Following the Joint Parliamentary Committee on Corporations and Financial Services (the Committee) tabling its report on whistleblower protections in September this year, and the release and commentary on an exposure draft of legislation, the Federal Government has introduced the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 (Cth) (Bill), to provide for enhanced whistleblower protections in the private sector.
If passed, the new legislation will apply to whistleblower disclosures made on or after 1 July 2018.
In its report, the Committee made a number of recommendations with a view to updating the existing regime for whistleblower protections in the private sector, which has been heavily criticised for lagging behind protections offered to employees in the public sector.
Following the Committee’s report, the Government released an exposure draft of the Bill for public consultation. These reforms have been on the horizon for some time, responding to concerns about the treatment of high-profile whistleblowers in the finance sector and the 7-Eleven underpayments scandal (among other examples).
The Bill will significantly change to the way in which the private sector approaches whistleblower activity.
WHAT ARE THE MAJOR CHANGES?
As our earlier article on the exposure draft whistleblower protection legislation flagged, these are the important changes from the existing legal framework:
A wider scope of corporate misconduct can be the subject of a protected disclosure.
A wider range of people can qualify for whistleblower protection.
The protection obligations will extend to all public and large proprietary companies.
These companies will have to have whistleblower policies in place – by January 2019 for public companies and December 2019 for large proprietary companies.
There will no longer be a requirement that the whistleblower is acting in good faith to gain the benefit of protections. Their motivation will be irrelevant, and it will be enough that the person has objectively reasonable grounds to suspect misconduct or a contravention.
Anonymous disclosures will be allowed.
In extreme cases (excluding tax matters), a protected disclosure can be made to the media or members of parliament.
There is an expansion of the protections and redress available to whistleblowers who suffer reprisals, and improved access to compensation.
The onus of proof has been reversed when a person seeks compensation, once they have established they have suffered detriment.
In addition to the overhaul we previously discussed, the Bill provides for the following further changes to Australia’s private sector whistleblower protections:
Protection from liability
‘Eligible whistleblowers’ subject of the protections in the Bill will not be made subject to civil, criminal or administrative liability because of their disclosures in respect of ‘regulated entities’ (see below), and will be protected from liability as a result of such disclosures.
Eligible whistleblowers must be or have been an employee, officer, or associate of a regulated entity, or be an individual who supplies goods or services to a regulated entity (or be an employee of such an individual), or be a relative or dependent of someone in any of the above categories.
Superannuation entities – eligible whistleblowers
Eligible whistleblowers in respect of superannuation entities have been expanded to include:
- trustees or officers of a company that is a trustee;
- employees of trustees or a company that is a trustee;
- suppliers of trustees or a company that is a trustee; and
- employees of such suppliers.
The Bill retains the exposure draft’s provisions making entities covered by one or more of the following federal statutes ‘regulated entities’ for the purposes of the new whistleblower protections:
- Corporations Act
- ASIC Act
- Banking Act
- Life Insurance Act
- Insurance Act
- Superannuation Industry (Supervision) Act
- National Consumer Credit Protection Act
- Financial Sector (Collection of Data) Act
In addition, the list of regulated entities has been expanded to allow for the inclusion of additional entities as prescribed by the Corporations Regulations. It is therefore possible that the list of entities that may be subject to protected whistleblower disclosures may increase over time as the need arises.
The concept of ‘whistleblower disclosees’ has been replaced with the concept of ‘eligible recipients’. These are the persons under the Bill to whom an eligible whistleblower (see above) may make a protected disclosure.
In relation to companies and superannuation entities, the list of eligible recipients includes:
- officers, auditors and actuaries of such entities, or persons authorised by the entity to receive disclosures that may qualify for protection; and
- the supervisor or manager of an eligible whistleblower who is an employee of the relevant entity.
Disclosures to legal practitioners
There is a specific entitlement for an eligible whistleblower to make a disclosure to a legal practitioner.
The concept of ‘whistleblower third party disclosees’ has been replaced with ‘emergency disclosures’, which permit whistleblowers who have previously made disclosures to make an immediate disclosure to a federal or state Parliamentarian or journalist in circumstances where the whistleblower has reasonable grounds to believe that ‘there is an imminent risk of serious harm or danger to public health or safety, or to the financial system’. There is a further requirement that the whistleblower notifies the regulator to which the initial disclosure was made of his or her intention to make the additional disclosure under the emergency disclosures procedure.
