Australia: New whistleblowing laws require a compliant policy

Last Updated: 18 May 2019
Article by Samantha Maddern

Amendments to the Corporations Act 2001 (Cth) and the Taxation Administration Act 1953 (Cth) take effect from 1 July 2019 ushering in significant changes to Australia's whistleblowing laws.1 Chief among the key changes is a requirement on public companies and large proprietary companies2 to have a compliant whistleblowing policy by 1 January 2020. A failure to have such a policy will be a criminal offence attracting a maximum penalty of $126,000.

As it is unlikely existing whistleblowing policies will be fully compliant with the new whistleblowing regime, it is important that organisations review their current arrangements for dealing with whistleblowers and make appropriate changes to their policy and process.

Importantly, while not all companies are obliged to have a whistleblowing policy, they must comply with the new laws, particularly their obligations to maintain confidentiality and take reasonable steps to prevent detrimental conduct towards a whistleblower. Having a policy will assist these companies to comply with such obligations, which come into effect from 1 July 2019, and also accords with best practice.

Content of the whistleblowing policy

To be a compliant policy, it must expressly state:

  • what are the protections available to WBs, including protections under the Corporations Act?
  • who can receive disclosures that qualify for protection and how can they be made?
  • how will the company support WBs and protect them from 'detriment' (which is broadly defined)?
  • how will the company investigate protected disclosures?
  • how will the company ensure fair treatment of employees who are mentioned in protected disclosures?
  • how will the policy be made available to officers and employees?

Other key changes

The new whistleblowing laws introduce other changes, some of which will be addressed in the policy, by:

  • expanding the categories of who can be a whistleblower to include former officers and employees of a company;
  • expanding the categories of persons who can receive a whistleblowing complaint;
  • broadening the range of matters that can be complained about to include, for example, misconduct or an improper state of affairs or circumstances in relation to the company, not just alleged breaches of the Corporations Act;
  • enhancing the protections for actual, potential and suspected whistleblowers;
  • permitting anonymous disclosures; and
  • increasing the penalties for victimising whistleblowers.

What else should companies be doing?

Whilst having a compliant policy is a requirement for many companies (or a prudent step for those companies who are not obliged to have a policy), as with all policies and procedures, even the best drafted document will not be effective without an appropriate and supportive framework. To this end, companies should also:

  • demonstrate a genuine organisational commitment to identifying and remedying wrongdoing, from the top down, by ensuring executives and senior management openly support a 'speak up' culture that encourages employees, and others, to raise their concerns about organisational conduct;
  • provide a number of avenues for disclosures to be made, including anonymously, that are easy to navigate;
  • consider how their whistleblowing policy and procedures in Australia will interact with any global whistleblowing regime;
  • provide training to all staff, at all levels, including to those who will receive complaints and investigate complaints;
  • ensure they have sufficient resources to deal with whistleblowing complaints;
  • review and amend other policies, such as a Code of Conduct, to ensure consistency; and
  • take appropriate and prompt action against those who take any detrimental actions against a whistleblower.

Further reforms?

Australia currently has one of the weakest private sector whistleblower protection frameworks in the world.3 The new laws remedy this deficiency but do not go quite as far as whistleblowing laws in the USA, for example, which provide substantial financial incentives to whistleblowers.4 The Federal Labor party has indicated some level of support for further reforms, including financial incentives and the harmonisation of public and private sector frameworks. We will continue to 'watch this space' with interest to see how the new regime operates in practice from 1 July 2019.

Footnotes

1Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth)

2A proprietary company is a large proprietary company for a financial year if it satisfies at least 2 of the following:

  1. the consolidated revenue for the financial year of the company and the entities it controls (if any) is $25 million or more;
  2. the value of the consolidated gross assets at the end of the financial year of the company and the entities it controls (if any) is $12.5 million or more;
  3. the company and the entities it controls (if any) have 50 or more employees at the end of the financial year.

3 Transparency International Australia reviewed whistleblower frameworks in all G20 countries in 2014, giving Australia a rating of 37, compared to 42 for the worst scoring nation, Russia, and a near perfect 17 for the best scoring nation, the USA.

4 From 2014-18 more than USD85 million was awarded to whistleblowers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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