21 December, 2018
Summary
On 6 December 2018, the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (the Bill) was passed in the Senate. Some significant changes were made to the previous version of the Bill, including changes to the categories of eligible recipients, the exclusion of most personal work-related grievances from protection, and additional circumstances in which whistleblowers will be entitled to protections if reports are made to the media.
The Bill will still need to be debated and passed by the House of Representatives before it can come into force and it will not now be considered by the House until February 2019 at the earliest. Based on the provisions in the current Bill the earliest that the requirements could come into force will be 1 July 2019, and the earliest date by which companies will be required to have a whistleblowing policy that complies with the legislation will be August 2019.
In the meantime companies should consider how they will need to update their policies and procedures if the Bill comes into force and ensure their policies will work with existing investigation and disciplinary measures.
What has changed since the previous version of the Bill
Amendments made to the Bill since we last wrote about it in December last year which are particularly relevant to employers include:
- a narrowing of the list of 'eligible persons' to whom a protected disclosure can be made, by removing "supervisors or managers" and replacing it with "senior managers". This is a welcome change as having "supervisors or managers" as recipients of whistleblowing reports would have meant that the majority of employees, even those at relatively junior levels, would have needed to be trained in receiving whistleblowing reports. However, even with the removal of this category there are still a number of different categories of people that will require training;
- the exclusion of most disclosures of personal work-related grievances from protection. The changes limit protection for disclosure of information that "concerns a grievance about any matter in relation to the discloser's employment (or former employment), having (or tending to have) implications for the discloser personally." These disclosures of personal grievances will remain protected if they concern detriment to the discloser in contravention with the Bill's victimisation provisions, or if disclosure is made to a legal practitioner for the purpose of obtaining legal advice in relation to the operation of the whistleblowing provisions;
- giving whistleblowers the ability to make a claim for compensation against a body corporate if the body corporate breaches their duties by allowing a third party to victimise the whistleblower;
- excluding "due diligence" as a defence to body corporates breaching their duty to protect a whistleblower, and instead allowing the Court to consider the exercise of due diligence as a mitigating factor when assessing an employer's liability; and
- a significant increase in penalties in line with the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018.
Amendments to the Bill have replaced the original 'emergency disclosure' regime with two new categories of protected disclosures which will protect whistleblowers who report to the media:
- A new public interest disclosure based on a broad public interest test under which an individual can make a disclosure to a journalist or parliamentarian if (amongst other requirements) 90 days have passed since the disclosure was made to a prescribed authority and it is believed that a further disclosure would be in the public interest; and
- An emergency disclosure category based on the discloser's belief of substantial and imminent danger to a person's health and safety or the natural environment. This category does not require a discloser to wait any period of time after making the disclosure to a prescribed authority before they make a disclosure to a journalist or parliamentarian (although they must first notify the prescribed authority of their intention to do so). This is a narrower emergency disclosure process than the one initially proposed in the previous version of the Bill, as it removes reference to 'serious harm to the financial system' as a justification for making an emergency disclosure.
Although emergency disclosures only operate in circumstances where a whistleblower has made a disclosure to a prescribed regulator, and are not available in relation to disclosures to internal eligible recipients within the company, they pose a risk of confidential information being made public. To mitigate this risk, companies should ensure that their whistleblowing and investigation procedures encourage whistleblowers to make disclosures to the appropriate internal personnel first and that there are processes in place to promptly address such complaints.
Requirement to have a whistleblowing policy
No changes were made to the Bill in relation to the requirement to implement a whistleblowing policy, save for the date by which relevant entities will need to have compliant policies in place. From the date the new whistleblowing regime is enacted, there will be a six month grace period to allow relevant entities to implement an appropriate whistleblowing policy. The requirement extends to the following categories of entities:
- public companies;
- large proprietary companies. Large proprietary companies are those that meet two of the following criteria (in relation to itself in conjunction with any entity it controls): consolidated revenue of $25 million, consolidated assets of $12.5 million, or has 50 or more employees; and
- proprietary companies that are a trustee of a registerable superannuation entity.
The Bill sets out that an employer's whistleblowing policy must contain information about:
- the protections available to whistleblowers, including the protections available under the Act. This will make it difficult for multi-national companies to have a single policy and they may need to consider specific Australian addendum's to ensure this requirement is covered;
- 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. Companies will need to ensure that this is consistent with any existing investigation procedures and consistent with the way in which the company conducts its investigations in practice;
- how the company will ensure fair treatment of employees who are mentioned in whistleblower disclosures; and
- how the policy will be made available.
What you need to do next
Companies need strong whistleblower policies and procedures which encourage whistleblowers to disclose their concerns to the company in the first instance and which allow the company to respond quickly and effectively. Companies should examine their whistleblowing, investigations and disciplinary policies to ensure that they are compliant with the proposed changes but noting that further changes may be made to the legislation in the House. It is also crucial that companies examine whether these policies work harmoniously with other internal compliance and human resources practices.
For further information, please contact:
Georgie Farrant, Partner, Baker McKenzie
georgie.farrant@bakermckenzie.com
