There are a number of important issues for employers in upcoming whistleblower legislation, according to Gordon Williams, who says there are a number of steps companies should take to prepare now
Many readers, but not all, will work for a company that already has a whistleblower policy of some description. However, if draft whistleblower legislation is passed as expected, from 1 January 2019 all but the smallest Australian companies will be required to put in place a detailed whistleblower policy and make it available to all officers and employees.
Failure to do so is a strict liability offence, risking penalties of up to $12,600.
Although you may think that gives your organisation plenty of time to get your house in order, the new statutory whistleblower regime is expected to take effect six months earlier, on 1 July 2018. The changes that will be imposed by this new regime are broad and penalties for breach can be significant. Therefore, it’s very important that companies carefully consider how the changes will impact them and what they need to do to comply (which could include updating an existing policy to reflect the changes, before the 1 January deadline).
By way of background, in the last few weeks, the Senate Economics Legislation Committee completed its inquiry into the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 – and recommended it be passed.
Relevantly, the Bill will amend the Corporations Act 2001 to significantly strengthen and consolidate current whistleblower protections (which are fairly limited). It will also create a whistleblower protection regime for disclosures of information by individuals about breaches of the tax laws or misconduct in relation to an entity’s tax affairs.
“All but the smallest Australian companies will be required to put in place a detailed whistleblower policy and make it available to all officers and employees”
The most significant changes for employers
For employers, there are several changes which are probably the most significant:
- The group of people who can make disclosures and be eligible for protection will be significantly extended. For example, in addition to your current and former employees, this group will include their relatives and dependants, employees of your suppliers as well as relatives and their dependents;
- The types of wrongdoing whistleblowers can make disclosures about will increase. This includes breaches of various Federal legislation – although not the Fair Work Act 2009. That said, there is a very broad catch-all in respect of disclosures about ‘misconduct’ or ‘an improper state of affairs’ in relation to a relevant entity;
- Whistleblowers can make a protected disclosure to a broader group of people. Relevantly, this will include a person’s manager or supervisor (in addition to officers, auditors, actuaries and others authorised to receive disclosures);
- The current ‘good faith’ test will be replaced with a requirement that the whistleblower has objectively reasonable grounds to suspect wrongdoing;
- Anonymous disclosures will be allowed;
- Significant penalties will apply for revealing a whistleblower’s identity without consent; and
- Whistleblowers who are victimised will find it easier to claim compensation, with a reverse onus of proof on the defendant (similar to adverse action claims).
These (and other) changes will apply to all companies, regardless of size. However, the whistleblower policy obligation will only apply to public companies (typically, those listed on the ASX) and large proprietary companies. In broad terms, these are companies that, in respect of a financial year, satisfy two of the following three conditions – the company (and any controlled entities) have more than 50 employees have consolidated revenue of $25 million or more and/or consolidated gross assets of $12.5 million or more.
Implications for employers
The Bill also specifies what must be included in these policies – eg, including information about whistleblower protections, how to make disclosures, the investigation process and how the company will ‘ensure fair treatment’ of any employees mentioned in the disclosure. As employees must be made aware of the policy, it seems likely the number of disclosures will increase – which is probably the intention.
Almost inevitably, in some cases, it will be difficult to determine whether the alleged wrongdoing is covered by the new regime. If it is, the relevant restrictions, protections and safeguards apply – if not, employers should have more flexibility in how they deal with the matter. There will likely be different views about how broadly ‘misconduct’ or ‘an improper state of affairs’ should be interpreted – and there will be a lot riding on it.
“Almost inevitably, in some cases, it will be difficult to determine whether the alleged wrongdoing is covered by the new regime”
We also expect that when the new regime is triggered, it could create a number of practical difficulties for employers in receiving and investigating protected disclosures. For example, it can be very difficult to properly investigate an anonymous disclosure. Similarly, the restrictions on disclosing the whistleblower’s identity may seriously hamper a proper investigation. And if identity is disclosed, even unintentionally, significant penalties can apply (up to $1 million for a company and $200,000 for an individual).
The fact that disclosures can be made to a person’s manager or supervisor may also be problematic. At the very least, it means managers and supervisors will need training to be able to identify and respond to a relevant disclosure.
So there’s definitely work to do now, and in particular you should:
- Keep an eye on the progress of the Bill – although it seems likely it will be passed and start operating from 1 July 2018
- Get across the detail of the Bill, what it means for your organisation and work out what procedures and systems need to be put in place to comply
- Well before 1 January 2019, review any existing whistleblower policy and update it – or put one in place (remembering not all companies have this obligation)
- Give managers, supervisors and others appropriate training to deal with the new regime.
4 key takeways for HR
Assuming the Bill passes as expected:
- From 1 July 2018, expanded whistleblower protection laws will apply to all companies
- A broad group of people will be able to blow the whistle and gain statutory protection – including current and former employees, suppliers, suppliers’ employees and relatives and dependents of employees
- It will be an offence to disclose the whistleblower’s identity without their consent (unless an exception applies) – with penalties of up to $1 million
- Most companies must adopt and communicate a compliant whistleblower policy by 1 January 2019
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