The Whistle has finally blown – New whistleblower regime commences

Whistleblowers in the private sector will have the benefit of a significantly strengthened whistleblower protection regime from 1 July 2019.

This new regime requires companies to raise the bar in their handling of reports of wrongdoing and to be vigilant about protecting and supporting whistleblowers.   This will likely require the involvement of boards and in-house corporate counsel to ensure compliance and to minimise the risk of significant penalties and compensation orders.

A change of government may bring about further significant changes to this regime. This may include a whistleblower rewards scheme, the establishment of a whistleblower protection authority which would support and protect whistleblowers (possibly similar to the Fair Work Ombudsman), further consolidation of the laws and the appointment of a dedicated prosecutor.

What you need to do

• All whistleblower policies, whether required to be compliant or not, should be reviewed to ensure that they are appropriate for the new regime.
• Compliant policies must be made available to officers and employees of the company. 
• As part of developing a new or updated policy, companies must carefully consider how the whistleblower policy is best placed within existing national and global codes, policies and procedures.
• Companies should implement all necessary back-end training and processes as soon as practicable as disclosures under the regime may relate to pre-existing conduct.

Key changes from the Bill

Our June 2018 article outlined key elements of the whistleblower regime set out in the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (the Bill).

A number of the issues highlighted in that article were addressed in the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2018 (Cth) (the Act) which was passed on 19 February 2019 and received royal assent on 12 March 2019.

Key changes from the Bill are set out below.

Eligible recipients

The Act has narrowed the scope of persons who can receive disclosures in the workplace to officers and senior managers. It previously included supervisors and line managers.  This places companies in a much better position to ensure that eligible recipients have the necessary skills to identify and handle a disclosure in accordance with law.

Misconduct

‘Misconduct’ no longer includes ‘personal work-related grievances’.  This goes some way to addressing concerns that employees could ‘policy shop’ for the best outcome across existing policies and procedures.  ‘Personal work-related grievances’ are defined as being decisions made by an employer that relate to the engagement, transfer, promotion, terms and conditions, disciplining, suspension or termination of engagement of the disclosure.

However, this personal work-related grievances carveout is subject to certain exceptions. 

First, personal work-related grievances can be protected disclosures when they are made in relation to detrimental treatment suffered by a whistleblower as a consequence of having made a protected disclosure. 

Secondly, a personal work-related grievance will still be a protected disclosure if it has significant implications for the company and the information relates to specific types of conduct.  For example, conduct constituting an offence or contravening specified legislation (such as the Australian Securities and Investments Commission Act 2001 (Cth)), conduct constituting an offence against any other law of the Commonwealth punishable by imprisonment for a period of 12 months or more, or conduct representing a danger to the public or the financial system. 

Public Interest Disclosures

Protected disclosures can be made to parliamentarians or journalists where it is in the public interest.  This is in addition to emergency disclosures which must be based on substantial and imminent danger to a person’s health and safety or the natural environment.  The 90 day waiting period only applies to public interest disclosures.  Both public interest and emergency disclosures require the person to have previously made a protected disclosure and to have provided prior written notification to the recipient of that disclosure.  The ability to make these alternative disclosures emphasises the importance of companies providing rigorous whistleblower processes that encourage reporting by employees.  If employees approach ASIC or other government authorities in the first instance, companies have limited opportunity to manage associated reputational risks.

Modified reverse onus of proof

The reverse onus of proof has been modified and, in circumstances of a claim of detrimental conduct, the person must be able to identify evidence that suggests a real possibility that detriment has occurred before the claim can proceed.  This modification is unlikely to deter claimants and employers should ensure that they properly document the ‘non-whistleblower’ reasons where there is any potential detrimental treatment of persons involved with a protected disclosure.

No complete defence

The taking of reasonable precautions and the exercise of due diligence are no longer defences to an employer’s vicarious liability for the detrimental conduct of its employees against a whistleblower.  These matters may however be relevant to courts when ordering compensation.   For example, in deciding what may constitute reasonable precautions and due diligence in making compensatory orders, a court may look to industry standards, guidelines or policies relating to whistleblower support and protection, Australian or international standards relating to whistleblower protections and guidance issued by ASIC or other agencies.  Also relevant is whether the employer has a whistleblower policy and the extent to which the employer gave effect to the policy.  Individuals and corporations engaging in detrimental conduct may be jointly and severally liable to pay compensation.

Increased penalties

Civil and criminal penalties have been increased for both corporations and individuals in respect of breaches of confidentiality of the identity of a whistleblower and victimisation of a whistleblower.  The penalty for failing to have a whistleblower policy remains unchanged from the Bill.

Operation of new laws

The commencement date is 1 July 2019 and the regime will apply to disclosures made on or after that date.  However, disclosures can relate to conduct that occurred prior to commencement of the regime.

Under the new regime, public companies, proprietary companies that are trustees of a superannuation entity and large proprietary companies must each have a compliant whistleblower policy.  Large proprietary companies must have a policy 6 months after the last day of its financial year in 2020, which for many entities with a financial year end of 30 June 2020 will be 1 January 2021.  In the case of public companies and trustee proprietary companies, policies must be in place by 1 January 2020.  Compliant policies must be made available to every officer and employee of the company.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).