By Andrew Crean, Special Counsel and Daniel White, Special Counsel
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Whistleblower Bill) will, if passed (it is currently before the Senate), amend the Corporations Act 2001 (Cth) and the Taxation Administration Act 1953 (Cth) to improve Australia’s corporate and tax ‘whistleblower’ protections.
The new legislation, as proposed, will apply to disclosures made by ‘whistleblowers’ on or after 1 July 2018.
The proposed reforms:
- Are designed to improve practices within Australian businesses, including in the areas of corporate governance and integrity;
- Aim to protect ‘whistleblowers’, who play a critical role in the early detection and prosecution of corporate or tax misconduct, but presently expose themselves to significant personal and financial risk in doing so; and
- Amongst other things, extend protection to a ‘whistleblower’ who makes a report to a journalist or politician in circumstances where they reasonably believe there is a risk of serious harm or danger to public health or safety, or to the financial system, if the information is not acted on immediately, and if a reasonable period has passed since they first made a protected disclosure.
The reforms are of particular relevance to public companies and large private companies, who will be obliged to set up internal Whistleblower policies before 1 January 2019, failing which they will face penalties of up to 60 penalty units ($12,600.00).
Overview – proposed changes
Important changes that are proposed to be introduced by the Whistleblower Bill include:
- Protected disclosure will apply to a more extensive range of corporate misconduct.
- Whistleblower protection will extend to a broader range of individuals, including employees, officers, associates and suppliers (including supplier employees) of companies, and relatives or dependents of any of the above.
- The inclusion of a wider category of “eligible recipients” of disclosure by whistleblowers, which includes, in relation to companies and superannuation entities:
- Officers, auditors and actuaries of such entities, or persons authorised by the entity to receive disclosures that may qualify for protection;
- The supervisor or manager of an eligible whistleblower who is an employee of the relevant entity; and
- Legal practitioners.
- Extended categories of eligible whistleblowers in relation to misconduct by superannuation entities.
- Public and large proprietary companies will be obliged to observe protections in regard to whistleblowers. This will include an obligation to put company policies in place for the protection of whistleblowers, which must include details of the:
- People to whom disclosures can be made;
- Protections that will be afforded to the disclosing whistleblower;
- Investigation process that will apply to the disclosure; and
- Means by which the policy will be made available to all staff.
- Whistleblowers may disclose contraventions that they have reasonable grounds to believe have occurred or are occurring. There is no longer an obligation that the individual making the disclosure is acting in good faith.
- Disclosures may be made anonymously.
- a concept of “emergency disclosures”, which will allow whistleblowers who have previously made disclosures, to make disclosures to nominated third parties including journalists, where it is perceived that ‘there is an imminent risk of serious harm or danger to public health or safety or to the financial system’. The definition of “journalist” has also been expanded.
- Whistleblowers are provided with a broader range of protections and redress/compensation where they are subjected to reprisals for disclosure. These include:
- Monetary compensation;
- Orders for:
- Reinstatement in the case of terminated employees; and/or
- An apology.
- In the case of applications for compensation by whistleblowers, the onus of proof has shifted so that the whistleblower only need show that they have suffered a detriment.
- It is no longer mandatory that the name of the whistleblower and/or the victim NOT be disclosed by a Court.
There are entirely separate protections provided for in the Bill in relation to tax matters / disclosures. The important reforms made under the Bill in this respect include:
- An expanded group of eligible recipients of disclosure in relation to tax misconduct, including:
- Registered tax agents or BAS agents who render services to the relevant entity;
- In the case of trusts and partnerships, any person or persons authorised to receive disclosure by the trustees or partners; and
- Legal representatives.
- Penalties have been increased for publishing a whistleblower’s identity.
- Penalties for victimisation or retaliation against whistleblowers have also been significantly increased.
- Compensation for offences against whistleblowers in breach of these protections are similar to those referred to above (in the context of disclosures regarding non-tax matters).
Key Take Away
Irrespective of whether the Whistleblower Bill is passed in its present form, large proprietary and public companies (or in the case of superannuation entities, private companies that are trustees of a registrable superannuation entity) should consider the terms of any existing policy in place, or the preparation of a new policy, that meets the requirements as set out in the Whistleblower Bill. This means a policy that:
- Details the protections available to whistleblowers; and
- 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;
- How the company will ensure fair treatment of employees who are mentioned in whistleblower disclosures; and
- How the policy will be made available.
Warning: Undefined variable $postsToDisplay in /home/millsoakleycom/public_html/wp-content/themes/millsoakley/single.php on line 327
Get the latest news insights and articles straight to your inbox, simply enter your details.