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Australia: Important Reforms To The Law Governing “Whistleblowers”

Important Reforms To The Law Governing “Whistleblowers”

Corporations (particularly public companies and large proprietary companies) will need to be aware of recent amendments to the corporations (and taxation) legislation that give greater protection to “whistleblowers” (those that make disclosure of corporate wrongdoing and breaches of the taxation laws). These changes impose additional duties on corporations to have mechanisms in place to deal with such disclosures. The legislation (Treasury Laws (Enhancing Whistleblower Protections) Act 2018) received Royal Assent in March this year, but the provisions affecting the Corporations Act 2001 (Cth) will take effect on 1 July 2019. Importantly, as noted below, there are obligations to have an appropriate policy dealing with whistleblowing in place before 1 January 2020. Because liability for breaches of the amendments can run before 2020, it is recommended that companies covered by the legislative amendments act as soon as possible to implement a policy and ensure compliance with the legislation.

Whistleblower Protections

Broadly, whistleblowers will be entitled to powerful new protections if detrimental action is taken, or threatened to be taken, against them. While some protections have been in place under the Corporations Act, the changes to the Act:

  • increase the group of people (“eligible whistleblowers”) who will be entitled to make disclosures to include those who were formerly in a relationship with the corporation;
  • widen the types of misconduct that can be disclosed (“protected disclosures”) to cover corporate corruption and other offences against Commonwealth law, and conduct which represents a danger to the public or to the financial system (but personal or professional work-related grievances are excluded);
  • change and widen the range of people to whom disclosure can be made (“eligible recipients”);
  • allow for anonymous disclosures;
  • remove the need for the whistleblower to demonstrate “good faith”, instead requiring the discloser to have “reasonable grounds to suspect” misconduct or other disclosable matters
  • reverse the onus of proof in a whistleblowing case, such that it will be on the alleged victimizer to prove the whistleblower’s claim is not made out (provided that the whistleblower at least raises a prima facie case;
  • allow for disclosure to journalists and members of Parliament in certain emergency cases or cases of non-action in response to an internal report.

Note that the penalties for breaches of the legislation (in particular, taking inappropriate action against a whistleblower) are very significant. It will also be open to whistleblowers to seek an order to be paid exemplary damages and not just compensation. Exemplary damages are designed to punish a wrongdoer, rather than merely compensate a claimant.

Whistleblower Policies

Affected companies will also need to have a policy in place that sets out information about:

  • the protections available to whistleblowers, including the new whistleblower protections under the Corporations Act;
  • to whom disclosures can be made and how such disclosures can be made;
  • how the company will support whistleblowers and protect them from detriment;
  • how the company will investigate whistleblowers’ protected disclosures;
  • how the company will ensure fair treatment of employees who are mentioned in protected disclosures; and
  • how policies will be made available to officers and employees of the company.

Failing to have such policies in place may result in criminal or civil penalties. While the amendments allow until 1 January 2020 for a policy to be put in place, liability for breach operates from the date of assent, and so it will be in the best interests of an affected company to have policies and training of staff in place as soon as possible.

Companies (and whistleblowers and potential whistleblowers) should seek legal advice in relation to any allegations of wrongdoing.