New Whistleblower Policy Regulations – Is Your Business Prepared?
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How prepared are you for the changes that came into effect at the start of the year?
Thanks to a new regulation, which came into effect on 1 January 2020, all public companies, large proprietary companies, and regulated superannuation entities are now required to have a whistleblower policy.
These policies should contain information about the legal protection available to the whistleblowers along with information on how and whom to make a disclosure. It should also lay down the procedure of how the disclosures will be investigated.
Who or what is a whistleblower?
Before we explain the changes, it is imperative to understand what is a whistleblower. In simple terms, it refers to a person providing information and exposes the corrupt conduct within an organisation hoping to stop it.
And, providing information about the corrupt conduct is known as ‘blowing the whistle’. A whistleblower, if that person acts in good faith, is protected by law from reprisals. As such, an allegation of corrupt conduct made to the right authority may offer protection under the Independent Commission Against Corruption Act 1988, the Public Interest Disclosures Act 1994 and other relevant legislation.
Why the change?
At the outset, the previous version of the law might have appeared sufficient. However, it did not cover private organisations. Furthermore, it had a very narrow scope. Very few people would have qualified for legal protection under the purview of the Act in its earlier version.
Some Acts which offer whistleblower protection are:
ICAC Act protection
This Act protects individuals who provide the ICAC with information about suspected corrupt conduct or its facilitation in anyway. The Act aims to protect people by making it a crime to victimise a person in reprisal for his informing ICAC or assisting it in other ways. This includes protection against dismissal or discrimination to anyone in their employment.
Public Interest Disclosures Act protection
This Act protects the public officials who report public sector wrongdoing under certain circumstances.
Whistleblower also come under some other Acts such as the Taxation Administration Act 1953 and the Corporations Act 2001.
But, their biggest drawback was that they did not offer any protection to the private sector whistleblowers. Shortcomings of earlier laws included:
· A narrow definition of a whistleblower
· Fewer types of matters that can be disclosed
· Limited number of people who can receive protected disclosures
· Other restrictive requirements – such as the revelation of the identity of the whistleblower before disclosing the information (no scope for anonymous disclosure)
What has changed?
The new legislation that came into effect on 1 January 2020 repeals the previous whistleblower regimes under the banking superannuation and insurance legislation and consolidates and expands the existing Whistleblowers Protection Act that had existed under the Corporations Act 2001.
With an aim to expand the purview of corporate whistleblowing scheme, the Corporations Act 2001 and the Taxation Administration Act 1953 have been suitably amended. As a result, a new tax affairs whistleblowing scheme passed by the Parliament commenced on 1 July 2019.
The amended laws will apply to disclosures even if the disclosed conduct occurred prior to the commencement date. So, if the discloser is victimised after the commencement date, the amended victimisation and compensation provisions will offer protection for disclosure, even for disclosures made at an earlier period.
Changes under the Corporate Whistleblowing Scheme
The amendments to the Corporations Act have resulted in the creation of a consolidated and expanded whistleblower protection regime. The amendment is applicable to all regulated entities in the corporate, financial and credit sectors. As such, the new scheme is broader in its scope as it applies to a wide variety of businesses.
Let’s now consider some changes that have come into effect as per the amendment. As such, now, due to the changes to the Corporations Act, a broader range of conduct can be reported without the fear of victimisation. However,
The conduct must concern misconduct or an improper state of affairs, which are broadly defined, unlike before when the subject matter of protected disclosures was limited to contraventions of the Corporations legislation
Disclosures can be made anonymously and need not be made in good faith. However, there must be some reasonable grounds for the whistleblower to raise a concern
Personal work-related disclosures will be offered protection only when related to systemic issues or involving detrimental conduct to the whistleblower.
Disclosure made to a legal practitioner for obtaining legal advice or representation in connection with the whistleblower provisions is also eligible for protection under the provisions of the amended Act.
Who is eligible to make a protected disclosure?
