4 June, 2019
New Australian legislation which enhances protections available to whistleblowers will come into effect later this year. The requirements are extensive, and the consequences for failing to comply can be dire. Organisations will need to prepare for the new laws.
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill has now been passed by parliament.
The new laws significantly expand on the type of individual who can be classed as a whistleblower; who can receive whistleblowing disclosures; and what can be the subject of a disclosure.
Key changes
The new laws cover "qualifying disclosures". This term is defined broadly and includes the disclosure of information that the discloser has reasonable grounds to suspect concerns misconduct or an improper state of affairs in relation to a company. It also includes conduct which might be unethical but not necessarily illegal.
A qualifying disclosure can be made by all past and present employees; office holders; suppliers of goods and services and their employees; and individuals who are associates of the company. Relatives of those people are also included.
A qualifying disclosure can be received by officers, senior managers, auditors, actuaries or other persons authorised to receive disclosures, either within their organisation or within associated companies.
Additionally, ASIC, APRA and other prescribed authorities may receive disclosures, and the laws also allow for emergency disclosures to members of parliament and journalists, subject to certain preconditions being satisfied.
What do organisations need to do and when do they need to do it?
The new laws will come into effect from 1 July 2019. However, the victimisation provisions also apply to any detrimental conduct occurring after 1 July 2019 in relation to a disclosure made before 1 July 2019 which would have been a qualifying disclosure had the new laws been in force at the time it was made.
Clearly, officers and senior managers will need to be trained so that they understand what constitutes a whistleblowing disclosure, who can make one, what to do and what not to do when they receive a protected disclosure.
Given the broad nature of what a 'qualifying disclosure' can be, it will be critical to ensure that people are properly trained to recognise protected disclosures when they receive them.
The new laws also require public companies and large proprietary companies to implement a whistleblower policy by 1 January 2020, and to make that policy available to their officers and employees.
The definition of a large proprietary company will change from 1 July 2019, effectively doubling the previous qualifying thresholds. From that date, a proprietary company will be a “large proprietary” if it satisfies at least two of these three conditions:
- the consolidated gross operating revenue for the financial year of the company and the entities it controls is $50 million or more;
- the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls is $25 million or more;
- the company and the entities it controls have 100 or more employees at the end of the financial year.
What are the penalties for failing to comply?
Stronger penalties have recently been introduced under the Corporations Act which will apply to the whistleblowing regime.
An organisation that reveals a whistleblower's identity without consent, or victimises or threatens to victimise a whistleblower may be subject to a penalty of up to $10.5 million, three times the benefit derived or detriment avoided, making these effectively anti-avoidance provisions, or 10% of the body corporate’s annual turnover, up to $525 million. These are also criminal offences, and may be punishable by up to two years' imprisonment.
Whistleblowers who are subject to detrimental conduct will be entitled to claim compensation for any loss, damage or injury suffered as a result of that conduct.
Public or large proprietary companies which fail to introduce a whistleblowing policy in time will also be subject to a fine of $126,000.
Future developments
The new whistleblowing laws include a requirement for a post-implementation review five years after the amendments commence to allow for the examination of the effectiveness of the new regime and to consider whether any further changes should be made.
This article was published in Out-law here.
For further information, please contact:
Katie Williams, Partner, Pinsent Masons
katie.williams@pinsentmasons.com
