The long awaited reforms to Australian whistleblower legislation was passed on 19 February 2019. Partner, Andrea Beatty; Law Graduate, Chelsea Payne and Law Graduate, Danielle Bonanno outline the significance of the reforms and what they signify for companies and individuals.
On 19 February 2019, the long awaited reforms to Australian whistleblower legislation was passed by Parliament. The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) (Whistleblower Act) will mostly take effect three months after theAct receives Royal Assent, which could be as early as 1 July 2019.
The significance of the Whistleblower Act lies in its ability to harmonise current whistleblower regimes under federal law, expand protections and remedies and create a regime for tax-related misconduct and contraventions. The amendments will apply to disclosures made on or after the commencement of the Act which may extend to matters that may have occurred before commencement. However, matters relating to compensation and remedies will apply retrospectively to disclosures made prior to commencement.
The main ramifications include:
- requiring public companies and large proprietary companies to entrench mandatory whistleblower policies with mandatory content;
- the facilitation of protected disclosures relating to misconduct, including the existence of an ‘improper state of affairs’;
- providing protection to a wider range of people than under the previous draft;
- providing protections to eligible whistleblowers on the basis that the disclosure was made to an ‘eligible recipient’, which includes officers and senior managers;
- allowing for anonymous disclosures;
- the exclusion of most personal work based grievances from protection;
- allowing for ‘emergency’ or ‘public interest’ disclosures to be made directly to the Media or Parliament in the most extreme cases;
- expanding the remedies available to whistleblowers who suffer backlash by improving access to compensation;
- the provision of a reverse onus of proof where an individual seeks compensation, once they have established they suffered detriment.
There are significant penalties for both corporations and individuals who are in contravention of the Whistleblower Act. Civil penalties under the Corporations Act include breach of confidentiality or victimisation/threatened victimisation of whistleblower which can result in:
- 5,000 penalty units ($1.050M) or three times the benefit derived/detriment avoided for an individual, and
- 50,000 penalty units ($10.5M), three times the benefit derived/detriment avoided or 10% of annual turnover (up to 2.5 million penalty units) for a body corporate
Criminal offences under the Corporations Act for:
- a breach of confidentiality or identity of a whistleblower may result in:
- during the transition period, 30 penalty units ($25, 200) or six months imprisonment, or both, and
- For conduct after commencement six months imprisonment,
- the victimisation or threatened victimisation of a whistleblower may result in:
- during the transition period,120 penalty units ($25,200) or two years imprisonment, or both, and
- for conduct after the commencement, two years imprisonment
Failure to implement a whistleblower policy is a strict liability offence resulting in 60 penalty units (currently $12,600).
The Labor Party has announced that additional whistleblower laws would be introduced if they were elected. The Labor Party will encourage workers to blow the whistle on any dishonest or criminal activities that their employers are involved in. If a penalty is imposed on the company or employer, the whistleblower will retain a percentage of that penalty fee as a reward. Rewards will be capped at $250 000 or one per cent of the penalty fee. This is significantly lower than the reward provided in the United States, where whistleblowers may receive up to 30% of the total monetary recovery as a reward.
The Labor Party has pledged $3 million for the plan, which may include an office to support whistleblowers, the Office of the Commonwealth Ombudsman, which would also act as a support centre. The new whistleblowing laws will be reformed under Labor’s new regime, and if elected in May they would come into effect in July. The Federal Government dismissed Labor’s proposal, with Industrial Relations Minister, Kelly O’Dwyer labelling the plan “wacky”.
The significance of the Whistleblower Bill lies in its ability to harmonise current regimes under federal law and expand protections and remedies for whistleblowers.