Blowing the whistle: major changes to Australia’s whistleblower protections
Major changes to a range of laws will increase protections for whistleblowers
Summary of the changes
- Major changes to the Corporations, Taxation and other relevant legislation, which were passed on 19 February 2019, will result in a significant increase in protections for whistleblowers
- A failure to protect a whistleblower from a breach of confidentiality or victimisation may result in penalties of up to $10.5 million or 10% of a company’s turnover and/or two years prison
- A new mandatory requirement for a whistleblower policy will be a strict liability offence
- Companies need to audit their current policies and implement measures to ensure compliance with the new regime.
The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 was passed on 19 February 2019, resulting in major changes to the Corporations, Taxation and similar Acts.
The changes will expand current protections and bring Australia’s corporate and tax ‘whistleblower’ scheme closer in line with international standards.
The reforms will likely take effect from 1 July 2019, save for the mandatory requirement to implement a whistleblower policy, which will take effect six months from the date of assent.
Whilst the proposal to introduce a rewards system has not been adopted as part of the changes, the Labor party has foreshadowed its intention to implement a bounty scheme to be administered by an independent body, which would likely be similar to the Securities and Exchange Commission in the United States.
New obligations you need to be aware of
The changes represent a major departure from the current regime and will impose significant obligations on companies, including as follows:
- disclosures can now be made about a broad range of issues, including misconduct and an ‘improper state of affairs’
- disclosures can be made by an extremely wide group of people, including former officers, employees and their relatives
- disclosures can be made to more people including ‘senior managers’ and lawyers
- anonymous disclosures can now be made
- there’s no longer a requirement to make disclosures 'in good faith'
- emergency disclosures can be made to the media or politicians
- new obligations to protect a whistleblower from retaliation by a third-party
- public companies and large proprietary companies must have a whistleblower policy which contains the content prescribed in the Act, which will be a strict liability offence
- as a result of a further bill which was passed on 18 February 2019 (namely the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018), penalties for disclosing a whistleblower’s identity or retaliating against a whistleblower will increase significantly to up to $1 million (individuals) and $10.5 million or 10% of annual turnover (company) and/or up to 2 years in prison.
As a result of the changes there is likely to be a significant increase in whistleblower claims going forward. Companies need to be prepared to handle disclosures in accordance with the new requirements in order to minimise the risk of civil and criminal penalties.
In addition to having a comprehensive whistleblower policy, companies should review their internal processes to ensure appropriate protections around confidentiality and minimising exposure of whistleblowers to detrimental treatment.
The implementation of the reforms will be overseen by ASIC’s Office of the Whistleblower, and the release of further guidance material is anticipated.
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