Whistleblower disclosures can be made by current and former:
· Employees and officers (former and current)
· Contractors, suppliers and their employees (paid or unpaid)
· An associate (as per the definition in the Corporations Act) of the entity
· Spouses and relatives of any of the above
Who can disclosures be made to?
Whistleblowing disclosures can be made to a host of authorities such as:
· regulatory bodies and other external parties such as ASIC, APRA, and other Commonwealth authorities
· officers or senior managers
· the internal or external auditor (including a member of an audit team conducting an audit) or actuary of the entity or related body corporate
· persons authorised to receive disclosures
· trustee (in case of superannuation entities)
It can include a whistleblowing hotline as well.
Disclosures to parliamentarians and journalists
Another feature of the amendment is that it provides for public interest and emergency disclosures, which can be made to members of Parliament and journalists. But, such an emergency disclosure must be based on the whistleblower having “[1]reasonable grounds to believe the information disclosed concerns a substantial and imminent danger to the health or safety of one or more persons, or the natural environment’’. There is no need to divulge more information than what is necessary to inform the concerned authority of the substantial and imminent danger.
[1] Ref: asic.gov.au/media/5340534/rg270-published-13-November-2019.pdf (page 25)
“ [1] Reasonable grounds to believe the information disclosed concerns a substantial and imminent danger to the health or safety of one or more persons, or the natural environment’’. There is no need to divulge more information than what is necessary to inform the concerned authority of the substantial and imminent danger.
[2] A whistleblower can make a public interest disclosure to a journalist or parliamentarian if:
at least 90 days have passed since the disclosure was made to ASIC, APRA or another Commonwealth body prescribed by regulation
the discloser has reason to believe that no action is being, or has been taken, in relation to their disclosure
the discloser has reasonable grounds to believe that making a further disclosure of the information is in the public interest
However, before making the public interest disclosure, the discloser should give written notice to the authority to which the previous disclosure was made:
· with sufficient information to identify the previous disclosure; and
· stating the intention to make a public interest disclosure”
Ramifications for breaching anonymity or engaging in detrimental conduct
In this context, it is important to touch upon the ramification for breaching the anonymity of the whistleblower. Any detrimental conduct towards a whistleblower by the regulated entity would be liable to compensation.
Whistleblower policies must be in compliance effective from 1 January 2020. Any failure to have a policy will be a criminal offence, which can attract a maximum penalty of $126,000.
Ensuring easy accessibility of the policy
Accordingly, the policy should be made available to officers and employees, and provide information[1] on:
protections available to whistleblowers, including protections under the Corporations Act
who can receive disclosures qualifying for protection under the Corporations Act (protected disclosures), and how to make them
company support to whistleblowers and protection from detriment
company’s investigation of protected disclosures
safeguarding fair treatment of employees mentioned in protected disclosures, or to whom such disclosures relate
the availability of the policy to officers and employees
any other matters prescribed by regulations
As these are fairly new areas, organisation might need to set up special compliance training sessions. It would make sure whistleblower disclosures are recognised and dealt with confidentially and sensitively, without resorting to detrimental conduct.
Get In Touch
If you would like to learn more about HR for your business contact us for a no obligations phone call with Iolanda Hazell, Director, Infinity HR, at info@infinityhr.com.au
About The Author
Iolanda Hazell is Director & Founder of Infinity HR, helping businesses create a people-first workplace culture. With over 18 years HR expertise, Iolanda works with small to large organisations to create tailored people strategies that achieve business goals."
Source References
[1] Ref: asic.gov.au/media/5340534/rg270-published-13-November-2019.pdf (page 39)
[1] Ref: asic.gov.au/media/5340534/rg270-published-13-November-2019.pdf (page 25)
[2] Ref: asic.gov.au/media/5340534/rg270-published-13-November-2019.pdf (page 25)
[3] Ref: asic.gov.au/media/5340534/rg270-published-13-November-2019.pdf (page 39)
Disclaimer
The information provided on our blog is designed to provide helpful information, and does not constitute legal advice, and not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you or your organisation may have.