Insights

07/12/18

Whistleblower reform bill progresses to the next stage

It’s taken a year, but the Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2017 has progressed to the next stage with a raft of Government amendments passed by the Senate.  Here’s a summary of what’s changed in the Government’s whistleblower reform package, which now goes to the House of Representatives.

Government bill panned by Senate committee

In our last update, we covered your five ‘need-to-knows’ about the Government’s proposed whistleblower reforms, which were roundly criticised by the cross-party Senate Economics Committee.  The Government responded to those criticisms with a raft of new amendments, passed yesterday by the Senate. 

If the new laws are finally passed by the House of Representatives, corporations can expect:

  • stronger penalties and remedies for breaches of toughened whistleblower protections
  • more scope for a whistleblower to go public
  • employers being more likely to be held responsible for their employees’ conduct – but the proposed reforms stop short of imposing a new duty to protect and support whistleblowers (if a duty does not already exist).

What are the key changes to the proposed whistleblower reform package?

Here is a recap of the key Senate criticisms and the Government’s amendments to its proposed whistleblower reforms which have now passed the Senate:

Key Senate Committee criticisms Government’s proposed response
Whistleblowing only about individual personal, employment or workplace grievances shouldn’t be protected.

Unless the whistleblower is complaining about their victimisation as a whistleblower, a disclosure will not be protected if it only concerns a “personal work-related grievance”.  Examples of such grievances include disclosures regarding interpersonal conflicts, transfer/promotion decisions and disciplinary decisions.

The exclusion will not apply in certain circumstances, such as if the disclosed information has broader significant implications for the regulated entity, or concerns certain offences or dangers to the public or financial system.

Disclosures made to low-level supervisors or managers should not be protected. Low-level supervisors and managers will be excluded from the class of persons to whom a protected disclosure can be made. Instead, senior managers will be added to the class, alongside other senior figures, such as officers of a company and persons authorised to receive protected disclosures.
The emergency disclosures regime, allowing certain protected disclosures to be made to MPs and journalists, is too narrow and needs clarification.

There will be two classes of protected disclosures made to MPs and journalists: public interest disclosures and emergency disclosures.

Public interest disclosures will be protected if the whistleblower reasonably believes the disclosure to an MP or journalist would be in the public interest and:

  • 90 days have passed since a disclosure was made to a relevant Commonwealth authority (such as ASIC or APRA), in which time the whistleblower reasonably believes no action has been taken;
  • prior written notice has been given to that authority;
  • the disclosure is no greater than necessary to inform the MP or journalist of the misconduct or the improper state of affairs or circumstances.

Emergency disclosures will now only apply in respect of certain disclosures concerning a substantial and imminent danger to the health or safety of persons or the natural environment.

Organisations should be held to a duty to support and protect whistleblowers.  If a company is under a duty to prevent a person from engaging in conduct which causes or threatens to cause detriment to a whistleblower, courts will be able to make orders for relief against the company if they fail to fulfil that duty.  The amendments stop short of imposing a new duty, but leave uncertain the kinds of legal duties which may fall within this provision. 
Remove the due diligence defence for employers. When courts make orders to remedy any detriment caused or threatened to a whistleblower, employers will no longer be able to rely on a defence of having taken reasonable precautions, and exercised due diligence, to avoid the detrimental conduct by their employees.  These considerations will now be discretionary factors for a court to take into account when ordering relief.

 

More time to comply, but stiffer penalties

The Government’s amended whistleblower reform package also proposes to:

  • delay the commencement of the legislation once passed and includes a 6 month period after commencement for relevant companies to comply with the requirement for a whistleblower policy; and
  • significantly increase civil and criminal penalties for disclosing whistleblower identity or victimising a whistleblower in line with recent amendments.  For companies, the maximum civil penalty is proposed to be 50,000 penalty units (currently $10.5m), three times the benefit derived or detriment avoided, or 10% of annual turnover (up to 1m penalty units, currently $210m).

More radical proposals, such as a whistleblower rewards or a bounty scheme, have not been introduced.  A proposed Greens amendment for an independent review after 2 years to consider where such a scheme should be introduced was rejected by the Senate.

With Labor indicating its support for the Government’s Bill, it is likely that the Bill will pass the House of Representatives in its amended form.

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