying for protection, under the draft legislation include: all past and present employees; office holders; suppliers of goods and services and their employees; and individuals who are associates of the company. Relatives or dependants of those people are also included.

Those who blow the whistle anonymously will also benefit from protection under the new laws.

Companies will need to look carefully at all of their relationships to ensure that they are compliant. A comprehensive approach will be essential. Careful thought will also be required to ensure that the company is equipped to deal with anonymous disclosures and protect anonymity.

Who can receive a disclosure?

Under the proposed laws, whistleblowers will now be able to disclose to officers, senior managers, auditors, actuaries or other persons authorised to receive disclosures, either within their organisation or within associated companies. Clearly, all these individuals will need to be trained so that they understand what constitutes a whistleblowing disclosure; who can make one; and how to respond when a disclosure is made.

Additionally, if the whistleblower has reasonable grounds to believe that there is an imminent risk of serious harm or danger to public health or safety, they may make emergency disclosures to members of parliament and journalists, subject to certain preconditions being satisfied.

It is likely that companies would prefer a whistleblower to come to them first, rather than use these other routes. Having a transparent, accessible and workable whistleblowing policy is one step to try and address this concern.

What are the penalties for breach?

Significant pecuniary penalties of up to A$200,000 for individuals and A$1 million for bodies corporate may be ordered for revealing a whistleblower's identity without consent, or for victimising or threatening to victimise the whistleblower. Additionally, whistleblowers who are victimised will be entitled to claim compensation for any loss, damage or injury suffered as a result of the detrimental conduct.

The proposed laws define "detriment" broadly. It includes dismissal; alteration of position or duties; discrimination or harassment; harm, including psychological harm; and damage to reputation or financial position.

Katie Williams is an employment law expert at Pinsent Masons, the law firm behind Out-Law.com.