Changes to whistleblower laws: how to prepare now

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[co-author: Jack Day - Intern]
 

The Australian Government has introduced its proposed whistleblower law reforms which aim to:

  • strengthen the protections available for whistleblowers;
  • extend the reach for those who may previously have been excluded from reporting under the existing legislation; and
  • significantly broaden the scope of protected disclosures.

The proposed changes will have wide ranging consequences not just for the types of disclosures protected but also for what organisations must do to investigate disclosures and respond to whistleblower allegations.

The changes will come into place on 1 January 2019, if passed during the Spring sitting of parliament with bipartisan support.

The proposed amendments, contained in the Treasury Laws Amendments (Whistleblowers) Bill 2017 (the Bill) will apply to disclosures made on or after 1 July 2018, are set to complement wide ranging reforms in a number of areas of corporate compliance, in particular reforms to Australia’s anti-bribery legislation. The Bill is being heralded as a strong starting point to more complete and targeted future legislation aimed at improving organisational culture. 

In brief: key changes

The Bill repeals existing whistleblower laws in various statutes, and amends the Corporations Act 2001 (Cth) and the Taxation Administration Act 1958 (Cth), to consolidate the new whistleblower laws within those Acts. The changes will allow for a central, consolidated source of whistleblower legislation, and harmonise protection in the corporate and financial sectors. Importantly, the Bill clarifies key terms and will introduce single concepts for areas that have been, in the past, somewhat restrictive and counterproductive, in order to expand the eligibility of those who have previously been excluded from making protected disclosures. In particular, under the new laws, single meanings have been introduced for:

  1. what is a ‘regulated entity’;
  2. who an ‘eligible whistleblower’ will be, broadening to include those who have had a past relationship with the employer and includes relatives and dependants;
  3. what is ‘disclosable conduct’;
  4. who is an ‘eligible recipient’; and
  5. ‘emergency disclosures’ and how they may be made to a Member of Parliament or journalist in limited circumstances where other avenues have been exhausted.

In addition, the Bill provides for disclosures to be made anonymously and legal practitioners will now be eligible to receive a disclosure for the purpose of obtaining legal advice. Importantly, the ‘good faith’ test for protected disclosures is to be removed altogether and replaced with the requirement that the discloser need only have objectively reasonable grounds to suspect wrongdoing. This change alone will see a broad range of new disclosures potentially arising.

How will this affect you?

The Bill introduces the requirement for public companies, large proprietary companies and proprietary companies that are trustees of registerable superannuation entities, to have a mandatory whistleblower policy from when the legislation receives assent (likely to be 1 January 2019). Such a policy will need to outline specific information, including the protections available to whistleblowers, how the company will protect the whistleblower, how to make a disclosure, and the relevant people within the company who the whistleblower can approach to make a disclosure. This open environment of information is being used to promote safe ways to disclose and bring awareness to the responsibility of both individuals and organisations as a whole.

Failure to comply with this obligation will constitute an offence and companies will risk a penalty of $63,000. More substantially, further penalties for disclosing (inadvertently or otherwise) the identity of a whistleblower will attract a maximum penalty of $200,000 for an individual and $1 million for a corporation. The significant penalties highlight the importance of confidentiality and seek to minimise any detriment that may be caused by disclosure of the identity of a whistleblower.

What now?

Organisations will have until 1 January 2019 to have a new or updated whistleblower policy in place that satisfies the requirements of the proposed reforms. Such policies should:

  1. cover all employees, past employees, contractors, suppliers, family members of employees;
  2. contain a clear outline of how a disclosure will handled and map out clearly what the process will be; and
  3. include clear information about how those protected will be treated fairly whether they are the disclosing party or the one being disclosed about.

The proposed new laws and requirement to have an open information environment about accessing whistleblowing information will inevitably see an increase in disclosures coming to light. It is essential to ensure that there is an efficient and streamlined process for the disclosing persons to be able to access the services required in order to disclose their information through the correct channels. Organisations will need to involve and consult with key stakeholders to ensure all requirements that have been handed down with the new laws are met. It is recommended that those with existing whistleblower policies undertake a review of current processes to ensure that prior to 1 January 2019, the policy reflects the changes in, and meets any new requirements arising under, the new proposed reforms.

Organisations will need to be proactive in their approach to implementing and facilitating compliant behaviour in line with the new whistleblower laws. Non-compliance may expose companies to substantial penalties, which may result in significant financial consequences and, more alarmingly, reputational damage.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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