What are the changes? 

Companies registered under the Corporations Act 2001 (Cth) must now comply with an enhanced set of protections for whistleblowers.

The Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) (Act) came into force on 1 July 2019. The purpose of the Act was to amend existing legislation (including the Corporations Act 2001 (Cth) and Taxation Administration Act 1953 (Cth)) to discourage ‘white collar crime’, whilst at the same time, encouraging whistleblowers to come forward and provide additional protections for them in the workplace.

The changes affect most businesses operating in Australia, including all companies registered under the Corporations Act 2001 (Cth), foreign corporations that trade within Australia, insurers (including life insurance), certain financial institutions, superannuation entities and trustees.

What disclosures are covered?

For a disclosure to be protected, it must be made by an ‘eligible whistleblower’ to an ‘eligible recipient’. The Act extends the definition of eligible whistleblowers to include current and former employees, contractors (and their employees), as well as associates and relatives of those employees and contractors.

‘Eligible recipients’ include certain regulatory authorities such as ASIC or APRA, and company officers, senior managers, company auditors or actuaries and trustees of superannuation entities. In certain circumstances, whistleblowers may also make disclosures directly to politicians or journalists.

Whistleblowers must also have ‘reasonable grounds to suspect’ that the information they are disclosing concerns misconduct or an improper state of affairs by the regulated entity. This includes criminal conduct, conduct that represents ‘a danger to the public or the financial system’ and breaches of regulatory laws such as the Corporations Act, the ASIC Act or the Banking Act.

If the disclosures made are found to be protected, whistleblowers may be eligible to receive immunity from prosecution, anonymity and protection from victimisation.

What disclosures are not covered?

Personal work-related grievances (such as interpersonal conflicts or decisions regarding engagement or termination of employment) are not covered by the new whistleblower scheme, unless they concern victimisation of a whistleblower or misconduct by an entity that is otherwise a protected disclosure.

Penalties

Under the new whistleblower scheme, strict obligations of confidentially apply, in particular regarding the whistleblower’s identity where they have requested anonymity. The penalties for disclosing a whistleblower’s identity or victimising a whistleblower are severe. For individuals, the penalty is up to 5,000 penalty units ($1.05 million) and for companies, 50,000 penalty units ($10.5 million) or up to 10% of annual turnover (to a maximum of $525 million or 2.5 million penalty units).

What do employers need to do?

By 1 January 2020, all public companies, large proprietary companies and trustees of registerable superannuation entities must have a compliant whistleblower policy in place. Failure to comply may lead to fines. We recommend that all companies operating in Australia take this opportunity to carefully review their existing policies and procedures and if appropriate, implement a whistleblower policy. Employers should also notify their staff of existing or new policies and provide training on who protected disclosures can be made to.