Updated Whistleblower Laws
On 12 March 2019, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 was assented to in Australia. The purpose of the Act was to amend and enhance the laws in Australia relating to whistleblowing, most notably in relation to protection for whistleblowers.
The amendments to the Corporations Act, as well as associated documents produced by the Australian Securities & Investments Commission (ASIC), such as Regulatory Guide 270 – Whistleblower policies (RG 270) and How ASIC handles whistleblower reports, has fundamentally shifted how businesses must not only receive protected whistleblower disclosures, but also how they manage their whistleblower programs generally.
For businesses that choose to operate ‘Speak Up’ Programs, it is important to consider how the Act (now more than two years old) may have impacted how these programs are run.
Key aspects of the legislation that affect Speak Up Programs
So how do the changes to whistleblowing laws in Australia, introduced by the Act, impact businesses that have ‘Speak Up Programs’? Consideration needs to be given to the key aspects of the Corporations Act that governs whistleblower laws. These are:
- Eligible Whistleblower – This definition has been expanded to include current and former officers, employees, contractors (and their employees), suppliers and the spouses, dependents or other relatives of the preceding categories of individuals.
- Disclosable matters – The disclosure needs to be about misconduct or an ‘improper state of affairs’ in relation to the business.
- Reasonable grounds – The ‘good faith’ element when making a report has been removed. Now a reporter needs to have “reasonable grounds to suspect that the information concerns misconduct, or an improper state of affairs”.
- Anonymous disclosures – Whistleblowers can now make anonymous disclosures
- Eligible recipients – protected disclosures can be made to an officer or senior manager (as defined by the Corporations Act) of the business, the business’s auditor, to ASIC, APRA or other prescribed Commonwealth entities and in extreme cases, a disclosure can be made to a member of Parliament or the media.
- Protections for whistleblowers – Several added protections have been included, such as the fact that the law prohibits the victimisation against a whistleblower and an employment contract cannot be terminated as a result of an employee making a protected disclosure.
- Compensation – The onus of proof has been reversed, now requiring the business to demonstrate it has not victimised the whistleblower (in circumstances where this is alleged) and orders may be made relating to reinstatement, damages or the issuing of an apology.
- Penalties for non-compliance – A wide range of penalties have been introduced for circumstances where corporations or individuals breach the legislation.
One of the most notable additions by the Act is that organisations must have a whistleblower policy in place and make sure that this policy is available to officers and employees of the business (Section 1317Ai of the Corporations Act). This requirement is fleshed out in detail in RG 270 where it notes that:
“Transparent whistleblower policies are essential to good-risk management and corporate governance. They help uncover misconduct that may not otherwise be detected.”
This view is backed up by research done as part of Whistling While They Work 2 – key findings and actions where the study found that employee reporting was seen as the single most important method by which wrongdoing was brought to light. Further the Association of Certified Fraud Examiners states in its ACFE 2020 Report to the Nations that 43% of fraud incidents were detected because of a tip-off received by the organisation.
Effective policies and programs that allow for matters to be raised are therefore critical to ensure that issues can be reported in a way that individuals understand and that they feel safe and protected when doing so.