What is whistleblowing?
The act of whistleblowing involves identifying and calling out misconduct and harm to consumers and the public. Whistleblowers are mainly covered by the Corporations Act 2001 (Cth) (Corporations Act) which provides them legal rights and protections, although other legislation can also protect them.
Who can be a whistleblower?
To be protected under whistleblower legislation, a person must be ‘eligible’. Eligibility covers those who have a connection to a company or organisation or who may be in a position to observe or be affected by misconduct and could also face reprisals for reporting the conduct. The protections are also extended to immediate family members of whistleblowers.
Who is eligible to be a whistleblower?
Must be a current or former:
- Employee,
- Officer (specifically director or company secretary),
- Supplier or contractor or an employee of a supplier or contractor,
- Associate of the company or organisation,
- Trustee, custodian, or investment manager of a superannuation entity or of a goods and service provider, or
- Familial relation, spouse or dependent of any of the above people.
Disclosed company or organisation must be a:
- Company,
- Bank,
- Insurer,
- Superannuation entity or trustee, or
- Incorporated association or other body corporate that is a trading or financial corporation, which also includes some but not all non-for-profit corporations.
Disclosure must be made to a:
- Director,
- Company secretary,
- Senior management,
- Related company or organisation,
- Auditor or member of the audit team,
- An actuary of the company or organisation in question,
- A person authorised by the company or organisation to receive whistleblower disclosures,
- ASIC or APRA, or a
- Lawyer
A person must have reasonable grounds to suspect that the information disclosed regards misconduct or an ‘improper state of affairs’ or circumstances. The information can also be about the company or organisation or an officer or employee of the company or organisation that:
- Has breached the Corporations Act.
- Breached financial sector laws enforced by ASIC or APRA.
- Committed an offence against any other law of the Commonwealth which is punishable by imprisonment for 12 months or more.
- Represents a danger to the public or the financial system.
Reports can be made to journalists or parliamentarians if it is in the public interest or is an ’emergency disclosure’. Both of these are subject to detailed provisions under the Corporations Act.
Why do we have whistleblower protection laws?
To maintain and ensure accountability of businesses and corporations and by protecting Whistleblowers.
What are the whistleblower protections?
Any information provided is to be kept confidential (unless the whistleblower consents otherwise) and can also be given anonymously. Whistleblowers are also protected against legal action and from detriment for making “protected disclosures”.
A whistleblower is protected from:
- Criminal prosecution (nor can disclosure be used against a whistleblower unless the disclosure is intentionally false).
- Civil litigation (such as breach of contract, confidentiality, or any contractual obligations).
- Administrative action (such as disciplinary action).
The Corporations Act provides a criminal offence and civil penalties for individuals and corporations where detriment is caused or threatened to a whistleblower, as a result of or possibility of a whistleblower disclosure. This legislation applies irrespective of a disclosure report having being filed.
Examples of detriment:
- Dismissal,
- Injury during employment,
- Altering a person’s position to their disadvantage,
- Discrimination,
- Harassment or intimidation,
- Psychological or physical harm,
- Reputational damage,
- Precarious financial position, or
- ‘Any other damage’.
Exclusions from whistleblower protections
1. Employment disputes or personal work-related grievances.
2. Competitors – where you have been affected by the misconduct of a competitor, then alternative legal action can be pursued.
3. Customers or clients – whistleblower protections are only available to ‘insiders’. If you are external to the organisation or company, concerns can be raised via ASIC separately.
Which businesses require whistleblower policies?
Since 2021, all public companies, ‘large’ proprietary companies and corporate trustees of APRA-regulated superannuation entities, are required to have a whistleblower policy. The policy should include details of the protections for whistleblowers.
Gaps in compliance
In March 2022, ASIC Commissioner Sean Hughes stated that despite the reforms in 2019 and 2021, there were still significant gaps in the legal requirements within corporate and business policies as well as responding to disclosures.
ASIC reviewed 102 whistle-blower policies and the majority had incomplete or inaccurate information, which rendered the policies obsolete. It was also a concern to ASIC that many policies lacked oversight arrangements for whistleblower programs.
Legal requirements
The Corporations Act requires the following to be contained in whistleblower policies:
- Purpose of policy,
- Available protections,
- How to make a disclosure and to whom,
- Support and protection mechanisms for whistleblowers,
- How whistleblower disclosures will be investigated, as well as ensuring fair treatment of employees identified in the disclosures or whom they relate to,
- How the policy will be made available to all levels of employees,
- Any matters prescribed by regulations,
- Protections provided in the taxation whistleblower regime pursuant to the Taxation Administration Act 1953 (Cth).
Why is it important to comply with the whistleblower policy?
Providing for and facilitating a strong whistleblowing culture within a workplace helps ensure that the corporation or business is protected from internal and external threats. It creates a positive and ethical working environment where employees and associates are adequately supported should misconduct arise. It also minimises risks and costs to the corporation or business if misconduct is left unreported or unresolved.
How can ER Strategies help?
The whistleblower laws introduced in 2019 impact almost all businesses. The actions businesses should be taking differ depending on a number of factors, such as the number of employees or yearly revenue, to name a few. What won’t differ is the horrendous impact failing to comply with these laws will have on businesses.
Here at ER Strategies, we have a number of services to cater to all needs. If you want to talk more about how we can help you, click here or give us a call on 1300 55 66 37.
