Whistleblower protection heralds new regime
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Bill) has now been passed by the Senate and, subject to successful passage through the House of Representatives, will take effect on the first day of the second quarter following Royal Assent. Given parliament has now adjourned until February 2019, we anticipate most of the changes will commence from 1 July 2019.
The Bill will substantially amend the current whistleblower protections (which exist more sporadically across the financial sector legislation) and house it predominantly in the Corporations Act. This will result in a further streamlined and strengthened whistleblower regime covering the corporate, financial and credit sectors. Changes will also be made to the Taxation Administration Act 1953 (Cth) to create a whistleblower protection regime for those who disclose breaches of tax laws.
The proposed changes take whistleblower protection to a new level and represent a powerful catalyst in addressing cultural change within corporations. The Bill will also require that companies update their existing whistleblower policies to remain compliant within six months of commencement. The proposed amendments will provide whistleblowers with access to compensation and enhanced protection against victimisation.
In general, a whistleblower is an insider within an organisation who reports misconduct, dishonest or illegal activity that has occurred in the same organisation.
The existing provisions in the Corporations Act were initially introduced in 2004 and confer protections and remedies on corporate whistleblowers in respect of actual or potential contraventions of Corporations legislation. The current regime includes:
The current regime’s protections have been criticised as being limited and overly complex. For example, to qualify for protection the whistleblower must:
The new legislation will:
If you are a publically listed company, a large proprietary company or a trustee for a registrable superannuation entity, then you will be required to have and make available, a whistleblower policy containing information about:
Failure to comply with the requirement to have and make a whistleblower policy available is an offence of strict liability with a penalty of 60 penalty units (currently $12,600 for an individual). It will be incumbent on boards and senior managers to ensure that suitable whistleblower policies are in place to properly receive, investigate and respond to disclosures.
It is also an offence to disclose the identity of a whistleblower under most circumstances. Under the current regime, the prosecuting agency must prove the elements of the offence beyond a reasonable doubt. The new amendments will also make whistleblower identity disclosure a civil penalty contravention with a maximum penalty of $200,000 for an individual and $1 million for a company.
Last month, the Australian Securities and Investments Commission (ASIC) released an updated guidance paper for whistleblowers, INFO 52, that can be viewed here.
If you require advice in relation to your obligations under the whistleblower protection regime, please contact HopgoodGanim Lawyers’ Corporate Advisory and Governance or Workplace and Employment team.