More than 2 years after the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 was introduced, it’s finally set to come into effect on Monday 1 July 2019.
The Act will apply to disclosures made on or after the commencement date, but can also apply to conduct which occurred before commencement.
The Act has made significant amendments to the Corporations Act 2001 (Cth) and Taxation Administration Act 1953 (Cth). It increases the protections afforded to whistleblowers, and requires companies to have greater accountability for whistleblowing obligations.
Why are whistleblowers important?
Whistleblowers perform an integral role by disclosing misconduct such as mismanagement, fraud, corruption, or other wrongdoings, ensuring that companies and organisations are held accountable for their actions under the law, and that employees, customers, and shareholders are protected.
So, it is vital to guarantee strong protections for whistleblowers, especially confidentiality of identity and safety from retaliation.
What are the key changes under the legislation?
The key features of the new legislation include:
- Widening the definition of ‘eligible whistleblowers’: The range of people who may now make disclosures and be eligible for protection has been extended to include officers, current and former employees, contractors and their relatives.
- Widening the definition of ‘eligible recipients’ of disclosures: The range of people who may be recipients of disclosures now include senior managers, directors, and auditors.
- Expanding the range of misconduct: The Act has expanded the types of disclosures that will be protected as ‘misconduct’ or ‘an improper state of affairs or circumstances’ (however, there is an exclusion for most disclosures of personal work-related grievances).
- Allowing anonymous disclosures.
- Increasing whistleblower protection: The Act provides stronger protection for whistleblowers, by expanding the prohibition against victimisation or detriment, and eliminating the requirement of whistleblowers to act in good faith to be protected (however, reasonable grounds to suspect misconduct is required.)
- Increasing penalties: There are significant civil and criminal penalties for individuals and companies for non-compliance and breach of the new legislation.
- Implementing whistleblower policy requirement: The Act now requires some entities to implement a compliant whistleblower policy.
What is the whistleblower policy requirement?
Public companies, large proprietary companies, and registrable superannuation entities must now implement and maintain a compliant whistleblower policy.
The whistleblower policy must contain the following information:
- the protections available to whistleblowers;
- to whom disclosures are to be made, and how they can be made;
- how the company will support and protect whistleblowers;
- the process of investigation for into disclosures by the company;
- how the company will ensure fair treatment of employees of the company who are mentioned in disclosures; and
- how the policy is to be made available.
The Act has a 6 month transitional period for entities to implement the policy. Accordingly, the last date to ensure your policy is in place is 1 January 2020.
Penalties
There are substantial penalties (both civil and criminal) for the contravention of the new whistleblower protection laws under the Act.
Failure to implement a compliant whistleblower policy may attract a penalty of 60 penalty units (currently $12,600).
However, the most significant penalties arise from breach of confidentiality of the identity of a whistleblower, or victimising (or threatening to victimise) a whistleblower.
The civil penalties for these breaches are:
For an individual, the greater of:
- 5,000 penalty units ($1.05 million); or
- 3 times the benefit derived or detriment avoided.
For companies, the greater of:
- 50,000 penalty units ($10.5m);
- 3 times the benefit derived or detriment avoided; or
- 10% of the body corporate’s annual turnover, up to 2.5 million penalty units (currently $210m).
The breaches may also attract criminal penalties for individuals, being:
Breach of confidentiality of identity of a whistleblower:
- Under the Corporations Act: 6 months imprisonment or 30 penalty units ($6,300) or both;
- Under the Taxation Administration Act: 6 months imprisonment or 60 penalty units ($12,600) or both.
Victimisation (or threatened victimisation of whistleblower):
- Under the Corporations Act: 2 years imprisonment or 120 penalty units ($25,200) or both;
- Under the Taxation Administration Act: 2 years imprisonment or 240 penalty units ($50,400) or both.
What now?
If your entity is covered, the first thing to do is to implement a compliant whistleblower policy.
As part of the policy, given the increased protections and widening of definitions under the new laws, we recommend that you incorporate training to ensure your personnel understand the new obligations under the Act. This is especially important for those people who will be ‘eligible recipients’ of disclosure under the expanded definition.
If you need any assistance in preparing a compliant whistleblower policy, or would like some further information and guidance on how these new whistleblower protection laws may affect your entity, please contact us.
Author: Blake Motbey, Paralegal.