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The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017, which is currently before the Senate, consolidates the existing whistleblowers’ regime in the corporate and financial sectors and also substantially strengthens and broadens the protections and remedies.
The new regime aims to bring the protections of whistleblowers in the corporate and financial sectors closer to that which is currently available to whistleblowers in the public sector under the Public Interest Disclosure Act 2013.
This will provide support for good governance in the private sector which is becoming a public priority, particularly in light of the recent fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The changes are due to commence on 1 July 2018 and will apply to disclosures made on or after that date.
The new private sector whistleblowers’ regime will have a number of key elements.
It applies to all constitutional corporations, which are defined in the new regime as “regulated entities”.
The class of persons who are afforded protection has been considerably expanded. Whistleblowers can be current and former employees, suppliers and associates of the entity, as well as any of their relatives, dependants or spouses.
The scope of disclosable matters has been significantly expanded to include, for example, misconduct or an improper state of affairs. There is no longer a requirement of honesty and good faith. Disclosures must only have been made on reasonable grounds. Malicious intent is irrelevant.
Disclosures may also be made to a wider scope of persons, including to a person’s ‘immediate supervisor’. Anonymous disclosures are also permitted.
Penalties for breaching the confidentiality of the whistleblower’s identify and/or for any victimising conduct of a person connected with the disclosure have been significantly increased – up to $200,000 for an individual and $1million for a corporation.
Emergency disclosures of some matters may also be made to members of parliament or journalists where an entity does not deal with the disclosure within a reasonable time period.
A reverse onus of proof applies for compensation claims for victimisation and breaches of confidentiality. In addition, adverse costs orders will only be made in limited circumstances; namely where the whistleblower is found to have vexatiously initiated the proceedings or has unreasonably caused the other party to incur costs.
Irrespective of any contractual arrangements, a whistleblower will not be subject to criminal, civil or administrative liability for a protected disclosure but may be liable if, for example, they were complicit in the disclosed misconduct.
Public companies, large proprietary companies and companies that are trustees of superannuation entities must have a compliant whistleblower policy in place by 1 January 2019. The policy must also be made available to employees and officers of the company.
These changes, if passed, will have far-reaching implications for corporations.
In particular, the inclusion of “misconduct” as a disclosable matter may adversely impact on the operation of existing policies and procedures. Care must be taken to ensure that any complaint is directed to the appropriate policy or employees could potentially choose the most suitable policy based on what provides the best outcome. For example, from the company’s perspective, claims of sexual misconduct may be more appropriately dealt with through its bullying and harassment policy rather than through a whistleblower process.
It will also be difficult for companies to ensure that all supervisors have the skills to competently handle a disclosure. This creates risks for the corporation in terms of penalties and orders for compensation, and also for the individual employee or officer of the company who has accessorial liability.
The reverse onus of proof, which applies to victimising conduct and breaches of confidentiality, is likely to be problematic. Similar to general protections claims, a company will need to be able to provide evidence that its decision-making in relation to any detrimental treatment is based on a reason that is not connected to a protected disclosure. It will also need to demonstrate that it has taken reasonable steps to ensure compliance in this regard.
If the new laws are passed, corporations should give careful consideration to the following:
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