Expansion of definition of journalist
The categories of ‘journalist’ have been expanded, meaning that a whistleblower can make an emergency disclosure (see above) to newspapers, magazines, radio or television broadcasters and various commercial electronic services. This does not extend to disclosures made by the whistleblower on social media or to self-defined journalists.
Expansion of the compensation regime
Additional potential remedies are provided under the Bill to affected whistleblowers. These include:
- monetary compensation;
- orders for apologies; and
- reinstatement of terminated employees.
These orders are not available if the employer can establish that it ‘took reasonable precautions, and exercised due diligence, to avoid the victimising conduct’.
These changes increase the courts’ flexibility in ensuring that justice is done to those who suffer reprisals as a result of making eligible disclosures.
Superannuation entities required to have a whistleblower policy
The requirement to maintain a whistleblower policy specifically refers to private companies that are trustees of a registrable superannuation entity.
Information required by whistleblower policies
Whistleblower policies require, additionally, information about:
- persons to whom disclosures can be made;
- how the whistleblower will be supported;
- how the disclosure will be investigated; and
- how the policy will be made available to officers and employees.
These amendments will ensure that the policies are comprehensive and will better enable eligible whistleblowers to be well-informed about their rights.
Disclosures of whistleblowers’ identities by courts
The provision mandating that the name of a whistleblower or a victim not be disclosed by a court has been removed.
THE BILL’S REGIME FOR TAX DISCLOSURES
Under the Bill, protected disclosures in relation to tax issues are dealt with under a separate regime to other disclosures. The changes between the exposure draft and the Bill in this area include:
Explanation of the Change
The list of eligible recipients has been expanded to include:
- a registered tax agent or BAS agent who renders tax agent services to the particular entity;
- in relation to trusts/partnerships, persons authorised by the trustee/partners to receive disclosures.
Penalties for publishing the identity of a whistleblower have been increased and penalties for victimisation offences have been doubled. This change reinforces the Government’s tough stance on reprisals in relation to those who serve the public function of identifying and disclosing misconduct in the tax sphere.
Disclosure to legal practitioner
There is a specific carve out for publications to legal practitioners.
Expansion of the compensation regime
The compensation regime has been overhauled in a manner identical to that discussed above.
WHICH RECOMMENDATIONS HAVE BEEN OVERLOOKED IN THE BILL?
There are a number of recommendations made by the Committee which, as yet, have not been introduced by the Government.
Some of the major recommendations which have been overlooked include:
complete harmonisation of whistleblower protections by combining such protections into one Act (Recommendation 3.1);
the introduction of a rewards system or ‘bounties’ for eligible whistleblowers (Recommendations 11.1 and 11.2); and
the introduction of a Whistleblower Protection Authority (Recommendations 12.1, 12.2, 12.7 and 12.8).
Given the proposed commencement date of 1 July 2018, it is unlikely that these recommendations will form part of the Bill unless amendments along these lines are moved and accepted in the Senate (e.g. at the insistence of the Nick Xenophon Team (NXT) which has been vocal in its calls for greater whistleblower protections). NXT Senator Rex Patrick (who has taken up former Senator Xenophon’s position) has already expressed the view that the Bill’s proposed emergency disclosure procedure sets the bar too high, and would not assist a whistleblower who had gone to the media to raise concerns about alleged misconduct at the Commonwealth Bank.
INTERACTION WITH BRIBERY AND CORRUPTION REGIME
The Government’s overhaul of the private sector whistleblower regime comes as part of a series of reforms to Australian regulation of misconduct in the private sector. As Corrs has recently reported, the Government has introduced a Bill to make it easier to prosecute those engaged in bribery overseas by simplifying existing bribery offences.
Additionally, to ensure that the process of resolving foreign bribery offences is not protracted, that new legislation will provide a means of deferring prosecutions in exchange for certain undertakings by the person or entity charged with bribery offences.
It is likely that the new whistleblower protection regime will have a role to play in identifying corporate and individual misconduct in the bribery space, given those who become aware of such misconduct will be able to rely upon the protections which would be introduced under the Bill.
As Parliament has adjourned for the Summer recess, it is likely that the Bill will be debated in the first sitting weeks of 2018.
Corrs will keep you updated on the progress of the Bill as it progresses through Parliament.
 Adele Ferguson, ‘Whistleblower laws need to be fixed’, Australian Financial Review, 11 December 2017.
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