New whistleblower protections – what could it mean for your business?
As part of the Federal Budget in 2016, the Government announced commitment to the introduction of whistleblower protections legislation to be operational by July 1 2018.
Currently there is a bill (Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017) before the senate which will amend the Corporations Act 2001 to consolidate and broaden the existing protections and remedies for corporate and financial sector whistleblowers.
If passed, the bill will significantly change the way that the private sector approaches whistleblower activity. Public companies, large proprietary companies and companies that are trustees of superannuation entities will need to take action.
Before we move to explaining what the major changes are, it’s necessary to define a whistleblower. A whistleblower is a person who informs on a person or organization regarded as engaging in an unlawful or immoral activity. Currently whistleblowers are required to make disclosures ‘in good faith’ but that is about to change, along with other important changes to the legal framework that we have outlined below.
What are the major changes?
- A wider range of people are now included in whistleblower protection under the new bill. An eligible whistleblower is an employee, supplier (or employee of a supplier) or associate of the entity, or relative or dependant or spouse of such a person. However, former employees and associates are now also protected.
- Public companies, large proprietary companies and companies that are trustees of superannuation entities are required to have a whistleblower policy which is available to officers and employees of the company. The policy has to set out information about the protections available to whistleblowers and what disclosures are protected, how the company will support whistleblowers and investigate disclosures, and how the company will ensure fair treatment of employees who are mentioned in disclosures. Policies have to be in place by January 2019.
- At present victimisation and disclosing a whistleblower’s identity are offences and a contravention has to be proved to the criminal standard, beyond reasonable doubt. The bill maintains criminal liability for these offenses. It reverses the onus of proof for the former in favour of the whistleblower, and also makes both offences civil penalty provisions, with contraventions attracting a maximum penalty of $200,000 for an individual and $1 million for a corporation.
- Anonymous disclosures will be permitted – rather than acting in ‘good faith,’ this requirement has been replaced by a reasonableness test which requires that the whistleblower have reasonable grounds to suspect misconduct or an improper state of affairs. There is no longer any requirement that a whistleblower provide his or her name in order to qualify for protection.
- Disclosures may be made to ASIC or APRA, or another prescribed Commonwealth authority, or to a lawyer for the purpose of obtaining advice. Disclosures are also protected if they are made to an officer of the entity, or an auditor or actuary of the entity, or another person the entity has authorised to receive disclosures. They may also be made by an individual employee to their supervisor.
- In some cases, an ‘emergency disclosure’ can be to the media of members of parliament. Such disclosure will be protected only if:
- The disclosure has already been made to ASIC, APRA or a prescribed body and qualifies for protection
- A reasonable period has passed since it was made
- There is now an imminent risk to public health or safety or to the financial system if the disclosure is not acted on immediately.
- A whistleblower is not subject to any civil, criminal or administrative liability for making a disclosure, and no action can be taken against him or her under a contract. For example, an employment contract or a supply contract with the company the disclosure relates to. Information that is protected by this act will not be able to be used against the whistleblower in criminal proceedings or proceedings where a penalty is imposed.
To keep up to date with the progression of this bill, or for more information, the Economics Legislation Committee has produced a report outlining the impacts and findings. Additionally, if you would like to discuss how these potential changes will impact your business, please contact Walter Allan Hall Audit and Assurance team who will be able to help you.
This article was written by Ashley Cowan, Manager, Walter Allan Hall.