The new laws will impose significant new obligations

Expanded ‘Whistleblower Protections’ are coming – will you be ready?

The new laws will impose significant new obligations on a much wider range of businesses than previously covered.

On 19 February 2019, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 passed both houses of Federal Parliament and has now received Royal assent. The expanded regime will commence on 1 July 2019

The expanded coverage of the legislation is – at least in part – a response to the release of the findings of the Hayne Royal Commission into the Banking, Superannuation and Finance sector. However, the new laws will impose significant new obligations on a much wider range of businesses than previously covered.

Key Features

The key features of this legislation are as follows:

  • A requirement that public and larger propriety companies must have a whistleblower policy or face penalties;
  • Expansion of eligible whistleblowers to include both current and former employees (plus others);
  • Expanded categories of whistleblower disclosures that will be protected , including disclosures about “misconduct” and “an improper state of affairs or circumstances”;
  • A requirement to maintain the anonymity of the whistleblower;
  • Reversal of burden of proof against defendants facing prosecution;
  • Expansion of available remedies for breaching whistleblower obligations;
  • Personal “work-related grievances” will be excluded from the protection.

Mandatory implementation of whistleblower policy by ‘larger’ companies

Public companies, and ‘large proprietary companies’ are required to create and implement a ‘whistleblower policy’.

A ‘large proprietary company’ will include any business which satisfies two of the following three conditions –

  • annual revenue of $25 million or more;
  • gross assets of $12.5 million;
  • the company and entities it controls, has 50 or more employees.

The whistleblower policy must contain the following as a minimum:

  • the protections available to whistleblowers;
  • how and to whom an individual can make a disclosure;
  • how the company will support and protect whistleblowers;
  • how investigations into a disclosure will proceed;
  • how the company will ensure fair treatment of employees who are mentioned in whistleblower disclosures; and
  • how the policy will be made available.

Regulations can add to this list.

Expansion of eligible whistleblowers and recipients of disclosures

The new Act has expanded the list of eligible whistleblowers to include former officers, directors, employees, associates, suppliers, and their relatives. Listed recipients of disclosure by a whistleblower has been expanded to include senior managers, auditors, actuaries or regulators such as ASIC or APRA.

Expansion of disclosable matters and the objective test

The new Act provides for protections of disclosures relating to corporate ‘misconduct or improper state of affairs or circumstances’, in relation to matters including breaches of tax laws and the entities’ tax affairs, as well as matters contravening the Corporations Act, banking, superannuation and finance legislation and any Federal offence which carries a penalty of 12 or more months imprisonment.

If the whistleblower ‘reasonably suspects’ there has been misconduct or contravention by the company, then their disclosure will be protected. The former ‘good faith’ disclosure requirement was repealed.

Confidentiality and Anonymity

The new Act requires the identity of the whistleblower to be kept in the strictest confidence and to permit them to remain anonymous if they wish. Any breaches of these requirements may result in severe civil and/or criminal penalties.

Reversal of the burden of proof

The new Act will reverse the burden of proof in compensation claims once a claimant has adduced or pointed to evidence that suggests that the defendant has engaged in conduct that caused detriment to the claimant.

New remedies

Courts will now be able to issue new remedies in cases of breaches under the new provisions, including awarding compensation, issuing injunctions, ordering apologies and reinstatement of employees.  

When considering whether to award compensation, the court can have regard to a number of factors, including whether the employer took reasonable precautions, and exercised due diligence, to avoid the conduct occurring, and if the employer has a whistleblower policy, the extent to which the employer gave effect to the policy.

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