Fraud, corruption, and other misconduct in business can have damaging impacts on society. Because of these damaging impacts, it is important to reduce this type of conduct as much as possible. One way to reduce this type of conduct is to encourage people who are aware of it to speak out about it. “Whistleblowers” are people who report information about misconduct including fraud and corruption. The Commonwealth Government has passed new whistleblower laws to support and protect people who report this kind of conduct. These laws try to encourage more people to report misconduct that occurs in business and to protect people when they do report misconduct. In this article, we’ll summarise the new laws and what they may mean for your business.
What Are the Objectives of the New Whistleblower Laws?
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) amends existing laws to apply public sector whistleblower standards and protections to many private sector businesses. Under these laws people who report misconduct in businesses will enjoy stronger protection and support. By providing increased protection to whistleblowers, the new laws intend to encourage more people to report information about suspected misconduct. The laws also aim to discourage this kind of conduct from occurring in the first place.
When Do New Whistleblower Laws Take Effect and Who Do They Apply To?
The amendments took effect on 1 July 2019. Under the amendments, whistleblower protections and standards now apply to all “regulated entities”. Regulated entities include all Australian companies as well as foreign corporations that operate in Australia. These new protections apply to most people who deal with regulated entities. The protections also apply to the relatives and dependants of these people. Additionally, the amendments require certain companies to develop whistleblower policies and detail the matters that these policies must address.
What are the Changes to the Whistleblower Laws?
Requirement to Enact a Whistleblower Policy
Public companies and large proprietary companies must enact compliant whistleblower policies prior to 1 January 2020 unless granted an exception by the Australian Securities and Investments Commission (ASIC). Employees and officers of a company need to be provided with access to the whistleblower policy. The definition of large proprietary company includes companies which satisfy two or more of the following:
- total consolidated revenue of $25 million or more in the financial year for the company and any entities it controls;
- consolidated gross assets valued at $12.5 million or more for the company and any entities it controls; and
- the company and any entities it controls have 50 or more employees at the end of the financial year.
The new laws include a list of information that needs to be included in these policies to assist companies that are required to have them. ASIC has also produced comprehensive guidelines to assist companies in developing these policies. Whistleblower policies must include information about:
- the protections available to whistleblowers;
- how to make disclosures and who to make them to;
- how the company will protect and support whistleblowers and protected employees mentioned in whistleblower disclosures;
- the company’s process for investigating whistleblower disclosures; and
- how the company will make the policy available to officers and employees.
Changes to Disclosable Matters
The amendments have broadened the types of conduct that attract whistleblower protections when reported. Under the amended laws, whistleblowers are protected when disclosing any information related to “an improper state of affairs or circumstances”. Such misconduct specifically includes any contravention of the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth), the Banking Act 1959 (Cth), and various other laws regulating the financial and insurance industries. Misconduct also includes any offence under Commonwealth legislation that is punishable by imprisonment for 12 months or more and any conduct that represents a danger to the public or the financial system.
Importantly, under the amendments a whistleblower doesn’t need to be certain that misconduct has occurred. So long as a whistleblower reasonably suspects that the information relates to misconduct the whistleblower protections will apply.
Changes to Eligible Whisteblowers
The new laws increase the number and types of people who will be protected for reporting misconduct. Most people who have had a relationship with a company can make a disclosure about that company. This includes officers, employees, associates, goods and services suppliers (and their employees), and the relatives and dependants of such people.
Changes to Who Can Receive a Disclosure
The scope of people that can receive a whistleblower disclosure has also been broadened. People who can recieve a whistleblower disclosure are referred to as eligible recipients. Eligible recipients include officers, senior managers, auditors, and actuaries of the company and any other person authorised by the company to recieve disclosures. Whistleblowers may also report disclosable matters to ASIC, the Australian Prudential Regulation Authority, and other prescribed Commonwealth authorities.
Public Interest and Emergency Disclosures
The amendments introduced provisions that allow whistleblowers to give information to journalists or members of Parliament when it is in the public interest. To make a public interest disclosure, a whistleblower needs to first disclose the information to an eligible recipient. After 90 days, if the whistleblower doesn’t have grounds to believe that the matter is being dealt with, they can disclose the information to a journalist or member of Parliament in the public interest.
Whistleblowers may also make emergency disclosures to journalists or members of Parliament if the information could reasonably concern a substantial and imminent danger to the health or safety of people or the natural environment.
Prior to making a public interest or emergency disclosure, the whistleblower must give written notice of their intention to make the disclosure.
Other Reforms
The legislative amendments also includes a number of other reforms designed to provide further protection and support for whistleblowers who disclose misconduct. The new laws increase the penalties for breaching a whistleblower’s confidentiality or punishing a whistleblower for making a protected disclosure. The amendments also strengthen the protections for whistleblowers against civil and criminal liability, disciplinary action, and contractual remedies.
Summary
Under the changed laws, whistleblowers enjoy strengthened protection and support. The amendments mean that more people will be able to disclose information about misconduct. The amendments have also expanded the matters that can be reported or disclosed by a whistleblower.
For further guidance on how these legislative changes might affect your business, it is worth consulting a business lawyer.
