Australia’s whistleblower law reform – what companies need to know

In brief

Australia’s whistleblower protections are set to undergo reform with the introduction of the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 (the Bill), which requires organisations to extend protections for whistleblowers and to implement whistleblowing policies. The House of Representatives passed the Bill On 19 February 2019, and it is expected to come into effect on 1 July 2019.

These reforms come at a time where Australia’s whistleblower laws have come under public scrutiny as a result of the media’s extensive coverage of Richard Boyle, a former Australian Taxation Office (ATO) employee who now faces the possibility of serving up to six life sentences, a total of 161 years in prison, for allegedly exposing abuses of power by the ATO.

The new laws contain important changes that all affected companies will need to ensure are captured in internal policies.

What is a whistleblower?

An insider within an organisation who reports misconduct or dishonest and illegal activities occurring within that organisation.

What is the current law?

The adequacy of whistleblower protections in Australia has been subject to criticism, with the complexity of existing laws, limited application of protections in “real world” situations and the small class of protected whistleblowers cited as concerns. The implementation of the Bill attempts to overcome some of these issues and to provide enhanced protection to whistleblowers.

The current legal regime in Australia sets out whistleblower protections under a number of different laws that govern taxation, banking, life insurance, superannuation and corporations.

Once implemented, the Bill will streamline and consolidate these protections by amending the Corporations Act 2001, as well as introducing new protections for whistleblowers not currently available under existing law.

Implications of the Bill

• All public companies, large proprietary companies and corporate trustees of registrable superannuation entities are required to have whistleblowing policies in place no later than 6 months after the commencement of the legislation.The policies must state how the company will support and protect those who speak up before they begin to experience any detrimental effects. The key word here is ‘before’;
• A broadened definition of whistleblower to include:
  • Current and former employees;
  • Officers;
  • Contractors; and
  • Spouses, relatives and dependants of the above parties.
• A company will be held liable for failing in its duty to prevent detrimental acts or omissions, such as neglecting to implement any support plans or policies;
• Whistleblowers will be provided with easier access to compensation and other remedies if loss is suffered;
• Whistleblowers will receive protection for disclosures to journalists and parliamentarians in certain circumstances;
• Protections will be extended to whistleblowers that allege misconduct or an improper state of affairs or circumstances about any matter covered by financial sector law, as well as all Commonwealth offences punishable by imprisonment of 12 months or more; and
• Civil penalties will be created (in addition to the existing criminal offences) for causing detriment to (or victimising) a whistleblower and for breaches of confidentiality.

The future of the Bill

The opposition has recently stated that if it wins the next election, the whistleblower protections will be strengthened to introduce a reward system, similar to that of the United States where there is a financial incentive for disclosures. Although, criticised by the government as a ‘wacky’ idea, the Bill may turn out to be the first step in a unification of laws in this area.

If you are a large proprietary company, public company or a corporate trustee of a registrable superannuation entity, then you need to take immediate steps to:

• Introduce whistleblower policy in line with the new laws;
• Implement policy and related support plans; and
• Otherwise comply with the law.

“In the modern age of institutions, whistleblowing is now established as one of the most important processes – if not the single most important process – by which governments and corporations are kept accountable to the societies they are meant to serve and service” – AJ Brown, Professor of Public Policy and Law, International Handbook on Whistleblowing, 2014.